The broker had joined the claimant to set up and head a currency trading desk in Switzerland. His remuneration included an element of salary, which could be varied according to business levels and other elements including a forgiveable loan. Business did not go well and, in broad terms, the claimants sought to reduce the salary element but the broker claimed that his financial commitments would leave him without any money to live on but he could not afford to leave as he would need to pay back the loan. He argued that the reason for the failure of the desk was that the claimants had not ensured trading with UBS, the largest client in this market, as he claimed had been promised. When the possibility of a move back to the UK with another broker arose, he obtained legal advice after which he terminated the contract. The co-defendants had requested written evidence of this in writing before taking him on. All this was set against the background of the controversial transfer of several brokers from the co-defendants to the claimants that has been the subject of separate litigation.

The claimants were seeking, broadly, damages for loss of profits, recovery of the loan, damages for breach of restrictive covenants and also damages against the co-defendants for inducement.  In this judgment, Sir Raymond Jack, sitting as a High Court judge, reviews in detail the factual background and the operation of Swiss law in relation to employment contracts.  He concludes that the contract had been terminated wrongly but the claimants could not show any losses though they were successful in recovering a loan to the employee. He also found that there had been no inducement to breach the contract by the co-defendants.

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Neutral Citation Number: [2011] EWHC 2009 (QB)

Case No: HQ09X02534

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 27/07/2011

Before :

SIR RAYMOND JACK (Sitting as a Judge of the High Court)

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Between:

BGC Capital Markets (Switzerland) LLC (Claimant)

- and -

Peter Kevin Rees (1st Defendant)

Tullett Prebon PLC (2nd Defendant)

Tullett Prebon Group Ltd (3rd Defendant)

Tullett Prebon (UK) Ltd (4th Defendant)

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Mr Jonathan Cohen (instructed by McDermott Will & Emery UK LLP) for the Claimant

Mr Mohinderpal Sethi (instructed by Edwards Angell Palmer & Dodge UK LLP) for the First Defendant

Mr Simon Devonshire QC (Instructed by Rosenblatt) for the Second, Third and Fourth Defendants

Hearing dates: 14-17, 20-24, 27, 30 June 2011

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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.

.............................

SIR RAYMOND JACK

Sir Raymond Jack:

Introduction paragraph 1

A. The case against Mr Rees 17

Termination by Mr Rees 17

Damages against Mr Rees 82

The loss of profit claims 84

The claim in respect of the loan 98

Post termination restrictions or restrictive covenants 99

Confidential information 109

B. The case against Tullett 111

Inducing Mr Rees to terminate his contract 111

Inducing breach of post termination restrictions

and misuse of confidential information 151

The outcome 153

1. BGC and Tullett, as I will call them, are both substantial groups of companies carrying on businesses of inter-dealer broking. That involves the employment in London and in other financial centres of large numbers of brokers who act as intermediaries between traders, most often employed by banks, in what can broadly be described as financial products, including cash, foreign exchange, derivatives, commodities and equities. There is a rivalry between the two groups.

1. On 5 June 2007 the first defendant in this action, Mr Peter Rees, commenced work for the claimant, BGC Capital Markets (Switzerland) LLC, as head of the company's Swiss francs forward desk under a contract dated 6 March 2007. He was to work at the company's office in Nyon, which lies between Geneva and Lausanne. The contract was for an initial period of 4 years with an additional notice period of 3 months, and the earliest Mr Rees might have left under that provision was 4 September 2011. On 6 April 2009 Mr Rees gave notice to BGC that he was treating the contract as ended by reason of BGC's reduction of his salary. That had been done by BGC under a term of the contract permitting a reduction if the desk's earnings failed to meet a defined level. On 25 April 2009 Mr Rees entered a contract of employment with the third defendant, Tullett Prebon Group Limited, and he commenced work as a broker on Tullett's forward cable desk on 18 May 2009.

1. In this action BGC Switzerland claims damages by way of loss of profits from Mr Rees for breach of his contract by terminating it on 6 April 2009, and damages for breach of the post termination restrictions on his employment contained in the contract. There is also a claim for misuse of confidential information. The company further claims from Mr Rees the sum of £144,525, the net amount of a 'forgivable loan' paid to Mr Rees under his contract. Mr Rees counterclaims against BGC Switzerland damages for constructive dismissal. BGC Switzerland claims damages against Tullett for inducing Mr Rees' breaches by offering him a job.

1. The previous paragraph sets out the bare bones of the litigation. An essential part of the story is the attempt by BGC between January and March 2009 to recruit a large number of the brokers employed in Tullett's London office. This was successful as to ten brokers including four from the forward cable desk. Mr Rees was employed by Tullett as a replacement on that desk. On 25 March 2009 Tullett commenced proceedings against BGC, Mr Verrier, Mr Lynn and Mr Hall. The last three were respectively executive managing director of BGC, president of BGC, and head of Tullett's forward cable desk. The ten brokers who had gone to BGC from Tullett were also joined as defendants soon after. The most important claims were for injunctions and for damages for conspiracy. In a judgment delivered on 18 March 2010 I upheld those claims. I found that BGC, Mr Verrier and Mr Lynn had conspired to use unlawful means to gain the employees in question: [[2010] EWHC 484 (QB)](). My judgment was upheld by the Court of Appeal: [[2011] EWCA Civ 131](). On 17 March 2011 I began the hearing of Tullett's claims for damages. On 11 April, when the evidence was close to completion, the parties stated that they had reached a settlement. An agreement was entered into. Its terms are confidential to the parties. I will call this action 'the conspiracy action'. In 2009 BGC recruited to its New York office, or Tullett would say 'poached', approximately 80 brokers from Tullett's New York office. That is the subject of on-going arbitration proceedings in the United States.

1. The present action was commenced by BGC Switzerland against Mr Rees on 15 June 2009. On 19 June Mr Rees offered undertakings not to trade forward Swiss or forward Euro, and BGC's application for interim relief by way of injunction was otherwise rejected. Following pre-action disclosure by Tullett, on 26 August 2009 BGC applied to join Tullett as a defendant on the basis that Tullett had induced breaches by Mr Rees of the post termination restrictions contained in his contract with BGC. An order was made by consent on 10 September 2009. But the claim that Tullett had induced Mr Rees to terminate his contract of employment with BGC was not added until January 2011.

1. The sole claimant is BGC's Swiss arm, BGC Capital Markets (Switzerland) LLC. I can in the main simply refer to BGC. But it is necessary to distinguish between the claimant and BGC London companies in relation to the right of the claimant to recover loss of profit suffered in London on the basis that had Mr Rees not terminated his contract, he would have been seconded to work for BGC in London. I will there refer to 'BGC Switzerland' and 'BGC London'. There are three Tullett defendants: Tullett Prebon PLC, Tullett Prebon Group Limited and Tullett Prebon (UK) Limited. The particulars of claim do not distinguish between them, and no point arises as to the differences. I can simply refer to 'Tullett'.

1. BGC has been represented by Mr Jonathan Cohen instructed by McDermott Will & Emery UK LLP. Mr Rees has been represented by Mr Mohinderpal Sethi instructed by Edwards Angell Palmer & Dodge UK LLP. Tullett has been represented by Mr Simon Devonshire Q.C. instructed by Rosenblatt. McDermott Will & Emery acted for BGC in the conspiracy action, and Rosenblatt acted for Tullett. Edwards Angell Palmer & Dodge were instructed by Tullett in the conspiracy action to guard the interests of three forward cable brokers, referred to as 'the Tullett Three', in respect of whom it was alleged by BGC that Tullett had induced them not to perform the forward contracts that they had entered with BGC. The Tullett Three were not parties in the conspiracy action but were important witnesses. I held that Tullett had induced them not to perform their contracts with BGC but that they were entitled to refuse to do so by reason of BGC's unlawful behaviour. Mr Cohen had represented BGC in the conspiracy action led by Mr Andrew Hochhauser Q.C. In the conspiracy action BGC were responsible for the costs of all the defendants. Tullett paid the costs of Edwards Angell in representing the Tullett Three.

1. In the present action Tullett have undertaken to pay the costs of Mr Rees which are incurred in his defence of the proceedings and in the advancement of his counterclaim. But Tullett have not undertaken to pay any costs which may be awarded against Mr Rees. Nor have they given any indemnity against any other sums which Mr Rees may be ordered to pay arising from the claims against him. Tullett's undertaking in respect of Mr Rees' costs was given orally to Edwards Angell, and passed by Edwards Angell to Mr Rees. Nothing has been put in writing. That was also the position in respect of the Tullett Three. The undertaking was given immediately following McDermott Will & Emery's involvement of Rosenblatt in the service of proceedings on Mr Rees. It is clear that Tullett then determined that Mr Rees should be represented at Tullett's expense. Tullett's reasoning is unknown. Mr Rees would have been unable to pay for his own representation. This situation is very different to the indemnities offered by BGC to its recruits from Tullett, with which I was concerned in the conspiracy action. Those indemnities were included in the packages by which they were recruited. While Mr Rees' financial position has hopefully improved since 2009 – when it was dire, it appears unlikely that he will be able to meet any substantial judgment against him.

1. The contract between BGC and Mr Rees is governed by Swiss law. I heard evidence as to that from Mr Edgar Philippin who was instructed on behalf of BGC, and Mr Daniel Hochstrasser who was instructed on behalf of Mr Rees. It is agreed that BGC's claims against Tullett for inducing breach of contract are governed by English law.

1. Mr Rees' contract was for an initial period of 4 years which might be followed by a three month notice period. He was to be employed as an associate director on the Swiss forwards desk or such other capacity as the company might reasonably require. It is agreed that he was in fact employed as head of the desk, and that he had no responsibilities beyond that.

1. Paragraph 2(c) provided:

"2(c) You will be employed to work for the Company (or on secondment with an Associated Company) in the offices based in Switzerland or, for a maximum consecutive period of six (6) months at any one time, in such other European offices of the Company or an Associated Company as it or they may reasonably require."

1. Clause 3 was headed 'Commission Compensation'. It provided:

"3(a) (i) You will be paid a fixed draw (which is calculated as an advance of remuneration) of £228,000 per annum ("Fixed Draw). The Fixed Draw is inclusive of any entitlement you have to a housing or car allowance as agreed between you and the President of the company.

Your Fixed Draw is calculated with reference to the amount of commission revenue you are expected to generate for the Company. You are therefore required to maintain a certain level of commission revenue commensurate with your level of responsibilities and Fixed Draw and if, after twelve (12) months from the date on which you, and other members of the Swiss Forwards Desk (as agreed with the President of the Company) commence employment with the Company, 50% of the commission revenue generated by the Desk for the Company in any consecutive three month period is less than the Full Employment Costs (as defined below) only over the same three month period, the Company reserves the right to reduce your Fixed Draw so the Full Employment Costs are equal to 50% of the average monthly commission revenue generated by the Desk for the Company in the three month period.

Before implementing any such reduction the Company will consider market conditions, any additional responsibilities you undertake on behalf of the Company and any other factors that the Company considers relevant and will give you a reasonable opportunity to explain why your performance has been below target.

Any reduction which the Company determines necessary in accordance with this clause 3(a) may not be permanent. Provided always that at least 50% of the commission revenue you have generated in any consecutive three month period is not less than the Full Employment Costs (as defined below) in that period, the company will not reduce your fixed draw or, if your Fixed Draw has already been reduced, shall be reinstated.

(b)(i) The Company may pay you with respect to each bonus year of the Company (as defined …) a discretionary share of a deemed bonus pool (the "Bonus Pool"). The Bonus Pool shall equal 60% of Net Revenue less Full Employment Costs (as such terms are defined below)."

Clause 3(b) (ii) to (v) set out further provisions in respect of bonus. Clause 3(c) set out definitions.

1. Clause 3(d) provided for a 'forgivable loan':

"3(d) In recognition of the significant contribution you are expected to make to the Company during employment you will be entitled to a one-time interest free forgivable loan, in the amount of £250,000 (less all such taxes and social security which would be payable by you on forgiveness of the loan) (the "Loan") payable net by the Company within thirty days after the Commencement Date or within thirty days after the parties' execution of this Agreement whichever shall be the later, subject to the following:

The Loan shall have a loan term which shall be four (4) years from the Commencement Date (the "Loan Term");

The Loan shall be immediately repayable (…) if at any time prior to the expiry of the relevant Loan Term your employment is lawfully terminated in accordance with its contractual terms, you give notice not to renew or to terminate your employment or you leave (unless in accordance with sub-clause 1(b) above [which deals with notice at the end of the 4 year period of the contract], or ask to leave the employ of the Company or an Associated Company (save where the Company dismisses you without cause so as to commit a substantial breach of your employment, as determined by a Court of competent jurisdiction).

…..

On the expiry of the Loan Term, the Loan shall be forgiven and waived in its entirety by the Company and you shall be under no repayment obligation. ….

The Loan does not form part of the Fixed Draw or any bonus or any other sort of salary or income. In the event you do not remain employed for the length of the Loan Term and the court or any other authority determines that the Loan does constitute part of the Fixed Draw or bonus or other salary or income, you accept and agree that you shall have no claim for payment of any portion of the Loan. [my underlining]"

1. Clause 5 was headed 'Early Termination'. It provided:

"5(a) You are referred to the additional provisions in the Terms and Conditions. The Agreement can be further terminated by either party for valid reasons pursuant to Article 337 et seq. of the Code of Obligations.

During your employment you are required to generate a certain level of commission revenue for the Company. If you fail over a consecutive three month period to generate commission equal to, or more than, 1.5 times your Fixed Draw over the same three month period the Company reserves the right to terminate your employment on three months' written notice. ….. ."

1. Clause 6 provided that the contract was to be governed by, and construed in accordance with, Swiss law. It also gave exclusive jurisdiction to the Swiss courts, a provision which has been waived.

1. The contract incorporated 'Terms and Conditions'. These contained the covenants by Mr Rees on which BGC rely. Clause 18 of the Terms and Conditions was an 'entire agreement clause'.

A. The Case against Mr Rees

1. On 6 April 2009 Swiss lawyers instructed by Mr Rees, Gross & Associes informed BGC by e-mailed letter that in accordance with Article 337 of the Swiss Code of Obligations Mr Rees was terminating his employment forthwith. The letter referred to 'assurances' given by BGC about the Swiss forward desk in Nyon being able to obtain business with UBS Zurich. It stated that the salary reduction clause was forbidden by Swiss law, and void. It said that the trust necessary to maintain a good working relationship was breached, and that this justified Mr Rees in terminating his contract.

1. It is agreed that, whether or not Mr Rees was justified in terminating his contract, the letter was effective under Swiss law to terminate it on its receipt by BGC. The issue is whether he was justified. It is agreed that, contrary to the letter, under Swiss law the salary reduction clause would not be treated as void, but could not be used to reduce the salary below an 'appropriate remuneration', applying by analogy Article 349a of the Code of Obligations. There is some dispute as to how that provision is to be applied in the circumstances of this case. It is agreed that, if the salary was reduced to a level below such 'appropriate remuneration' or at least substantially below, this gave Mr Rees good grounds to terminate the contract. It is agreed that in operating the clause BGC had to comply with its provisions, but there are disputes as to whether the clause was operated in breach of its provisions, and, if it was, as to the effect. There is a dispute as to whether Mr Rees terminated the contract sufficiently quickly after his right to do so arose and so, if not, had lost his right. It is for Mr Rees to establish that BGC's conduct entitled him to determine his contract. If he succeeds in that, it would then be for BGC to establish that he had nonetheless lost that right by not acting quickly enough.

1. These issues lie at the heart of the case. For if Mr Rees was justified in terminating the contract, the claims against him fall away save for that relating to misuse of confidential information, and his counterclaim for damages succeeds. Likewise the claims against Tullett for procuring breaches by Mr Rees fall away, with the same exception. If he was not justified, BGC has a claim against him for such damage it has suffered. It can also recover the loan, but not otherwise.

1. I will next set out the facts as I find them in relation to this part of the dispute.

1. Mr Rees is aged 40. He has been a broker in the forward Swiss franc market since 1993 when he was employed by Prebon Yamane, a predecessor in part of Tullett Prebon. In 2003 he moved to RP Martins where he was a director and head of the Swiss forward desk. The other members of the desk were Mr Morley and Mr Miller. Mr Storry joined the desk soon after. The desk was successful, and Mr Rees considers that it became the best in the market or at least as good as any.

1. In 2006 Mr Rees, Mr Morley and Mr Storry were approached by a head-hunter, or recruiting agent, who was an employee of BGC, called Jonty Watt. The idea was that the whole desk should move from RP Martins to Nyon with the exception of Mr Miller who was retiring. The desk would be the first forward currency desk in the BGC group. I deduce that for this reason perhaps BGC's touch may have been less sure than in other markets. The BGC executive in charge of the Nyon office and other continental offices was Mr Jean Pierre Aubin. He reported to Mr Shaun Lynn, who was BGC's senior officer in Europe and based in London. Mr Robin Clark was executive managing director in London. All three were involved in the discussions about the new desk at Nyon, but apart from one meeting with Mr Clark the only person who spoke to the recruits was Mr Watt. The biggest trader in Swiss forward by some way was and is the Zurich office of UBS. It is also the most important market maker – that is, setter of prices. The desk at RP Martins had, using the jargon of the trade, a line to UBS Zurich and talked to them, that is to say UBS was a client of the desk, daily communicating and frequently trading with them. The other three top forward Swiss desks, ICAP, Cosmorex and Tullett all had lines to UBS. So all involved in the recruitment of Mr Rees and his desk to BGC knew that it was very important to the success of the new desk that when Mr Rees and the others left RP Martins they brought their connection to UBS with them, and UBS 'put in a line' – a dedicated telephone line, to them. At the same time as Mr Watt was talking to Mr Rees, Mr Morley and Mr Storry, he was also talking to Mr John Tipper, another forward Swiss broker specialising in off balance sheet products, then working elsewhere. In an e-mail to Mr Aubin dated 3 January 2007 Mr Watt referred to Mr Tipper as having 'not got UBS guaranteed' – that is to say, Mr Tipper could not be sure that, if he moved to Nyon, his UBS connection would follow him. At the end of January 2007 terms were agreed through Mr Watt with Mr Rees, Mr Morley and Mr Storry.

1. In mid February 2007 Mr Rees judged that the time had come to inform his clients, in particular UBS, of the impending move. He informed Mr Watt of the outcome regarding UBS and on 19 February Mr Watt recorded the situation in the following terms in an e-mail to Mr Aubin and Mr Clark:

"We have hit a wall with the SWF situation. Our man went to see UBS Zurich to ask him to put the line in to BGC. The man he saw is Holger Seger and the answer was "no" as he has too many lines at the moment. Until they agree to put the line in our men won't move and we don't really want them to. Does anyone have a good relationship with Seger or does anyone have a good idea as to how to get round this? Perhaps a conf call? … ."

I think that this is essentially accurate, though the view as to BGC not wanting them may have been more strongly expressed by Mr Watt than was the case. Mr Clark replied:

"The obvious first route must be the other candidate for Swiss [Mr Tipper]? JP [Mr Aubin] would you call him to confirm he has the line in ok? Failing that we do trade with the bank, they may think as Euro Brokers."

On 20 January Mr Clark suggested by e-mail to Mr Lynn:

"Do you think Rob Pearson may help us? I think you are the best relationship here?"

It appears that Mr Lynn did not respond until 16 March, when he asked Faye Eden (who I think was his p.a.) to follow it up.

1. Meanwhile on 22 February Mr Aubin e-mailed Mr Lynn under the heading 'Tipper':

"As you may know, ubs refused to open line to rees and his rpmartin team, which is strange as number 1 [presumably meaning the number 1 desk]. Call back Tipper, who is my preference since day 1, he still ok to join and he's not bound by a contract. ….. . "

1. On 26 February Mr Watt e-mailed Mr Clark:

"… .I'm... seeing the no 2 and 3 tomorrow evening [Mr Morley and Mr Storry]. But I would like to have something positive to say to them about how we plan to get the ubs line in for them. If you can put some thought to it I'd be really grateful. See you tom[orrow]."

In his witness statement Mr Clark quoted the e-mail omitting the reference to 'see you tomorrow'. He did not say what he had discussed with Mr Watt as to what he should say to reassure the recruits. Nor did he do so in cross-examination: Day 4.112 and following.

1. Mr Rees met Mr Watt on probably 26 March 2007. Mr Morley and Mr Storry were also there. They had a separate meeting with Mr Watt. Mr Rees states that Mr Watt told him by reason of BGC's connections with UBS Zurich, a line would be put in. If that did not happen immediately, BGC by Mr Lynn, Mr Aubin and Mr Clark would make a pitch to UBS. Mr Watt said that the senior executives involved were convinced that they would obtain a line within 3 to 6 months of his arrival in Nyon. He states that on the basis of what he was told he agreed to leave RP Martins and join BGC. He signed his contract on 6 March, as did Mr Morley and Mr Storry. However Mr Morley later changed his mind and stayed at RP Martins.

1. On 14 March 2007 Mr Tipper signed a contract with BGC to join the desk in Nyon. He was to have a salary or fixed draw of CHF420,000 pa with a guaranteed bonus of CHF300,000 pa. It was a term of the contract that UBS Zurich and Morgan Stanley should agree within a reasonable time frame to install lines to the new desk at Nyon. Mr Tipper transacted very little business following his arrival in Nyon and his contract was terminated in October 2007. He did not achieve a line to UBS or to Morgan Stanley.

1. The Swiss forward desk at Nyon was very far from a success: it could be described as little short of a disaster. I refer among other evidence to that of Mr Robinson at Day 3.52.21 to .56.10 and to that of Mr Clark at Day 4.67. The desk always ran at a substantial loss – that is, the costs, in particular the fixed salaries or draws and other expenses, always exceeded the commissions earned. One would expect the commissions to be a multiple of the costs.

1. I will have to trace through some of the events involving Mr Rees, but it is helpful to set out at this stage the things that it appears went wrong. I have not of course been conducting an enquiry into the matter, but I think that the evidence has touched on the main points. I would list them as follows, but not in an order of importance:

(1) Mr Morley stayed at RP Martins.

(2) Mr Tipper was a failure. He did not bring lines to UBS Zurich or Morgan Stanley.

(3) Mr Joe Galea, who joined the desk early on, suffered from ill-health, and attended work less and less.

(4) Mr Trevor Fisk, who was recruited to the desk by Mr Rees in early 2008, turned out not to be up to the job.

(5) The desk did not secure a line with UBS Zurich until a trial line was put in in September 2008. The trial was a failure.

(6) The desk never obtained a line with Credit Suisse, the second biggest presence in the market though some way behind UBS.

(7) The desk information systems were inadequate at least in the early period.

(8) Mr Rees was over-concerned about his own status; he set himself up in a substantial house and took on two expensive cars; he was over-confident of success; he did not put in the hard work required. His attendance in the office was irregular – in 2008 he did not attend on 48 days.

(9) Mr Rees was a poor desk head, who did not earn the respect of the others. He did not trouble to learn about interest rate swaps which were traded by Mr Galea and Mr Fisk.

(10) Mr Rees spent too much on entertaining.

1. In a number of e-mails following the start of the desk Mr Rees referred to the issue of getting a line to UBS in terms of what the desk must do to get a line rather than any promise or undertaking by the BGC management to secure it for the desk. I refer to 5 October 2007 Rees to Clark, 18 October 2007 Rees to Lynn, 30 October 2007 Rees to Lynn, 8 November 2007 Rees to Lynn, 5 December 2007 Rees to Clark, 7 December 2007 Rees to Lynn, 15 February 2008 Rees to Clark. Mr Rees said that he did not refer to what had been promised to him because he was careful what to say to senior management. I do not accept that as an explanation for complete silence.

1. On 29 April 2008 Mr Rees and Mr Clark exchanged e-mails concerning Mr Rees' complaint that his salary was set in sterling but was paid in Swiss francs which were moving against sterling. The two had also recently discussed the fact that the 12 month period in which Mr Rees' salary could not be reduced would come to an end in July. Mr Clark referred to that and asked him what he thought was fair in the circumstances. Mr Rees replied at 14.56:

"Well I don't know what I can say. Would be insulted if my salary got cut when this company is clearly not set up to do FX Forwards. We have no STP still which is costing us business all the time. We have no UBS ZUR as discussed when we tried to pull out of the deal but were persuaded not to by BGC. We were told that it is a long term plan to do Swiss Francs and to be fair we think we have come a long way in that period under such difficult circumstances but you are the boss. I think it would be an outrage if salaries are cut when no one from senior management in London has even come to have a look at the set up and talk to the staff. When it comes to salary reductions, I believe that mine is not the one that should be cut, …. ."

In a later e-mail at 15.07 Mr Rees said that he was still confident of getting the Swiss banks as customers, and that the desk had suffered badly from not having Mr Morley who would have given it a much better chance of getting them in. Mr Clark replied that the points Mr Rees was making were valid. The outcome was that on 15 May 2008 Mr Rees' contract was amended to provide a salary of CHF500,000. It is significant in his e-mails that Mr Rees did not refer to any particular action promised by BGC but to an assurance that the company was in it for the long term.

1. On 21 July 2008 Mr Clark initiated the process of considering salary reductions for Mr Rees, Mr Storry and later Mr Galea. On 11 August Mr Clark sent Mr Rees the figures showing the losses. Soon after, the issue of the Nyon desk salaries was taken over by Mr Secretan, then BGC's head of non-G7, FX and Rates, based in London. He had not been involved in Mr Rees' recruitment. He had an informal meeting with Mr Rees in London in early August and a formal meeting in Nyon on 28 August. The letter dated 25 August setting up the meeting stated that its purpose was to discuss Mr Rees' revenue levels, the management of the desk, his attendance and travel and entertainment. At the meeting Mr Rees said that he had been promised that a line would be set up to UBS and that UBS' refusal to speak to the desk had significantly affected its performance. He said he had significant expenses including rental payments on two expensive cars and the rent of a chateau. It was made clear to Mr Rees that the desk had to be put on a sound financial basis by reducing the outgoings to a level commensurate with the commissions being earned. He was asked to come up with a proposal to achieve this. Mr Storry had a similar meeting the same day. He was asked to propose a reduction to his salary and he offered to take £100,000 in place of £158,500. That was more than the figure to which his salary might have been reduced to under his contract. Mr Secretan accepted that figure. Unfortunately Mr Storry was told that the other desk members were also having their salaries cut. That was not so. In a Bloomberg conversation the next day Mr Rees told Mr Secretan that he was going to get control of things and that he could get the revenue up.

1. On 3 September Mr Rees sent Mr Secretan an e-mail which was largely about his own finances. He had seen his bank manager and had found he had no disposable income after rental for cars and schooling. In fact, to say that he had been careless with his money would be kind. He had been in receipt of a very substantial salary – initially £228,000. He had had the forgivable loan – which had all gone. His bank statements show that he had even borrowed money which he was paying off. He had taken no account of the fact that his salary was guaranteed at its high level for 12 months only, and that so far the desk was failing. He said in the e-mail:

"I still feel that we have been let down on certain promises with regard to the most important customer in the market, but endeavouring to continue doing my job despite this. Were this customer to have been in place within the 3-6 month period as promised by the company, I firmly believe we would not be in this situation. If you continue to believe that I am the right man, then I ask you to give me some grace at this stressful time."

This was the first time that Mr Rees had put what is now his case as to a promise by BGC into writing. He had not made this assertion to Mr Clark. As I have said, Mr Secretan had not been involved in 2007. Mr Rees had complained to Mr Secretan about the absence of UBS before this and Mr Secretan had told him to the effect that one account was not everything. It is unclear what, if any, promise Mr Rees had said had been made.

1. On 1 September 2008 Mr Secretan's responsibilities towards Nyon were taken over by Mr Sean Robinson who became managing director of BGC Switzerland. Following discussions between the two it was decided that it would be counterproductive to reduce Mr Rees' salary at this point. Mr Rees never suggested any reduction as he had been requested to do. The position was that by reason of his improvidence he could not at this point accept any reduction.

1. Mr Robinson was almost immediately able to set up a meeting with Mr Holger Seger of UBS Zurich using an intermediary in the bank. Mr Seger agreed to put a line in to Nyon on a three month trial basis. He insisted that the line was not to be handled by Mr Rees. For the first few days things went well but then went dead and no more business was done. Neither Mr Rees nor Mr Robinson could explain why this was. It seems to me that the likelihood is Mr Seger did not want to deal with Mr Rees or with a desk managed by him. So he agreed to put the line in to satisfy Mr Robinson, but no more.

1. The desk revenue for August 2008 was $110,762. In September it fell to $78,769. Mr Secretan and Mr Robinson met Mr Rees on 29 September to discuss his own performance and his management of the desk. Mr Rees was asked to discuss the amount by which his salary should be immediately reduced or given the option to remain on full salary to 31 December when it would be reduced by the exact ratio in clause 3 of his contract with a further review in March. Mr Robinson had further meetings with Mr Rees on 10, 22 and 24 October, the last being a formal meeting. It was particularly directed to what Mr Rees had to do to improve his management of the desk. The outcome was that on 28 October Mr Rees e-mailed Mr Robinson to say that he wished to find an arrangement whereby he could leave. He said he had not taken legal advice and did not want to do anything going against his contractual obligations. The reaction in BGC was that the company had a large investment in Mr Rees and if he went that would be the end of the desk.

1. On 23 January 2009 the issue of a cut in salary was discussed between Mr Rees and Mr Robinson. Mr Rees said that he could not afford any cut. He said that BGC had not fulfilled its obligations to him in respect of Mr Morley and the UBS line. On 26 January Mr Robinson was advised that BGC were contractually entitled to reduce Mr Rees' salary to CHF90,000.

1. On 18 February 2009 Mr Galea was placed on garden leave until 30 April when his contract would be terminated. On 25 February 2009 BGC terminated Mr Fisk's contract as of 31 May. At this time Mr Larsen was doing less and less work, and he did not attend or carry out any trades after 16 March. He resigned on 4 April. That left Mr Rees and Mr Storry.

1. On 4 March 2009 Mr Robinson and Mr Rees had a meeting about the brokers putting their names on their deals so the management would know who did what. Mr Rees strongly opposed that. Mr Rees said he wanted to leave but would not resign because of his contract. He wanted an agreed exit strategy. He was moving his family back to England and was intending to commute from London. By this time he was under pressure not only because of the situation regarding the desk and his finances but also by reason of his wife's desire to leave Switzerland and the illness of their new-born son who had been in and out of hospital.

1. Following discussions within BGC as to the level of reduction which was appropriate a meeting was held by Mr Robinson with Mr Rees on 11 March. Nicole Moran, a human resources officer, attended by video link, and prepared a minute of the meeting. Mr Rees said that he did not think that his salary should be cut. He referred to BGC's promise of a line to UBS. He referred to his own finances. He wanted to leave under a compromise agreement. He asked if BGC had considered market conditions, and was told it had. Towards the end Mr Rees asked what his salary would be cut to and was told it would be CHF170,000. (That was the equivalent to £105,000 and was a cut of 66%).

1. On his way home that day, Mr Rees telephoned Dr Neupert to ask his advice about the legality of the reduction. Dr Neupert is a lawyer, who is a director of Cosmorex, and to whom Mr Rees had spoken previously about his fear that his salary might be reduced. Cosmorex is a Swiss subsidiary of Tullett, with which Mr Rees had been having discussions about a job at the end of his time with BGC. Dr Neupert had previously said that he could not advise him. Mr Rees states that on this occasion Dr Neupert did say that in his view the salary cut was unlawful, but he also said that Mr Rees must seek his own advice. It is likely that any view expressed by Dr Neupert was in fact in more guarded terms, but I accept that the effect of the conversation was to encourage Mr Rees to think that the reduction was unlawful.

1. Mr Rees responded to the meeting of 11 March with a strongly worded e-mail on 13 March. He said 'no UBS means no chance' and that BGC had promised that a line would be in within 3 to 6 months. He wanted to find an amicable way to part. He said he could not afford to live in Switzerland anymore even on his current salary. BGC did not respond.

1. On 23 March Mr Robinson wrote to Mr Rees formally informing him that his salary would be cut from CHF500,000 to CHF170,000 with effect from 13 March.

1. By 18 March BGC were considering moving Mr Rees to London. This resulted in Mr Rees coming to London on 25 March, when Mr Verrier made an offer to him based on a salary of £125,000. I deal with this in greater detail in paragraph 89 below. Meanwhile Mr Rees was pressing Tullett to offer him a place on its forward cable desk which had lost four of its seven members to BGC. He was also pressing Mr Clark to find a way for him to leave amicably. He offered to pay £15,000 against the forgivable loan, borrowed from his mother. On 1 April he said that he could not afford to put petrol into his car and could not afford to come to work. That was wholly untrue because he had been paid his full salary on 27 March. Mr Rees did not attend the office after this. That evening Mr Clark informed him by e-mail that the situation was not as simple as Mr Rees thought: he had a contract and a loan.

1. On 2 April 2009 Mr Rees sought legal advice in Switzerland. He found a firm of lawyers, Gross & Associes through a directory and went to see them and left them with the paperwork. The next day he went to receive their advice. It was that the salary reduction clause was void under Swiss law and that BGC had broken the contract by reducing his salary. On 6 April Gross sent a letter by e-mail to BGC stating that his contract was terminated. The letter referred to the UBS situation and to the salary reduction clause being void.

1. It is a central part of Mr Rees' case that he had been promised by Mr Watt on behalf of BGC that BGC would ensure that UBS put in a line to the desk within six months at the maximum, and that this had contractual force. Alternatively it was relied on as a misrepresentation. BGC deny that any promise of any kind was made. However in his written opening submission for BGC Mr Cohen wrote '… indeed it is BGC's case that Mr Watt assured Mr Rees that BGC would do all that it could to help to obtain a line into UBS and that would undoubtedly have been an assurance that created optimism on everyone's part.' Further Mr Cohen accepted, Day 8.25, that the UBS situation was capable of being a factor which BGC could choose to take into account when exercising its power under clause 3(a) to reduce salary. It was agreed that, if any promise had been made, the time in which the contract could be terminated solely by reason of its breach had gone by. Further, Mr Hochstrasser conceded that even if the promise had been a term of the contract, breach of it would not have been sufficiently serious to permit termination.

1. I am satisfied that a desk dealing in Swiss francs forward, which seeks to be a top desk and does not deal with UBS Zurich, is at a serious disadvantage. The top desks all deal with UBS. I accept the evidence of Mr Rees to that effect and that of Mr Potter. But, having heard the evidence, I do not think that it is impossible for a desk to start and to achieve a fair measure of success without a line to UBS. It is possible to build up a clientele and a volume of business and establish a presence in the market. Then UBS might wish to deal through the desk. That is what Mr Rees said he was trying to do in the first year: I refer to the e-mails identified in paragraph 30 above. Mr Secretan said that he became tired of Mr Rees going on about UBS: he told Mr Rees that the one account was not the be all and end all: he could build a desk from other relationships. That was true. I think that the BGC witnesses underplayed the importance of UBS, and that Mr Rees over-played it.

1. It is clear that when Mr Seger told Mr Rees that he would not follow the desk to Nyon Mr Rees and his colleagues decided that in that event they would stay at RP Martins. It is clear that Mr Watt said enough to change their minds. He no longer works for BGC and was not called. Mr Clark who was closest to what Mr Watt might have said did not assist. Mr Rees did not refer to a promise as he now alleges until the desk was in trouble and he was threatened with a salary cut. Further, I think that I should generally treat his evidence with caution where it is unsupported. I deduce that the probability is that Mr Watt emphasised to Mr Rees that BGC was a powerful player and was in the Swiss forward market for the long term, that BGC had a lot of connections and strings to pull. He may well have referred to the possibility of a briefing by senior BGC executives – though I am unclear what they could have told Mr Seger that he did not already know. So Mr Rees was given a good deal of comfort and he was reassured that all would come good. He did not think that the responsibility for obtaining a line had passed from him (on whom as desk head it would normally have rested) to others in BGC. I am clear that nothing that Mr Watt said should have been taken as a legally binding promise, assurance or representation that a line would arrive. That is an exaggeration which developed as the threat to Mr Rees' salary grew.

1. I will next come to the provisions of the Swiss Codes, which were relied on by the parties. The Swiss Code of Obligations was originally promulgated in 1911. Article 337 is part of Title 10, headed 'The Employment Contract'. It provides (in the translation used on the Swiss Federal website):

"337.1 Both employer and employee may terminate the employment relationship with immediate effect at any time for good cause; the party doing so must give his reasons for doing so at the other party's request.

.2 In particular, good cause is any circumstance which renders the continuation of the employment relationship in good faith unconscionable for the party giving notice.

.3 The court determines at its discretion whether there is good cause. However, under no circumstances may the court hold that good cause is constituted by an employee being prevented from working through no fault of his own."

1. Article 349a is found in a section headed 'The Commercial Traveller's Contract'. As I have said, it is agreed that a Swiss court would apply it by analogy to the situation in the present case. It provides:

"349a.1 The employer must pay the commercial traveller a salary consisting of a fixed salary component with or without commission.

.2 A written agreement whereby the salary consists exclusively or principally of commission is valid only if such commission gives appropriate remuneration for the services of the commercial traveller.

.3 ……."

1. Article 328 is relied on by Mr Rees. It provides:

"328.1 Within the employment relationship, the employer must acknowledge and safeguard the employee's personality rights, must have due regard for his health and ensure that proper moral standards are maintained. In particular, he must ensure that employees are not sexually harassed and that any victim of sexual harassment suffers no further adverse consequences.

.2 In order to safeguard the personal safety, health and integrity of his employees he must take all measures …. ."

1. Mr Rees also relied on Article 2 of the Civil Code:

"2.1 Every person must act in good faith in the exercise of his or her rights and in the performance of his or her obligations.

.2 The manifest abuse of a right is not protected by law."

1. Mr Sethi put Mr Rees' case on 'good cause' under Article 337 entitling Mr Rees to determine his contract in two ways. First he submitted that the manner in which clause 3(a) of the employment contract was operated by BGC was in breach of its provisions entitling Mr Rees to terminate the contract. Second, he submitted that the reduced salary of CHF125,000 equivalent to approximately £105,000 was not 'appropriate remuneration' as required by Swiss law. I will take these in turn. I should state at the start that Mr Sethi accepted that, if BGC had operated the clause as he said it should have been operated, BGC would have been entitled to reduce Mr Rees' salary by no more than 37%, namely from CHF500,000 to CHF 315,000, or taking the sterling starting salary of £228,000, a reduction to £143,640. 37% was the reduction to Mr Storry's salary effected in August 2008.

1. But before I can come to the detail of the case advanced by Mr Sethi for Mr Rees it is first necessary to set out the effect of the evidence which I heard as to how brokers including desk heads are remunerated in the inter-dealer broking business. This is important background to the operation of the salary reduction provision, and what was happening cannot be properly understood without it. First desk heads are not normally remunerated in a way which differs from the other brokers on the desk. They are not paid anything specifically for being desk heads, though it may be that a desk head's share of commission may be higher to reflect his position: but I heard no evidence about that. It may well be that other brokers on the desk earn more than the head because they do more business. A broker is primarily remunerated by a share of the commissions which he earns for his company. The share will most usually be between one half and one third. At Tullett Mr Rees is on 2.5:1, so he takes 40%. Employment costs are deducted first. Sometimes, as provided in Mr Rees' contract with BGC, the bonus will be assessed for the desk with its distribution being discretionary. The bonus pool for the desk was there to be 60%. The broker will also have a salary and this acts as a kind of safety net. The parties expect that his share of commissions will exceed his salary, hopefully by a substantial amount, and that is what usually happens. But, if they do not, he has the salary. However, if he under-performs over a period – in Mr Rees's BGC contract 3 months, the salary can be reduced to reflect his actual earnings. To attract a broker to a new job or to ensure that he does not leave it may be necessary to offer him a cash payment. This can be done by a payment which is repayable if he does not serve out the term of his contract, or by a forgivable loan which is forgiven if he serves out the term of his contract. Where a broker is going to be involved in the setting up of a new desk, the salary may serve a different function for a limited period. For the desk will need to build its business and meanwhile the broker will suffer a dip in commissions. So to protect him against that he will be offered a high salary as part of his package. The salary will be guaranteed for a period, which will not usually be longer than a year and may well be shorter. The effect is that during that period the reduction clause will not be available to the employer, and that protects the broker during the start-up. But once that period is over the broker must earn his commissions: if he does not, his salary can be reduced. That was the risk Mr Rees faced once a year had gone by: he had until then to get the desk going and the commissions coming in. Lastly, when the market in which a broker operates is busy, he does well and, if he is in the top flight, he makes a lot of money for himself and for his employer. If the market is quiet, he is likely to do less well. He must ride the rough with the smooth.

1. It is important to have in mind that under the mechanism in the clause BGC could have cut Mr Rees' salary further to CHF90,000, and Mr Clark wanted to do so. Mr Robinson disagreed and wanted to fix the salary at the equivalent of £105,000, because that was a bit above that of Mr Storry, to reflect that Mr Rees was the desk head. Mr Robinson prevailed.

1. The first issue raised by Mr Sethi in his closing submissions was whether Mr Robinson had considered market conditions. That is the first factor referred to in clause 3(a)(ii). It is clear that Mr Robinson discussed market conditions with Mr Rees. Mr Robinson knew that the market was substantially down, perhaps by as much as 50%. Mr Robinson did not consider that in the circumstances market conditions required a higher salary than he was considering. He said that the driving consideration was the revenue position. This was a situation in which he was entitled to reach that decision. As I have said, in general a broker rides with the market, and Mr Robinson was entitled to conclude that the market situation did not mean that the reduction should be less. It was also a decision reached in good faith. There is no room for the operation of Article 2.1 of the Civil Code.

1. Mr Sethi also relied on the evidence of Mr Hochstrassser that it is a general principle of Swiss employment law that an employer may not shift his entrepreneurial risk to the employee. Mr Hochstrasser did not consider that the clause itself was in breach of that principle, and I refer to his evidence at Day 8.166 -172. I do not consider that the way the clause was operated here was in breach of it. It is important to have in mind that the background to remuneration in the industry and to the clause, which I have set out.

1. Clause 3(a) (iii) then refers to 'any additional responsibilities you undertake on behalf of the company'. It was initially sought to rely here on Mr Rees' duties as desk head. They, however, were not additional: they were provided for in the contract by the designation 'associate director'.

1. BGC was also required to consider 'any other factors that the Company considers relevant'.

1. The first 'other matter' relied on by Mr Sethi was the difference in responsibilities between Mr Rees and Mr Storry, and the difference in the reduced salaries of only £5,000. Mr Robinson of course had Mr Storry's position in his mind. It is of some importance that Mr Storry's reduced salary was higher than it might otherwise have been because, unlike Mr Rees, he had 'volunteered'. Mr Robinson did consider that he should not reduce Mr Rees's salary below that of Mr Storry (which the clause's formula would have allowed him to do), and that it should be a bit higher. He had considered whether Mr Rees' salary should be lower because unlike Mr Storry who had agreed to take a cut, Mr Rees had staved off the evil day. He decided in favour of Mr Rees that he should not. I have set out that in the industry a desk head is in no special position. These were decisions which Mr Robinson made in good faith, and he was entitled to conclude as he did.

1. Mr Sethi also relied on the position of Mr Storry in another way, namely inequality of treatment. He submitted that any reduction should not have been more than the 37% reduction which Mr Storry submitted to in September 2008. Mr Storry had a much lower fixed draw, the starting point, than Mr Rees. Mr Rees had a high fixed draw, which he had been unable to justify. BGC was entitled to effect a much greater reduction in Mr Rees' case. There was no requirement that the two employees should have their salaries reduced by the same percentage.

1. Mr Sethi also relied on evidence that Mr Rees brought in substantially more commission than Mr Storry. Clause 3(a)(ii) takes the commissions generated by the desk as a whole rather than the individual broker. There is a conflict here with clause 3(a)(iv), which refers to the commissions generated by Mr Rees. Mr Rees was strongly of the view that the desk was to be treated as a whole on the basis of 'one team, one dream'. He strongly opposed suggestions that the brokers should put their names on their deals so it could be seen who had done what. It is likely that clause 3(a)(ii) was drafted to reflect that approach. The more usual approach is, as I understand it, to take the commissions generated by the individual. I suspect that the change to the usual drafting was not carried through into clause 3(a)(iv). Clause 3(a)(ii) set out the agreement between the parties and BGC was entitled to proceed on the basis of it without having regard to the commissions generated by individuals. I should say that I accept Mr Philippin's evidence in cross-examination that, while there is no general principle of equal treatment of employees under Swiss law, a difference in commissions earned could be a factor that might be taken into consideration under the clause: Day 8.36,37. But, given how the clause is worded, it was not something which Mr Robinson was bound to take into account.

1. Mr Sethi also relied on the fact that Mr Larsen's salary was not reduced. However, by March 2009 Mr Larsen was doing very little work and was, as I put it in court, at the departure gate. A different solution had to be found in his case.

1. The next matter was the lack of the UBS Zurich line taken in the context of what Mr Rees had been told by Mr Watt. Mr Robinson had been repeatedly told by Mr Rees that the desk's troubles were in large part due to the absence of the line and the failure of BGC's senior management to keep their promise. Mr Robinson was a late arrival on the scene and Mr Watt had left. Mr Robinson made no enquiries as to what Mr Watt might have said. Mr Robinson was sceptical as to the alleged promise, rightly as I have held. But I have found that it is probable that Mr Rees had been given substantial comfort falling short of a promise, as I have set out. Mr Robinson also thought that Mr Rees exaggerated the problem which UBS had caused. I consider that he was right about that. He thought that there were considerable problems elsewhere, namely in Mr Rees' management of his desk and Mr Rees' own performance, and since he arrived in August 2008 Mr Robinson had done what he could to remedy this, as the paperwork relating to his meetings with Mr Rees shows. The clause obliged Mr Robinson to take into account factors which he considered relevant. He did not consider that the UBS situation was a factor which he should take into account by reducing Mr Rees' salary by rather less. That was a conclusion reached in good faith. I do not consider that there was a breach of the clause. I should add that all this is in the context of an attempt by BGC to turn loss caused by an excessive salary burden into profit.

1. Mr Sethi further relied on Mr Rees' financial troubles as a reason for a lesser reduction. Mr Robinson took the view that these were of Mr Rees' own making and the company should not take account of them. Mr Rees had had many months in which to control his finances, and £105,000 pa is hardly penury. Mr Robinson said that he considered it 'a reasonable and perfectly liveable level'. There is nothing in this complaint.

1. I should make plain that I do not accede in any way to the suggestion that Mr Rees did not have adequate notice of what was going to happen. He had had warnings enough and had declined to put forward his own figure. If he had wanted to, he could have done the calculation. What was in his mind was his financial position coupled with his desire to get out of his contract. He had also been given more than enough opportunity to explain why his performance was below target – the concluding requirement of the clause. It is also clear that having successfully staved off the evil day for so long Mr Rees could not expect anything other than an immediate reduction: he had had more than the period of grace which he had asked for in his e-mail to Mr Secretan of 3 September 2008.

1. Mr Sethi sought to rely through Mr Hochstrasser on Article 328. I do not think that anything happened here which might come within the ambit of the Article. Mr Philippin said of 'personality rights': 'It is a very wide concept. It is a general obligation of the employer to take into account the employee as a person, to respect the employee as a person.' – Day 7.145. Mr Hochstrasser agreed: Day 8.151. The sort of thing that the Article is dealing with is demonstrated by its reference to sexual harassment. An example in the inter-dealer broker field of where the Article might have been relied on had Swiss law applied is Horkulak v Cantor Fitzgerald International [2003] IRLR 756, where the employee was subjected to verbal abuse. Mr Hochstrasser said that the size of the reduction was a breach of the Article. If it was something which BGC was contractually entitled to do, and if the resulting salary was 'appropriate remuneration' looking by analogy to Article 349a.2, I do not see how that can be so.

1. I conclude that BGC was entitled to operate the salary reduction provision as it did subject to the second way in which Mr Rees' case was put, namely, whether the resulting salary was 'appropriate remuneration' as that phrase is used in Article 349a.2.

1. Mr Philippin and Mr Hochstrasser were agreed that a Swiss court would apply Article 349a.2 by analogy in this case, and that a failure to pay 'appropriate remuneration' would amount to a good cause for Mr Rees to terminate his contract pursuant to Article 337. There was a dispute as to whether to give rise to good cause the salary paid must be 'substantially' below what the court finds to be appropriate remuneration. But as the court's determination of the latter cannot in the nature of things be exact, some margin is required.

1. Mr Philippin and Mr Hochstrasser were also agreed that the following factors were relevant in determining the 'appropriate remuneration': commitment of the employee to his work, age, seniority, training and social commitments and the usage in the trade. It is to be considered on a case-by-case basis.

1. Having read the statements of the two, and considered the Swiss decisions to which they refer I think there is a danger of looking at what should be a comparatively simple question in too technical a way. I think that the issue is whether the remuneration was appropriate for this man doing this job. It must enable him to live decently that is decently bearing in mind the job he does. A senior company executive is entitled to a more 'decent' level of living than a factory worker. The job and the sort of salary which is commonly paid must be of high importance: I refer to Mr Hochstrasser's evidence at Day 9.9 and .17. The sort of salary commonly paid apparently comes in under 'usages of the trade'.

1. I have translations of only some passages from the Swiss decisions which are relied on, and it would be helpful also to know the factual situations with which the courts were concerned. It may nonetheless be helpful to set them out in part:

"The idea at the root of Article 349a.2 is to avoid the employer exploiting the traveller by exclusively or principally promising commissions which subsequently prove to be insufficient (….). A provision is appropriate if it offers the traveller earnings that will enable him to live decently, considering his years of service, his age and social obligations (….). The traveller's pay depends very closely on the conditions that the employer fixes in order to be able to negotiate or enter into business. We must also take into account, as a guideline, what is usual in the industry ['des usages de la branche'] (….)."

"The reimbursement is reasonable when it enables the travelling salesman to lead a decent lifestyle bearing in mind his work assignment, his education, the length of his employment, his age, and his social obligations. The adequacy of the salary will closely depend on the framework conditions stipulated for the travelling salesman by the employer to enable him to obtain business resulting in commission. Possible nuances particular to the sector can then be taken into consideration."

"The appropriate nature of the remuneration of the commercial traveller is judged on a case-by-case basis. A provision is appropriate if it offers the traveller earnings that will enable him to live decently, considering his working commitment ['Arbeitseinsatz' – perhaps here 'job assignment' meaning what the job involves], his training, his years of service, his age, and his social obligations (….). The traveller's pay depends very closely on the conditions that the employer fixes in order to negotiate or enter into business (….). We must also take into account what is usual in the industry [des usages de la branche]".

1. I have set out the effect of the evidence which I heard as to the manner in which brokers are remunerated. With two exceptions I did not hear evidence as to the level of the salary element. I did hear that brokers sometimes ask that the salary be set low so it does not come into account, and they are paid simply on a commission basis: for they may prefer to avoid the risk of reduction. The first exception was that Mr Rees incorporated into his witness statement the figures relating to the contracts entered into by the 13 Tullett brokers who signed forward contracts with BGC in early 2009. These brokers had been chosen by Mr Verrier because of their particular ability and the packages which they were offered were exceptional. Nonetheless the salaries in six cases were between £125,000 and £90,000. The second exception is that Mr Rees' salary at RP Martin had been £130,000. That only emerged in cross-examination.

1. Mr Philippin introduced figures from the Swiss Federal Office of Statistics as to the average gross yearly salary paid in the 'financial intermediation services industry' with a number of further indicia. The average was CHF144,000. Mr Hochstrasser said that the court would not consider statistical information and never had. I do not see why relevant and reliable statistical information should not be used in the court's task. But given the way in which inter-dealer brokers are remunerated, I think that it is of limited help here. It certainly does not suggest that Mr Rees' reduced salary of CHF170,000 was too low.

1. It was Mr Hochstrasser's view that the salary of CHF170,000 was not appropriate remuneration. He stated as a fact that the earnings of inter-dealer brokers were high. That is the case if the broker is successful. But once a broker is out of any guaranteed period – here, with Mr Rees, his first year, he is dependent on success, here the success of the desk as a whole rather than on him individually. I do not think Mr Hochstrasser had understood how remuneration in the business commonly works. I heard evidence as to that, and I am satisfied that if a Swiss court was dealing with the issue it would regard such evidence as highly important in the circumstances. Mr Hochstrasser also suggested that fixing the contractual salary at £228,000 indicated that this was the average that Mr Rees was expected to earn. It was no doubt hoped on both sides that the desk's commissions would justify that high salary, but that in no way prevents a much lower salary being appropriate if the desk did not succeed.

1. I do not think that anything here turns on seniority or years of service. I have dealt sufficiently with the position of desk head and pay. As to commitment, if it means the commitment which the employee gives to his job, Mr Rees' commitment can at the best be described as patchy. I refer to his absences and his failings as a desk head. Neither Mr Philippin nor Mr Hochstrasser could put much flesh on this. I do not accept that the fact that Mr Rees had got himself into financial difficulty through extravagance can be relevant.

1. As 'a pre-condition set by the employer' Mr Hochstrasser relied on the failure of BGC to ensure that a line was put in by BGC within 3 to 6 months. I have held that there was no contractual undertaking by BGC to that effect. I accept that the lack of UBS Zurich as a client was important. But it was far from the only factor in the desk's failure. Credit Suisse, the second player in the Swiss forward market, was not a client either. If the only negative factor affecting the desk had been UBS, the desk's performance should have been quite different to what it was. I am far from satisfied that the comfort which Mr Rees received in connection with UBS before he signed his contract is something which in all the circumstances made a salary of CHF170,000 inappropriate.

1. I conclude that the salary of CHF170,000 was 'appropriate remuneration'. So the two lines of attack on the reduction of Mr Rees' salary fail. He had no good ground to determine his contract. It is most unfortunate for him that in April 2009 he received advice from Gross & Associes that the salary reduction clause was void, that the reduced salary was unlawful and that he was entitled to determine his contract.

1. BGC assert that even if its conduct in reducing Mr Rees' salary was a 'good cause' under Article 337, his right to terminate had to be exercised within two or three days after he acquired knowledge of the cause for termination. In his witness statement Mr Philippin relied on the decision of the Federal Tribunal of 28 August 2004, X.AG c.A and Caisse de chomage B, case 4C.348/2003. This was a case where an employer had terminated an employee's contract sometime after it knew of misconduct by the employee. A translation of only a short passage of the judgment was provided:

"A party who terminates an employment contract and invokes just reasons has only a short period of reflection in order to communicate the immediate cessation of employment relations; otherwise, one can conclude that the employment relations may continue until the end of the ordinary term of the contract (citation omitted). A general period of two to three working days for reflection is presumed to be appropriate; an extension of several days is only admissible on an exceptional basis and according to the particular circumstances of the individual case (citation omitted)."

But it seems necessary to me to read on because the court then expanded on what it had said:

"It is the same when the requirements of ordinary economic life, especially the questions of organisation inherent to moral persons, require longer extensions. Such is the case if the dismissal decision is to be made by a body with several members to which time must be given necessary for the expression of its will. It is also the case where the employer is obliged, or judges it appropriate, to discuss the intended dismissal with a worker's representative (….). One can also quote the situation in which the unfolding of the facts requires clarification ( ….). With this intention, the Federal Tribunal held that one must distinguish between the situation in which the suspicions, clear in themselves, need simply to be confirmed or shown unjustified, from the situation in which the facts are obscure and need complicated investigations, or the breaches come to light bit by bit; ….. ."

1. Mr Hochstrasser's view of the law was as follows:

"There are no strict rules with regard to the time limits applying to a termination according to Article 337.1. How long a party is allowed to wait to file its termination cannot be stated generally, but must rather be decided by carefully examining the circumstances of each individual case. The key question remains whether the reason leading to the termination constitutes a "valid cause" in the legal sense of Article 337.1. As stated before, this is only the case when the relationship between the parties is disrupted to an extent which makes the immediate termination appear as the only reasonable solution. The fact that a party hesitates to file its termination, has been interpreted by the Swiss Courts as an indication that the continuation of the employment relationship is reasonable, since otherwise the termination would have occurred more rapidly. [I insert that it seems to me that Mr Hochstrasser is here referring to Article 337.2 which states that 'good cause' is 'any circumstances which renders the continuation of the employment relationship in good faith unconscionable for the party giving notice'.] However the two to three day restriction has typically been applied in cases where an employer was entitled to dismiss his employee for valid reason. Evidently the case at hand is the other way round. Thus it is clear to me that a Swiss judge would pay respect to the fact that an employee needs to consider very carefully in advance, whether or not to terminate his employment (citation)".

Mr Hochstrasser then gave his view that as in the interval between 12 March and 6 April Mr Rees was protesting against the reduction and was seeking a compromise with BGC, he should not be held to have forfeited a right to terminate.

1. The first point is that there is no legislative provision imposing a time bar and the time limit appears to arise from the decisions of the courts. Second, from the little material which I have, the basis appears to be that, if the party who may perhaps terminate does not do so quickly, this will indicate that the problem is not such as to make the continuation of the contract 'in good faith unconscionable', the words in Article 337.2. In colloquial language delay tends to show that the injured party can still live with the contract. As I have set out, following the meeting on 12 March Mr Rees protested vigorously against the reduction. He got no response save the letter of 23 March confirming the reduction. That did not refer to his e-mails. He tried to negotiate an amicable parting through Mr Clark. When that failed he took legal advice and immediately terminated the contract. I have in mind the seriousness for an employee of terminating his contract, and the difficulty in which Mr Rees found himself in knowing his legal rights. I conclude that Swiss law would not hold that he had delayed so as to show that he could continue with the contract, and that he had not delayed so that he had become barred from terminating it.

1. I have headed this 'Damages against Mr Rees', but it is also very relevant to any claim against Tullett for inducing breach of contract.

1. BGC has had great difficulty in formulating any claim for damages. The history is as follows:

(a) When BGC commenced proceedings against Mr Rees and sought an injunction against him in June 2009 it asserted that the breaches Mr Rees might commit of his post termination restraints could cause the 'loss of multiple streams of client revenue … and result in over a million dollars in annual loss' – Mr Robinson's first witness statement, paragraph 36. In his second witness statement of 14 July Mr Robinson asserted that breaches of confidence by Mr Rees meant that the claim had considerably expanded.

(b) BGC applied for a split trial but that was refused and BGC were ordered to serve a provisional schedule of loss by 12 February 2010.

(c) BGC served a preliminary schedule of loss on 26 February 2010. The claim for net lost revenue in respect of the unexpired term of Mr Rees' contract was $620,000. This was calculated as a multiple of Mr Rees' fixed draw or salary.

(d) On 19 November 2010 BGC served a schedule of loss. The claim for the balance of Mr Rees' contract on the basis that he was seconded to London was for $387,382. This was calculated as a multiple of Mr Rees' projected future salary. The claim for lost revenue for breach of the restriction against competition and on solicitation was for £139,414 or £304,821 on a Wrotham Park basis.

(e) On 3 March 2011 the defendants applied to strike out the action with an alternative of an order for the disclosure of specific documents relating to damages. Andrew Smith J. held that the schedule of loss was entirely inadequate for its purpose and ordered that it should be replaced.

(f) The amended schedule of loss was served on 16 March 2011.

1. In its amended schedule of loss BGC advanced the following claims;

(a) For loss of profits on the basis that Mr Rees would have been seconded to London on 1 May 2009 for the balance of his contract, £136,625.

(b) Alternatively, as (a) save secondment on 1 August 2009, £138,710.

(c) Alternatively, as (a) but returning to Nyon after 6 months, £192,444.

(d) Alternatively, as (b) but returning to Nyon after 6 months, £186,918.

(e) Alternatively, Mr Rees would have been seconded as in (a) or (b) and after 6 months BGC would have negotiated a release with Tullett.

(f) Alternatively, Mr Rees would have remained in Nyon, £209,509.

(g) Repayment of the forgivable loan, £144,525.

(h) Alternatively to the claims for loss of profit, Wrotham Park damages based on a negotiated release to Tullett £300,000.

(i) Wrotham Park damages for the period of the post-termination restrictions, 6 months, £100,000.

The figures at (a) to (f) are as reduced under cover of a letter dated 23 May 2011. No claim other than for Wrotham Park damages is made for breach of the post termination restrictions. No claim is made for misuse of confidential information save that under pressure from me in his closing submissions Mr Cohen said that he was instructed to ask for nominal damages.

1. It is the case of Mr Rees and Tullett that the damages claims have been manufactured to support the action, which was a counter to Tullett's action against BGC, and that BGC has actually suffered no loss as a result of Mr Rees' termination of his contract.

1. In so far as the assessment of the claims for loss of profit are concerned it is not contended that there is any difference between Swiss and English law and no question of applicable law arises. However, the defendants assert that Swiss law is applicable to determine whether the claimant, BGC Switzerland, can recover losses incurred by BGC London, and as to whether Wrotham Park damages are recoverable. The defendants say that in each case the answer is no. BGC asserts that under Swiss law in each case the answer is yes, but that English law should apply. There is a dispute as to the position under English law in each case.

1. Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 was a case where instead of making an injunction against the defendant for breach of covenant the court awarded damages under Lord Cairns' Act and held that the damages should be what the claimants might reasonably have demanded for a relaxation of the covenant. The principle is now very well-established where an injunction is refused. I am doubtful whether it is helpful to refer to the assessment of damages by reference to a release fee or licence in other situations as Wrotham Park damages. For the approach under Lord Cairns' Act and the approach in other situations must be rather different. But it seems to be the practice.

1. My basic approach to the loss of profit claims must be to compare the financial position of BGC as it is with the balance of the contract unperformed with that position if Mr Rees had not terminated the contract. So the first question is what would have happened if Mr Rees had not terminated his contract.

1. The Swiss forward desk in Nyon had collapsed. Apart from Mr Rees the only survivor was Mr Storry. The communications between Mr Clark, Mr Farrington and Mr Verrier show that there was a strong case for BGC to cut its losses and let Mr Rees go, extracting from him what BGC could against the loan. However Mr Farrington had worked with Mr Rees before and considered him to be a good broker. When he heard from Mr Robinson that Mr Rees was moving his family to England and intending to commute to Nyon, he saw an opportunity to enlist him for the new BGC G10 desk in London. Mr Rees was reluctant to come to London to discuss this and was effectively ordered to make the journey. As he set out in an e-mail on 24 March 2009 Mr Verrier saw two reasons to retain him at BGC. One was that Mr Rees would be a suitable and useful broker on the new G10 desk in London. The other was that Tullett had named Mr Rees as a disgruntled BGC employee in attempts to get Tullett brokers who had signed forward contracts with BGC not to go to BGC. Because of that Mr Verrier did not want any compromise agreed to with Mr Rees: he wanted to keep him in BGC's employment. In the same e-mail he said that the offer to transfer to London would be at £125,000 a year on his existing terms and conditions. In an e-mail of 19 March he had said that the £125,000 should be guaranteed for 6 months and Mr Rees should thereafter be on a 2:1 ratio of commissions earned to remuneration. An e-mail of 19 March shows that was to be on a 3 monthly basis with 3 months' notice. These were the terms which were on the table when Mr Rees came to London on 25 March for meetings with Mr Farrington and Mr Verrier. He was not attracted to the proposal. Mr Verrier therefore made him an offer that, if he came and worked at full capacity for six months and at the end of it felt the same, he would be released from his contract. That was Mr Farrington's evidence, and it is as Mr Farrington set out in an e-mail on 1 April 2009. Mr Verrier said that if Mr Rees agreed to the offer it would be put in writing. Mr Rees apparently understood that the offer would be put in writing before he stated his position, but that was wrong. An issue arose at the trial whether the release from the contract included the release of the forgivable loan. I think that the answer is clear. The obligation to repay the loan was part of the contract and so was to be released as part of the release. That accords with the evidence given by Mr Robinson at Day 3.72. Further, in practical terms, if Mr Rees was not released from the loan, he would not be able to leave. For, as BGC knew, he did not have the means to repay it. It also followed from Mr Rees' lack of money, that if the loan was released, BGC was not giving up very much. Mr Verrier did not give evidence. I deduce from the circumstances that the second reason he gave in his e-mail of 24 March, namely reluctance to release a dissatisfied employee in the course of his battle with Tullett, was a powerful factor in how he handled the situation. It is significant that this part of the e-mail was initialled redacted on the ground of legal privilege, something which is hard to understand.

1. If Mr Rees had not terminated his contract, the offer made in London on 25 March was one which I consider he would have been bound to accept. It got him out of Nyon. It got him a gross salary which was better than he was due to get in Switzerland. It may have been less attractive after tax, but England is cheaper than Switzerland and he would not have had to commute and keep two establishments. If he accepted the offer he had only to work for BGC for 6 months and then could leave. Mr Rees had built up a strong dislike of BGC and I am satisfied that when the 6 months were up he would have left. The deal advanced by Mr Verrier would have had very real advantages for BGC in that it would have kept Mr Rees within the BGC fold for at least 6 months and it solved the problem of what to do with him. Despite BGC's evidence to the contrary I found the scenario that he would remain on his own in Nyon working remotely from the new G10 desk quite unrealistic in all the circumstances. Under his contract he could only be seconded to London for 6 months. Mr Storry transferred to London that summer and is still working for BGC on the G10 desk.

1. I therefore conclude that, if Mr Rees had not terminated his contract he would have worked for BGC in London for 6 months and would then have left in accordance with Mr Verrier's offer. This scenario therefore sets the limits of BGC's claim for lost profit, namely a six month period followed by Mr Rees' departure and the forgiving of the loan.

1. It is important whether BGC London would have entered a new contract with Mr Rees rather than treating the transfer to London as a secondment under his contract with BGC Switzerland with varied terms. Had Mr Verrier's offer been accepted the mechanism would have been considered by BGC's legal department. But that never happened. I do not know how Mr Storry's transfer was dealt with. If there would have been a new contract rather than a secondment under the existing contract, it is hard to see how BGC Switzerland could have any claim for lost profit. It is hard to see how the package which Mr Verrier offered could have been grafted onto Mr Rees' Swiss contract. It is also hard to see how the Swiss contract could have operated if he was working on the G10 desk in London and the Nyon desk had ceased to exist. All points to a new contract as the probability. There is no contemporaneous mention of secondment.

1. The sums claimed in respect of six months working in London in the third and fourth ways in which BGC put its loss of profit claim, (c) and (d) in paragraph 84 above are £28,123. In order to earn that profit BGC would have lost the right to recover the forgivable loan (claimed in the sum of £144,525). For Mr Rees would have left at the end of that period, and the loan would have been forgiven. For reasons to which I will come, in my judgment BGC is entitled to recover the whole of that sum, rather than part as argued for Mr Rees. But it is to be set off against any claim for lost profits. I do not accept Mr Philippin's evidence that under Swiss law the two matters are to be considered separately, the one having no bearing on the other. I have no hesitation in accepting the contrary evidence of Mr Hochstrasser. So on this basis BGC cannot show any loss.

1. Mr Robinson was the BGC witness who in his witness statement dealt with loss. It is remarkable that he had no input into BGC's amended schedule of loss. Although Mr Storry is not as good a broker as Mr Rees, it is striking that up to the end of 2010 Mr Storry has not covered his costs on the G10 desk, let alone met his ratios. On 3 June 2009 BGC agreed to restore Mr Storry's salary to £158,500. It would have been difficult for BGC not to have also adjusted Mr Rees' salary. BGC's calculation does not take account of the cost of retaining Mr Rees' benefits package. Mr Robinson agreed that a cost of £908 per month was about right. The costs of secondment would have to be met. Mr Storry's costs were over £12,000. The allowance for travel and entertainment was too low. Desk overheads of about £2,500 should have been included. There would have been an inevitable dip in earnings following the move as Mr Rees established himself in London. Further, the G10 desk did not open until 1 July and then made a very slow start. If Mr Rees had been in London with Mr Storry, commissions earned by Mr Storry on Mr Rees' lines would have been earned by Mr Rees: credit is required. I consider that when these matters are taken into account BGC has failed to show by some way that it suffered any loss in respect of a six month period. That is apart from the point as to the forgivable loan.

1. Because of the conclusions which I have already reached as to loss, I will deal shortly with the point that the loss of profit was suffered by BGC London and not by BGC Switzerland. BGC's case was first put forward on the basis that Mr Rees' earnings in London would have been booked to BGC Switzerland and so the loss was that of the Swiss company. That was abandoned in correspondence, and must have been put forward without foundation. The case was then put on the basis that, as a matter of either Swiss or English law, BGC Switzerland could claim for losses suffered by BGC London while Mr Rees was seconded under the Swiss contract. I have held that the probability is that Mr Rees would have entered a new contract with BGC London with the consequence that his contract with BGC Switzerland would have been discharged. The claim by BGC Switzerland to recover BGC London's alleged losses depends on a secondment and the Swiss contract continuing. If there had been a secondment, I would have held that under Swiss law it was open to BGC Switzerland to claim BGC London's loss: Article 112 of the Code of Obligations is of assistance to BGC here. I would have held that under English law the position was the same: I refer to McAlpine Construction ltd v Panatown Ltd [2001] 1 AC 518. The question of which law is applicable is not an easy one, and I was addressed on it but briefly: I put forward no view.

1. In the alternative to its claim for calculated loss of profit BGC claims damages on a release fee or Wrotham Park basis. It would seem that this could only be relevant to the claim against Tullett Prebon as it is with Tullett Prebon that the hypothetical negotiation supposed by BGC takes place. Further, it is Tullett which is alleged to have made the substantial gain from employing Mr Rees rather than Mr Rees.

1. I have concluded that in the present situation release payment damages are not available either under Swiss law or English law. The concept is unknown to Swiss law save in the patent field. I preferred the evidence of Mr Hochstrasser as to why a Swiss court would not develop the law to introduce the concept to that of Mr Philippin. Mr Philippin's evidence really came to saying no more than it was a possibility. In English law three cases are of particular relevance: AG v Blake [2001] 1 AC 268, World Wide Fund for Nature v World Wrestling Foundation [2008] 1 WLR 445 and van der Gaarde v Force India [2010] EWHC 2373 QB. The situation in the present case is one in which the court will ordinarily assess the loss of profit as best it may and award a figure. The assessment may or may not be difficult depending on the evidence which is available. But the court is used to that, and can arrive at a figure just as it can, for example, in the difficult situation where it has to assess the loss of future earnings of a seriously injured teenager. The intended function of the claim here is to avoid BGC's problem that it cannot show that it has suffered any loss because it has not in fact done so. In my judgment the award of release payment damages is not available as a substitute for conventional damages to compensate a claimant for damage he has not suffered. Nor should it be used to award a larger sum than a conventional calculation of loss provides.

1. In accordance with clause 3(d) (ii) of Mr Rees' contract the loan became immediately repayable when he wrongly terminated his contract. The net figure is £144,525. It was agreed that if he had been justified in terminating, the loan would not have been recoverable. Mr Hochstrasser's view was that under Swiss law the loan was either to be treated as a component of Mr Rees' salary, or as a bonus or gratification, these having the attribute of being discretionary. Mr Hochstrasser said that because it was not discretionary, it was to be treated as salary. As salary it was to be treated as having been earned in proportion to the amount of the term of the contract which Mr Rees had served: so only the balance was recoverable. Mr Philippin stated that the contract was clear as to how the clause should operate and there was nothing inconsistent with Swiss law in its provisions. His view was that the parties were free to agree on what he called 'milestone payments' and the law would give effect to their intention. I prefer the reasoning of Mr Philippin, and I do not think that the cases cited by Mr Hochstrasser supported his conclusion on this point. So I hold that BGC is entitled to recover the whole of the loan.

1. Clause 15.2 of the terms and conditions incorporated into Mr Rees' contract was as follows:

"15.2. …….. you shall not during your employment or for a period of six (6) months after its termination:

15.2.1 solicit or entice away any client or counterparty of the Desk … with which or whom you have had material and/or regular dealings … any time during the twelve (12) months prior to its termination; ['the non-solicit covenant'].

15.2.2 in competition with the Restricted Business, seek to procure orders from, deal with or carry on business with, or transact business with, any client or counterparty of the Desk …. with which or whom you have had material and/or regular dealings in the course of your duties or, where this provision would apply after your employment ends, any time during the twelve (12) months prior to it termination; ['the non-deal covenant'].

15.2.3 ….. become interested in (as …employee …) any business activity that is in competition with the Restricted Business." ['the non-compete covenant'].

1. Clause 15.3 defined Restricted Business:

"15.3 "Restricted Business" shall mean the business or any part of the business and which in either or both case(s):

15.3.1 is carried on by the Company or any Associated Company at the date of termination of your employment;

15.3.2 was carried on by the Company or any Associated Company at any time during your employment or, where the relevant provision would apply after your employment ends, at any time in the twelve (12) months immediately preceding the date of termination of your employment; or

15.3.3 ………

and which you were materially concerned with/worked for or had management responsibility for (….) in either case at any time during your employment or, where the relevant provision would apply after your employment ends, any time during the period of twelve (12) months immediately prior to its termination."

[I should make it clear that the latter words beginning 'and which you were materially concerned with' are not part of 15.3.3 but are to be read with each of the sub-clauses 15.3.1 to 15.3.3.]

…..

The restrictions entered into by you in paragraph 15 are valid and enforceable in Switzerland, UK, Italy and France.

1. In order to be enforced in England a restriction on post termination employment must be enforceable under both its proper law and English law. The need for the latter is because the relevant English law is founded on public policy and so Article 16 of the Rome Convention applies. I refer to Dicey, Morris & Collins on the Conflict of Laws, 14th Edition, paragraph 32-234, and to Duarte v Black & Decker Corporation [2007] EWHC 2720 (QB) at paragraph 63 in particular. The submissions of the parties concentrated on Swiss law.

1. The relevant Articles of the Swiss Code of Obligations are:

"Article 340

1. An employee …. may give the employer a written undertaking to refrain from engaging in any activity that competes with the employer once the employment relationship has ended and in particular to refrain from running a rival business for his own account or from working for or participating in such a business.

1. The prohibition on competition is binding only where the employment relationship allows the employee to have knowledge of the employer's clientele or manufacturing or trade secrets and where the use of such knowledge might cause the employer substantial harm.

Article 340a

1. The prohibition must be appropriately restricted with regard to place, time and scope such that it does not unfairly compromise the employee's future economic activity; it may exceed three years only in special circumstances.

1. The court may at its discretion impose restrictions on an excessive prohibition of competition, taking due account of all the circumstances; in particular it will have due regard to any consideration made by the employer.

Article 340b

1. An employee who infringes the prohibition of competition must provide compensation for the resultant damage to the employer.

1. ….

1. ....

Article 340c

1. The prohibition of competition is extinguished once the employer demonstrably no longer has a substantial interest in its continuation.

1. The prohibition is like wise extinguished if the employer terminates the employment relationship without the employee having given him any good cause to do so, or if the employee terminates it for good cause attributable to the employer."

1. It was agreed that Swiss law differs from English law in two particular respects. First the court has power to write down a restriction to what it regards as reasonable. The court is not limited to simply excising passages – the English 'blue pencil rule'. So if a covenant is expressed to cover the whole of Europe, the court can limit it to such countries as are appropriate rather than holding the covenant void. Second, the validity of the covenant is to be judged having regard to the situation in which its enforceability has arisen: a Swiss court does not only look at the situation when the contract was made. Under Swiss law a provision put forward by one party for its benefit is to be construed against that party where there is an uncertainty – the English contra proferentem rule.

1. The first issue arising in respect of the non-compete and non-deal covenants – clauses 15.2.3 and 15.2.2, is whether in working on the Tullett forward cable desk (dollar sterling forward trading) Mr Rees was in competition with the BGC Switzerland forward Swiss franc desk. All parties agreed that 'the Restricted Business' for the purpose of the clauses was the forward Swiss desk. The issue was whether this desk was in competition with Tullett's forward cable desk. Because of the Swiss desk's inadequate revenue in Swiss francs the desk had been instructed to deal in other currencies as the occasion arose. In consequence the desk had carried out a very small amount of trading in forward cable. In the last year of Mr Rees' employment it amounted to 0.41% of the desk's revenue and 1.4% of Mr Rees' revenue. This was not business which the desk obtained because it was specifically seeking forward cable business but was incidental business which the desk had 'bumped into' to use Mr di Palma's vernacular – meaning that a trader who normally trades with a desk in one product had asked for help in placing an order for another on a one-off basis. I do not consider that on the basis of this minimal trading in forward cable it can properly be said that the two desks were in competition with one another.

1. If I was wrong about that, I would nonetheless hold that to prevent Mr Rees from working on Tullett's forward cable desk would be 'an unfair compromise of Mr Rees' future economic activity' – the words of Article 340a. For at that point in time BGC really had no forward cable business. That was why it tried to recruit the whole of Tullett's forward cable desk. That is a further answer to the claim under clause 15.2.3 and also to that under clause 15.2.2. As to the latter I do not consider that BGC had a protectable interest in preventing Mr Rees from doing business in forward cable with banks and their employee traders with whom he had done business in Swiss francs. That is again because BGC had no business in forward cable.

1. BGC's case in respect of clause 15.2.1, the non-solicit clause, has two aspects. First, Mr Rees should not have solicited clients of the Nyon desk to trade in forward cable on the Tullett desk. Again I do not consider that under Swiss law BGC had a protectable interest in preventing this, because it did not trade in forward cable. Further, the dealings on the Nyon desk must be 'material' dealings. As they were not in forward cable they were not material. Lastly, I am not satisfied that clients were solicited by Mr Rees. That is because when he came to the Tullett he was allocated existing lines by Mr di Palma, who introduced him to the traders concerned.

1. The second aspect of BGC's case relates to specific trades in Swiss francs, which Mr Rees carried out despite having been instructed by Mr Potter that he should not trade in Swiss francs because Tullett had its existing Swiss forward desk. There were six trades and the total commission was £2,094. I accept that these trades came his way without solicitation by him and so there was no breach of clause 15.2.1. But the dealing was a breach of clause 15.2.2 - whereby he agreed not to transact business with clients he had dealt with at BGC. I accept that BGC here had an interest, its client connection, which it was entitled to protect, and that the protection provided by the clause was reasonable. For inter-dealer broking is international, and Mr Rees could trade in Swiss francs with his former clients with whom he had dealt at BGC wherever he was situated. If he had in effect taken his connections from BGC to a new employer, he could have done BGC appreciable harm. BGC was entitled to seek reasonable protection against that. I do not think that the fact that the trading which was in fact carried out was on a small scale can affect the validity of the clause in Swiss law. What is important is whether there was a "possibility of the employer to suffer an appreciable loss" – Mr Hochstrasser's fourth witness statement at paragraph 132.

1. My conclusions as to lack of protectable interest are borne out by the fact that BGC cannot show any damage by way of loss of income or profit caused by the breaches of covenant of which it complains. The sole claim that it makes is for release payment or Wrotham Park damages. For the reasons I have stated in respect of the claim for wrongful termination of Mr Rees' contract, in my judgment such damages would not have been available to BGC under either Swiss or English law.

1. As mentioned, on 20 March 2009 Mr Rees sent Mr Potter the names of fourteen traders and the ten banks for whom they worked. This may be compared with the list of fifteen banks which Mr Rees sent to Mr Farrington on 19 March under the heading 'I have relationships with the following banks'. The context in which the list was sent was Mr Potter's uncertainty as to how Mr Rees would cope with forward cable having always been a forward Swiss broker. So he asked Mr Rees to send him a list of the traders whom he knew in the forward cable market with whom he thought he might do business. The list was the result. It was not a list of the Nyon desk's clients nor of those clients of the desk with whom Mr Rees dealt. There was obviously a considerable overlap. In naming the names he did Mr Rees was trying to sell himself. I do not consider that in answering Mr Potter's question Mr Rees was disclosing information that was confidential to BGC. I would also accept the view of Mr Hochstrasser:

"It would not be in accordance with Swiss law if an employee by virtue of his duty to act in good faith is forbidden from informing a future employer about his knowledge of the market, in circumstances where this knowledge was not acquired as a consequence of the employee's insight into his present employer's business secrets. Such an excessive interpretation of the duty of good faith would unjustly compromise the employee's economic future."

1. It is significant that all BGC seek here is an award of nominal damages.

B. The case against Tullett

1. It is agreed that the issues arising in connection with BGC's case that Tullett induced Mr Rees to leave his employment in breach of contract are to be determined in accordance with English law. BGC's case is as follows. In a telephone conversation at 16.21 on 26 March 2009 Mr Potter told Mr Rees that there was a job for him at Tullett on the forward cable desk and Mr Rees accepted that offer. It is not suggested that in the conversation there was any discussion of the terms of the employment. It is alleged that it was as a result of this offer and his acceptance of it that Mr Rees decided to leave BGC's employment and go to Tullett. Tullett accept that in the conversation an unspecific offer of a job was made to, and accepted by, Mr Rees: but it is alleged that that was conditional upon Mr Rees being free of his contractual obligation to BGC.

1. There is no record of what was said in the conversation in question just as there is no such record of other conversations between Mr Potter and Mr Rees. There are e-mails, and some text messages between the two have also survived. Mr Potter and Mr Rees were cross-examined at length with the aim of showing that the offer on 26 March was made in disregard of the contractual position between Mr Rees and BGC. My task is to consider their evidence in the context of what preceded the conversation and what followed it. In setting out the facts there is inevitably some overlap with what I have already set out in relation to the reduction in Mr Rees' salary and his termination of his contract. But here it is necessary to look at much the same period of time from a different angle to see what Tullett's knowledge and intentions were, and in particular those of Mr Potter. Repetition is unavoidable if the threads are to be followed through.

1. Mr Rees and Mr Potter had both worked at Prebon Marshall Yamane between 1993 and 2003. Mr Rees broked forward Swiss, and Mr Potter broked forward yen. They both reported to Mr Farrington, then divisional managing director. Mr Rees left to become head of the forward Swiss desk at R P Martins in 2003. Mr Potter had been head of Tullett's treasury division since the company's formation by merger in 2004.

1. In September and October 2008 Mr Rees and Mr Potter communicated a number of times as a result of Mr Rees' desire to work on Tullett's London forward Swiss desk. Mr Rees said that he had made a mistake in joining BGC, hated how it treated its staff and wished to leave. (On 28 October 2008 Mr Rees e-mailed Mr Robinson that he no longer wished to work at BGC and wished to reach an arrangement whereby he could leave.) Mr Potter had no interest in recruiting Mr Rees for his London forward Swiss desk. However he knew that Mr Heinz Kost, the head of Cosmorex – Tullett's Swiss subsidiary, wanted an English speaking broker for Cosmorex's forward Swiss desk. Discussions took place between Mr Rees and Mr Kost. These continued into 2009 but did not progress from the general to the particular because Mr Rees was contracted to BGC until 2011. Mr Potter and Mr Kost kept in touch about the discussions.

1. On 23 February 2009 there were press reports that BGC had hired up to 15 brokers employed by Tullett including 7 from Tullett's forward cable desk. This was brought to Mr Rees' attention and he telephoned Mr Potter on 24 February to ask about a position on the forward cable desk. Mr Potter's response was twofold. First, Mr Rees was a forward Swiss broker, to which Mr Rees responded that he could adapt. Second, Mr Potter said, the forward cable brokers contracted by BGC had said that they would work out their contracts with Tullett, and so Tullett had no immediate need to replace them. It is evident that Mr Rees was looking for a new job in the immediate future. He was not free to take up a new job unless he could reach an accommodation with BGC to leave their employment, and he had the problem of the forgivable loan of £144,525 (net), which he would be liable to repay if he left early.

1. On 4 March 2009, following Mr Robinson's request that the brokers on the desk put their individual names on the tickets recording their deals, Mr Rees told Mr Robinson that he did not wish to work for BGC any more: but he would not resign or put anything in writing because of his contract. He wanted Mr Robinson to find a mutually agreeable exit strategy for him. He said he was moving his family back to England and would be commuting to Nyon.

1. Just after 6 on the evening of 4 March Mr Potter sent two text messages to Mr Rees. Their content has not survived. It is likely that he sent them because Mr Rees had been trying to telephone him. They may have had a conversation – the available records would not include it if Mr Rees made it on his mobile. If they did, I deduce from the circumstances that Mr Rees wanted to know whether the position had changed as to his joining Tullett, and he would have repeated his unhappiness with BGC and his need to move. By this time Mr Potter becoming aware that BGC was planning to engineer a situation in which the brokers who had signed forward contracts with BGC would walk out. But I do not think that he gave Mr Rees any particular encouragement at this stage.

1. On 10 March 2009 Mr Rees was in England looking at houses for his family.

1. On 12 March 2009 the meeting was held at which Mr Rees was told that his salary was to be reduced with immediate effect from CHF500,000 to CHF170,000. Although Mr Rees must have appreciated that he could not stave off a reduction in his salary much longer, the extent of the reduction came as a shock. It considerably increased the urgency for him to leave Switzerland and BGC, and to get another job.

1. On his way home that day, he telephoned Dr Neupert to ask his advice about the legality of the reduction, as I have already set out.

1. At 8.13 am on 13 March Mr Rees sent Mr Robinson and others a substantial e-mail objecting to the pay cut. On that day or soon after Mr Rees had a Tandberg call (video conference) with Mr Clark and Mr Robinson. Mr Rees was looking for a way to leave. Mr Clark was more sympathetic than Mr Robinson. As the Nyon desk was collapsing through departures BGC had to decide what to do with Mr Rees. The idea emerged that he should transfer to London and work on the new G10 desk. Mr Rees did not want that and had to be ordered to come to London for discussions. On 25 March he had the meetings with Mr Farrington, which Mr Verrier attended for part. The proposal for him to come to London for what was in effect a trial period of 6 months was made. Meanwhile on 23 March Mr Rees was sent a letter confirming the salary reduction with effect from 13 March.

1. On 19 March at 17.10 and 17.11 Mr Potter had sent Mr Rees two text messages. They were probably in response to efforts by Mr Rees to speak to Mr Potter. There is no record of a telephone call that day, but it is clear that there was one. It must have been a call by Mr Rees, and I deduce that it followed these messages. They had not spoken since 4 March. Mr Rees told Mr Potter his tale of increasing woe. He said his salary had been reduced by 66 per cent, and that this was a breach of his contract freeing him from it. There was no vacancy on Tullett's forward Swiss desk, but in the current situation Mr Potter was interested in Mr Rees as a possibility for the forward cable desk. He asked Mr Rees how as a forward Swiss trader he would cope with forward cable. Mr Rees said that he was a good forwards broker and would adapt. He said he had contacts in the forward cable market. Mr Potter asked him to send a list of his contacts. Mr Rees sent a list by e-mail at 9.54 Swiss time the next day, 20 March. The list overlaps with, but is not the same as, a list of banks with whom Mr Rees said that he had relationships, which he had sent to Mr Farrington on 19 March. I have considered the e-mail to Mr Potter in the context of BGC's claim against Mr Rees for misuse of confidential information: paragraph 109 above. Mr Potter arranged for the list to be passed to Mr di Palma who would later become the head of the forward cable desk following the walk-out.

1. On 24 March Mr Potter arranged that he would meet Mr Rees at London City Airport on 25 March following his meetings with BGC. They spoke for 15 minutes that evening – 24 March. The intended meeting must have been to review the possibility of Mr Rees coming to Tullett in the light of the situation as it developed. But Mr Potter could not attend because of the pressure of events following the suspension of Mr Hall and the service on proceedings on Mr Hall that afternoon. I do not think that there is anything in the suggestion made on behalf of BGC that the real purpose of Mr Rees' visit to London was to see Mr Potter. Later that evening Mr Rees and Mr Potter spoke by telephone for 10 minutes. Mr Potter told Mr Rees a little about what had happened at Tullett, and Mr Rees told Mr Potter that BGC had offered him a position in London. Mr Rees is a talker and I am satisfied that he would have filled Mr Potter in and told him that he did not want to work for BGC in London. Mr Rees may have told Mr Potter on this occasion that he had two other offers of employment from London inter-dealer brokers, or that may only have come later. It was bravado on Mr Rees' part.

1. On 26 March 2009 at 16.14 Mr Potter sent Mr Rees a text asking him to call him. Mr Potter was now moving fast to find brokers for the forward cable desk. By 3 April he had recruited two brokers, one of whom was about to start. A few minutes after the text he called Mr Rees and they spoke for 2 minutes and 48 seconds, quite a short time. According to BGC this is the crucial conversation. At 17.19 Mr Potter sent an e-mail to Mr Wink, his superior. It was copied to Mr Duckworth, Tullett's chief operating officer, and to Mr Clark and Mr Elmitt of the legal department. It stated:

"Angus, I want to hire Peter Rees, who currently works for BGC Nyon, for our forward cable desk. Apart from the BGC complication, Heinz has been trying to hire Peter to join his Cosmorex Forward Swiss desk. For Heinz, Peter Rees would have been an excellent hire. Peter's problem is this; Peter recently had his third child who is ill in hospital over in Switzerland. As a result of his child's illness Peter's wife has said she doesn't want to live in Switzerland anymore and has moved back to England. Peter now wants to work in London and has asked me for a job three or four times. BGC flew Peter to London yesterday to try to persuade him to join BGC London doing Forward FX. "

I am going to phone Heinz and explain the situation to him but I must warn you, Heinz may end up being pissed off.

Peter will not work in Switzerland so if I don't hire him we will lose him to BGC or, more likely Trads London.

Finally - I have told Peter he has a job here if he wants it – and he has said yes. I just have to agree terms with him.

James.'

1. This important e-mail did not surface on the first trawl of relevant e-mails. I do not think that there was anything sinister in this. I accept Tullett's explanation. I think that the purpose of the e-mail is important. Its purpose was to inform Mr Wink that he was looking to hire Mr Rees ('I want to hire Peter Rees') and to warn Mr Wink that, if he did so, there might be trouble with Mr Kost who also wanted to hire Mr Rees. It was not to tell Mr Wink that he had hired Mr Rees. I think that 'we will lose him to BGC' refers to Mr Rees becoming an employee of BGC London rather than of BGC Switzerland, and shows that Mr Potter's understanding was that Mr Rees was being offered a new contractual package – which would bring the existing one to an end, rather than secondment.

1. The e-mail makes clear that in the brief conversation which had preceded it Mr Potter had told Mr Rees that Tullett had a job for him and Mr Rees had said yes. The primary issue is whether the offer was made without regard to Mr Rees' contractual position with BGC, or whether it was made on the basis that Mr Rees must show that he was free to come to Tullett. Mr Potter says that his offer was subject to checking the legalities and agreeing terms. It was certainly the latter. BGC dispute the former. I will return to this crucial conversation when I have set out what followed it.

1. There was a further conversation lasting 20 minutes the same evening, 26 March, at 17.55, when Mr Potter had more time. In the course of it Mr Potter asked to be sent a copy of Mr Rees' contract, which Mr Rees did at 20.30. Until he saw the contract Mr Potter did not know how long it was for: he had not asked and Mr Rees had not told him. They were both necessarily proceeding on the basis that, if it remained operative, Mr Rees was unable to join Tullett lawfully. Its actual period was of no interest. It was Mr Potter's evidence that during this call he told Mr Rees that Tullett could not just accept that Mr Rees was free to leave BGC because of how BGC had behaved towards him, but he should seek legal advice. Mr Rees confirmed that evidence. Mr Potter forwarded the contract to Mr Simon Clark, head of Tullett's legal department, the same evening, 26 March.

1. On the following morning, Friday 27 March, Mr Rees tried to speak to Mr Robin Clark. His reason was that, of the BGC executives with whom he was dealing, Mr Clark was the one most favourably inclined to doing a deal with him and releasing him from his contract. There was one call of any duration by Mr Potter to Mr Rees on that day, lasting 9 minutes. The reason for the call was probably so Mr Potter could tell Mr Rees that he had cleared the position with Mr Kost, but it would be civil if Mr Rees were to call Mr Kost. Mr Potter says that he also emphasised that Mr Rees must establish that he was free to join Tullett.

1. At 9.07 on Monday 30 March Mr Simon Clark e-mailed Mr Potter asking for two missing pages, saying 'these are of course the crucial ones'. The pages in question contained the post termination restrictions or restrictive covenants as they are alternatively called. This was relied on by BGC as showing that Tullett were unconcerned about the period of the employment and so were unconcerned when Mr Rees would be free to come to BGC. Although this at first seems a valid point, if Tullett's position was that the move (which was only of interest if it could happen quickly) depended on Mr Rees being able to extricate himself from the contract, it has much less force.

1. During that morning, 30 March, Mr Potter asked Mr Rees by text to send the missing pages. Mr Rees texted back that he would send them and asked 'How are things looking?' Mr Potter replied 'Interesting, how about you?' Mr Rees answered that nothing had changed and he was going to talk to Mr Robin Clark about being released. Mr Potter wished him good luck. Mr Rees' conversation with Mr Clark took place by Bloomberg just after midday. Mr Rees said that he had raised £15,000 by way of a loan from his mother to pay something against the forgivable loan, and he asked not to be put on garden leave. Mr Clark said he would try. At 14.49 Mr Rees called Mr Potter and they spoke for over 8 minutes. Mr Rees must have told Mr Potter how his conversation with Mr Clark had gone. So Mr Potter knew that Mr Rees was trying to get a release, and, if he did not know before, he knew about the forgivable loan. But it appears that he already knew about this from Mr Kost.

1. Mr Rees had to get the missing pages of his contract from BGC, and he sent them to Mr Potter on 31 March at 15.54. During that morning Mr Rees had tried three times to speak to Mr Robin Clark by Bloomberg. He was unsuccessful. He was plainly trying to pursue the question of his release. Later that day he tried to call Mr Potter. Mr Potter responded by text that he was in a meeting. Mr Rees asked him to call when he was done. Mr Potter texted back that he would. Mr Potter called Mr Rees at 17.32 and they spoke for some five minutes. It is probable that Mr Rees' inability to speak to Mr Clark about a release from his contract was one topic.

1. On Monday 30 March and Tuesday 31 March Mr Rees had been on pre-arranged holiday. He was not on holiday on Wednesday, 1 April, and he went into work, though I would question what actual work he did. At 9.14 on that day he sent Mr Robin Clark an e-mail asking if he was there. He called Mr Clark's office and was told he was reachable by e-mail. At 9.52 he e-mailed Mr Clark as follows:

"…. I need this situation sorted out mate. Quite simply I can no longer afford to even put petrol in my car to come to work. I am not breaching my contract, just my salary has been cut by such a huge amount that I can no longer afford to live. I am hoping that something is resolved today as it looks very much like I will not be able even to get in tomorrow."

I hope to hear from you ASAP as I don't want this situation to drag on. It is affecting myself and my family and in my opinion we should just sever our ties now and move on".

1. Mr Clark replied at 13.11 that he was waiting on 'the forward guys'. He said he would push again. At 12.11 he had sent an e-mail to Mr Verrier and Mr Farrington saying that Mr Rees and the others on the desk were 'dead money', and BGC should take the £15,000 Mr Rees had offered towards his loan. At 16.00 Mr Rees sent Mr Clark a further e-mail saying he could no longer afford to come into work, which he did not consider a breach of contract as BGC had created the situation. He referred to the offer of a job in London, which he said he had been promised in writing, but it had not come (I have held that Mr Rees was wrong about that.) Mr Clark replied at 17.10 saying that he was forwarding the emails to BGC's legal and human resources teams. He said it was not as simple as Mr Rees suggested: they had a contract, and Mr Rees had a considerable loan. The e-mail was copied to Mr Verrier and Mr Farrington among others. That was, as it turned out, the end of Mr Rees' hope of getting a release from his contract through Mr Clark.

1. On Thursday, 2 April, Mr Davidson Poltock, a new recruit, started on Tullett's forward cable desk, and Mr Black signed a contract to join when he was free to do so. At 07.34 that morning Mr Potter sent Mr Rees a text: 'Please give me a call later this morning if you can? I have now hired two people plus two graduate trainees. (Please remember we do not, and will not, breach anyone's contract.)' BGC allege that the words in brackets were put in by Mr Potter because he realised that there might be trouble with BGC and he wanted to cover himself as he had already offered Mr Rees a job regardless of whether Mr Rees was free. However Mr Potter deleted the text from his phone and it was recovered from Mr Rees' phone. BGC responded that he must have deleted it after it seemed that BGC were not pursuing Tullett for inducing breach of contract. Mr Potter said that he regularly as a matter of practice deleted texts en bloc from his phone. I accept Mr Potter's explanation. I do not think that the bracketed words were added with an eye to litigation. They were added to make it clear to Mr Rees that Tullett needed to be sure that he was out of contract with BGC before they would employ him. It appears that Mr Potter was developing an unease about Mr Rees. As I have recounted, later that morning Mr Rees located the firm of lawyers, Gross & Associes, in a directory and went to see them at about 10 am. He left them some paperwork and they said they would advise him the next morning. Mr Potter and Mr Rees did not manage to speak that day.

1. On Friday, 3 April at 08.41 Mr Rees called Mr Potter. Mr Potter called back at 08.44 and they spoke for 16 minutes. Mr Potter asked Ms Amy Luff, Tullett's European business manager to sit in on the call. He did not ask her to make notes and she did not make any. It was suggested by BGC that this was a deliberate ploy by Mr Potter to give him 'wriggle room' as to what was said in the conversation. I reject that. Mr Potter, Mr Rees and Ms Luff all gave evidence about the conversation. Mr Potter's recollection centred on him telling Mr Rees that he might not now be needed, and Mr Rees' anger at that, an anger which one might think justified in view of what Mr Potter had said on 26 March. Mr Potter said that he told Mr Rees that Tullett would require either to see it in writing from BGC that he was no longer under contract or to see advice from Swiss lawyers to that effect. The conversation became heated. Mr Rees told Mr Potter he had two other offers. Mr Potter told him he should take one. Mr Potter put the phone down. Mr Rees said that Mr Potter's response to his complaint when Mr Potter said a job might not be available was to say that any offer was subject to Tullett's legal department being satisfied that he was free, with confirmation from Swiss lawyers, and a successful meeting with the new head of the forward cable desk, Mr di Palma. He said that he agreed to satisfy these conditions and said he was seeing his Swiss lawyers that day. Miss Luff's recollection was that the conversation became difficult when Mr Potter told Mr Rees that no job could be offered unless Mr Rees could satisfy both him and Tullett's legal department that he was free to come to Tullett. She thought that Mr Potter's statement that Mr Rees might not now be needed came later. Mr Potter had said he had not made a job offer to Mr Rees. That was correct in the sense that he had not made an offer capable of acceptance as they had not considered terms. But he had made an offer in principle as he had set out in his e-mail to Mr Wink of 26 March.

1. This telephone call did not emerge when the records were first checked. I accept Tullett's explanation for this. The three involved were trying to remember what had been said, long afterwards. They all had plenty on their minds, and I would not expect a wholly accurate recollection. I think that the conversation probably went on the lines suggested by Ms Luff. Mr Potter initiated the call by asking Mr Rees to call him, and I think that Mr Potter had become concerned that Mr Rees was 'hearing what he wanted to hear', and might be thinking that he was more advanced in getting a job with Tullett than in fact he was.

1. During that morning Mr Rees went to see Gross & Associes and received the advice I have set out. The lawyers were to write to BGC saying that Mr Rees' employment was at an end.

1. Mr Rees tried to call Mr Potter at 14.01. Mr Potter texted back that he was in a meeting. Mr Rees responded by text 'Ok. I no longer work for BGC.' Mr Potter replied 'Well done. Have you got it in writing?' I do not think that there is anything sinister in that. Mr Potter was in a meeting, and this was his off-the-cuff response. He may well have thought from Mr Rees' wording that he had reached an agreement with BGC. BGC's case was that this exchange was an orchestrated plan to cover up what had passed between them earlier – closing submissions, paragraph 119. I think that far-fetched. During the afternoon Mr Rees was called by Mr Farrington, whom he told that BGC would be receiving a letter from the lawyers on Monday. Mr Rees and Mr Potter eventually spoke at 20.42. Mr Rees no doubt told Mr Potter what had been happening. Mr Potter no doubt told Mr Rees that Tullett would need to see the advice in writing.

1. Mr Potter was on holiday in Dubai from Monday, 6 April to Monday, 13 April inclusive. On 6 April Gross & Associes wrote to BGC as I have stated. At 11.25 Mr di Palma sent an e-mail to Mr Potter enquiring whether it was permissible for him to have coffee with Mr Rees, because Mr Rees had asked him. Mr Potter replied that it was for Mr di Palma to decide if Mr Rees was suitable for the forward cable desk. They met on 7 April. On 7 April Mr Rees e-mailed to Mr Potter a letter from Gross & Associes to himself. On 9 April Mr Potter forwarded this to Mr Elmitt of Tullett's legal department saying he had made Mr Rees a verbal offer subject to him being legally free. Mr Elmitt replied that they needed to see the paperwork and form their own view.

1. I can take things more shortly from here on. On 14 and 15 April Mr Rees e-mailed Mr Potter saying he wanted a sign-on payment of £175,000 and a salary of £125,000, and a large number of ancillary matters. Notably he did not ask for an indemnity against any claim which BGC might have against him, a contrast with what BGC offered to the Tullett employees involved in the conspiracy action. A salary of £150,000 (with a reduction clause) was agreed on 21 April. Mr Rees' other requests were refused. Mr Elmitt took matters up with Gross and was duly satisfied that on the basis of their advice Mr Rees had been entitled to leave BGC and so was free to join Tullett. No criticism is made of Tullett in respect of this. Mr Rees' contract with Tullett dated 23 April was signed by him on 25 April. It foresaw him starting on 18 May.

1. Because of what Mr Potter and Tullett were clearly saying commencing with Mr Potter's text of 2 April 2009 – 'please remember, we do not, and will not, breach anyone's contract' BGC's case has to be tied to what happened on 26 March combined with the allegation that it was on the strength of this that Mr Rees decided to leave BGC so that the conversation remained causative despite all that happened afterwards.

1. The foundation stone of the case is probably Mr Potter's e-mail to Mr Wink following the 26 March conversation. Bearing in mind the purpose of that e-mail, I think that BGC place too much weight on it.

1. In their witness statements and in their oral evidence Mr Potter and Mr Rees were both at times trying to remember things which really they could not remember, but could only reconstruct, and they would have done better to have said so more openly. I was also conscious how closely Mr Rees' case stuck to Tullett's. Mr Potter was on occasion his own enemy in the witness box by trying to fence with the cross-examination. But what is certain, of course, is what is in the e-mails and texts, though there may be difficulties of interpretation. So far as recollection is concerned, in addition to the passage of time Mr Potter was a very busy man at this time, and Mr Rees was not his only recruit. Mr Rees was under great pressure as I have said.

1. I think that Mr Potter was essentially honest in his evidence about the recruitment of Mr Rees. I do not think that it was in his mind at any stage to employ Mr Rees if Mr Rees was still under contract with BGC. I do not think that he said anything to make Mr Rees think otherwise. Nor do I consider that Mr Rees really did think otherwise. By 3 April Mr Rees was in a desperate situation under huge pressure, and I think that this is largely the source of the disagreement that then occurred, in so far as the offer of a job was concerned. It was a situation in which for much of the time it simply went without saying that Mr Rees would have to disengage himself from BGC. For that is normal and obvious: a would-be employer does not take someone on when he is still employed by somebody else. This is demonstrated by the lengths to which BGC went to recruit the Tullett employees concerned in the conspiracy action, namely forward contracts, indemnities and contrived cases of constructive dismissal. I find that Mr Rees terminated his contract with BGC because of the legal advice he had received. Tullett only took him on once Tullett had established, to the best of its legal department's ability, that Tullett was free to do so.

1. I have considered whether I should find that, if he had not been held out the hope of a job with Tullett if he could get free, Mr Rees would still have terminated his contract with BGC on the basis of the advice he had received. He had come to dislike his employment with BGC strongly, and he said he would have taken his chances in finding another job in the market. That would have been a brave step, and the alternative would have been to stick it out for another 6 months and then leave free of the burden of the loan. This would have been the commonsense thing to do. In the end I am not satisfied that he would have done otherwise.

1. I should deal expressly with BGC's case that by 1 April Mr Rees' mind was set in stone that he would leave BGC in reliance on Tullett's offer on 26 March 2009. Mr Rees certainly very much wished to leave, and it was certainly his intention to leave if he could. But I do not think that anything was set in stone, and I doubt whether Mr Rees' thoughts were in fact very clear at this time. In his first witness statement of 19 June 2009 he said that he decided not to go into work after 31 March 2009. In his second witness statement he said that it was after 1 April. This change probably arose because he went into the office on 1 April to e-mail Mr Clark. But at the same time he was saying that he was not breaching his contract and was trying to arrange a release from his contract. He was not a lawyer but a broker under pressure.

1. In my judgment the findings set out in the previous paragraphs are sufficient on any view of the law to dispose of BGC's claim against Tullett for inducing Mr Rees to leave his employment. It is clear from the decision of the House of Lords in OBG Ltd v Allan [2008] AC 1 that the defendant must intend to cause a breach of the contract, which involves knowledge of the existence of the contract and that it will be broken, or at least turning a blind eye, to whether it will be broken or not. I refer to paragraphs 146 to 151 and 179 of my judgment in the conspiracy action where I set out citations. There was no disagreement as to this aspect of the law. I have found that Mr Potter and Tullett did not have that intention.

1. Mr Devonshire submitted that a claimant must also establish that the defendant's actions towards the contract breaker were such that without them the contract would not have been broken. Mr Cohen submitted that it was enough if the breach was 'at least in part fairly attributable to that act'. He relied on passages from the judgment of Sir Raymond Evershed MR in D C Thomson & Co Ltd v Deakin [1952] All ER 361 at 373, and from the judgment of Jenkins LJ at 378. That was a case where the defendant was found to have no knowledge of the contract in question. It also requires reconsideration in the light of the OBG case as discussed in Clerk & Lindsell on Tort, 20th Edition, paragraph 24-34. It seems to me 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 to the contract show that his losses were caused by that conduct because they would have occurred in any event. This seems to me to be in line with the analysis of Lords Hoffman and Nicholls in OBG. However, on the facts as I have found them, the issue does not arise.

1. Had I found in favour of BGC that the other elements of the tort of inducing breach of contract were proven, I would have found in favour of Tullett that BGC had failed to establish any loss of profits, and that BGC was not entitled to a release payment or Wrotham Park damages. The reasons are those stated in respect of the claim against Mr Rees.

1. Lastly, I should mention a submission made on behalf of Tullett which does not require determination on the facts as I have found them. In its claim for damages in the conspiracy action Tullett gave credit to BGC in the amount of the commissions earned by Mr Rees on its forward cable desk against its claim for the losses due to the departure of four of the desk's members to BGC. Tullett asserted that the benefit of the forward cable credit must have been reflected in the settlement of the damages hearing in the conspiracy action. Mr Rees could not be both on the Tullett forward cable desk and the BGC G10 desk. So, if BGC were able to claim as losses what he would have earned on the G10 desk as well as receiving credit for what he in fact earned on the forward cable desk, they would be receiving two inconsistent benefits. BGC's answer to this was first to say through separate solicitors, Berwin Leighton & Paisner, that the settlement was confidential and should not even have been referred to, and then that, if any attempt was made to reveal the settlement, BGC London would be represented by separate counsel to oppose it. Tullett's position was to accept that the court should not know the sum for which the conspiracy claim was settled, but Tullett put forward the situation as a further reason why it would be inappropriate to award release payment or Wrotham Park damages.

1. I have found that Mr Rees was in breach of clause 15.2.2, the non-deal covenant, but not otherwise. In respect of this and also the other breaches alleged by BGC, I find that Tullett did not have the necessary intent to procure any breach. Tullett considered that Mr Rees' contract had been lawfully terminated by him, and was justified in thinking that the covenants were at an end.

1. The claim for misuse of confidential information fails for the reasons I have given in respect of Mr Rees.

1. BGC has established that Mr Rees wrongly terminated his contract of employment, but has failed to show that any loss resulted. Its claim against Mr Rees to recover the loan succeeds. Its claim against Mr Rees for breach of clause 15.2.2, the non-deal covenant, succeeds, but its claim for damages fails. BGC's other claims against Mr Rees fail. Its claims against Tullett fail.