B e f o r e :
THE HONOURABLE MR JUSTICE LIGHTMAN
|| CHRISTOPHER EVANS
||- and -
||(1) SMG TELEVISION LIMITED
(2) SCOTTISH MEDIA GROUP (JERSEY) LIMITED
(3) SMG PLC
(4) KENTFARM LIMITED
(5) GINGER RADIO LIMITED
(6) VIRGIN RADIO LIMITED
(7) GINGER MEDIA GROUP LIMITED
||- and -
||GINGER TELEVISION PRODUCTIONS LIMITED
||Part 20 Claimant
Mr Christopher Pymont QC & Mr Nicholas Peacock (instructed by Harbottle & Lewis,
Hanover House, 14 Hanover Square, London W15 1HP) for the claimant
Mr Geoffrey Vos QC & Mr Anthony de Garr Robinson (instructed by Herbert Smith,
Exchange House, Primrose Street, London EC2A 2HS) for the defendants
Hearing dates: 19 March - 7 May 2003
HTML VERSION OF JUDGMENT
Crown Copyright ©
||1 - 3
||4 - 12
|| A. Mr Evans and his Witnesses of Fact
||14 - 20
|| B. The defendants' Witnesses of Fact
||21 - 30
|| C. Expert Evidence
||31 - 43
||Virgin Radio and the Radio Industry
||44 - 52
||The Detailed Chronological History
||53 - 162
||163 - 165
||The Presenter's Agreement and Related Issues
|| A. The Terms of the Presenter's Agreement
||166 - 175
|| B. Novation
||176 - 189
|| C. Mr Evans's Obligations
||190 - 193
|| D. Breaches of Contract
||194 - 240
|| E. Discharge by Breach
||241 - 244
||The Partnership Agreement
||245 - 257
||The Sale and Purchaser's Agreement
|| A. Terms of Agreements
||258 - 266
|| B. Issues of Construction
||267 - 276
|| C. The Character and Effect of the Circumstances
||277 - 285
||286 - 287
Mr Justice Lightman:
- This action relates to a series of agreements to which the claimant Mr Christopher Evans ("Mr Evans") was a party. The first is a Presenter's Agreement dated 5 March 1998 and made between (1) the fifth defendant Ginger Radio Limited ("Ginger Radio"); (2) the Kentfarm Partnership ("the Partnership"); (3) Mr Evans; and (4) the seventh defendant Ginger Media Group Limited ("Ginger Media"). The second is a Partnership Agreement ("the Partnership Agreement") also dated 5 March 1998 constituting the Partnership and made between (1) the fourth defendant Kentfarm Limited ("Kentfarm") and (2) Mr Evans. The third is a sale and purchase agreement ("the Sale Agreement") for the sale by the shareholders in Ginger Media (including Mr Evans) of their shares in Ginger Media to the second defendant Scottish Media Group (Jersey) Limited ("SMG Jersey"), a member of the Scottish Media Group of Companies ("the SMG Group"), in part consideration of payments of cash and in part consideration of ordinary and deferred shares in SMG Jersey. The fourth is an option deed ("the Option Deed") also dated l3 January 2000 made between (1) SMG Jersey; (2) the first defendant SMG Television Limited, formerly known as Scottish Media Group plc ("Scottish Media") (of which SMG Jersey was a direct and wholly owned subsidiary) and (amongst others); (3) Mr Evans.
- In this action Mr Evans sues for damages arising from the alleged wrongful termination of the Presenter's Agreement and the Partnership Agreement. Under these agreements Mr Evans agreed in return for very large payments for five years to present the Virgin Radio Breakfast Show ("the Show"). The defendants counterclaim for damages sustained as a result of Mr Evans's breaches of these agreements. Mr Evans also claims that he is (and has since 8 October 2001 been) entitled under the Option Deed as modified by a scheme of arrangement dated 7 April 2000 ("the Scheme") to convert certain deferred shares in SMG Jersey received under the Sale Agreement (the "Tranche C Shares") into shares in the third defendant SMG Plc ("SMG"). In the absence of such a right to conversion, the shares are valueless and effectively forfeited.
- In summary the sixth defendant Virgin Radio Limited ("Virgin Radio") is a leading national radio station. It is one of only three national commercial radio stations broadcasting in the United Kingdom and the only station with a mainstream popular music format. It has targeted male and female listeners aged between 25 and 34 (a market which is highly attractive to advertisers and sponsors). The Show has at all times been Virgin Radio's flagship programme. The Show (like the breakfast show of all commercial radio stations) has Virgin Radio's maximum available audience (or "reach") and is its showcase, establishing the station's identity and maximising its audience for the rest of the day. In September 1997 Mr Evans joined Virgin Radio as presenter of the Show and in December 1997 Mr Evans together with certain investors (through his company Ginger Media) bought Virgin Radio Holdings Limited ("VRH"), the parent company of Virgin Radio, for £83 million. As a crucially important part of the purchase transaction for the investors, Mr Evans entered into the Presenter's Agreement and Partnership Agreement which were designed to secure for Virgin Radio the continued provision for the term of five years of his services as presenter of the Show. In March 2000 the shareholders in Ginger Media (including Mr Evans) sold Ginger Media for £225 million to SMG Jersey, the SMG Group. The SMG Group now includes each of the defendants. The principal assets of Virgin Radio (besides its radio licences and goodwill) were the benefit of the Presenter's Agreement and the Partnership Agreement and in particular the right to the services of Mr Evans as presenter of the Show. As part of the consideration for the sale of his shares in Ginger Media to SMG Jersey Mr Evans became entitled as deferred consideration to the Tranche C Shares. On 28 June 2001 the defendants gave notices treating the Presenter's Agreement as discharged and expelling Mr Evans from the Partnership by reason of breaches of contract by Mr Evans.
- During 2000 and early 2001, the relationship between Virgin Radio's management and Mr Evans deteriorated, a state of affairs which the defendants attribute to a series of breaches of the Presenter's Agreement. These alleged breaches fall into two categories: (1) those considered by the defendants of secondary importance ("the Secondary Breaches"); and (2) those considered of primary importance ("the Primary Breaches"). The alleged breaches gave rise to the two notices served on 28 June 2001.
- The first issue I must determine is whether any relief is available to any of the defendants in respect of the alleged breaches of the Presenter's Agreement by Mr Evans which are established, and in particular whether Virgin Radio has the necessary standing to sue. This issue arises because Ginger Radio has since 1998 been totally inactive: any role it previously occupied as producer has been assumed by Virgin Radio. In the circumstances the loss occasioned by any breach of contract was to Virgin Radio alone. If Virgin Radio is to recover such losses, (though various ingenious alternative mechanisms have been pleaded), as it seems to me it is necessary for Virgin Radio to establish a novation under which it was substituted as a party to the Presenter's Agreement in place of Ginger Radio.
- The second issue to be addressed is whether the breaches of contract alleged are established and if so whether Virgin Radio (if substituted as a party to the Presenter's Agreement) can establish a claim in damages.
- The third issue is whether (assuming breaches of contract are established) Mr Evans's conduct constituted a repudiatory breach by the Partnership of the Presenter's Agreement (which justified the removal of Mr Evans as presenter of the Show).
- The fourth issue is whether Mr Evans's conduct likewise constituted a breach of the Partnership Agreement entitling Kentfarm to expel him from the Partnership. This issue is simplified by the fact that Mr Evans has rightly conceded that Kentfarm was justified in expelling him from the Partnership if Virgin Radio was entitled to treat the Presenter's Agreement as discharged.
- If Mr Evans's conduct did not justify the action taken against him by Virgin Radio and Kentfarm, Mr Evans has a claim for damages for breach of contract against Virgin Radio, Ginger Media and Kentfarm. In this latter case the fifth issue arises, namely whether Mr Evans took reasonable steps to mitigate damages.
- The sixth issue only arises if Kentfarm lawfully expelled Mr Evans from the Partnership. That issue is whether or not Mr Evans satisfied the conditions entitling him to convert the Tranche C Shares into shares in SMG and in particular whether the circumstances giving rise to the expulsion of Mr Evans from the Partnership were or were not materially adverse either to SMG Jersey's business or to its financial position.
- At this trial, the issues of entitlement, liability and mitigation are to be decided. The assessment of any damages is postponed to a separate hearing at a future date after judgment on the issue of liability.
- Two subordinate issues required determination when the trial commenced. These related to the entitlement of Kentfarm under the Partnership Agreement to monies standing to the credit of the Partnership and to payment by Mr Evans of some £1.95 million compensation for loss occasioned by his premature determination of the TFI Friday Presenter's Agreement ("the TFI Agreement") under which he agreed to present a television series entitled "TFI Friday". Mr Evans wisely and inevitably conceded both these issues in the course of the trial and accordingly they do not require consideration in this judgment.
- Before I recount the history of events in this case I shall paint a thumbnail sketch of the principal characters. Their credibility is critical in the resolution of the multitude of issues of fact raised in this case, and some knowledge of their personalities (and most particularly the personality of Mr Evans) is essential to an understanding of events and the conduct of the parties. I shall begin with Mr Evans and his principal witnesses. I shall then turn to the principal witnesses for the defendants who were involved in the matters in contention.
- Practically all Mr Evans's witnesses were friends of his and to varying degrees partisanship was apparent in their evidence.
(1) Mr Evans
- This case very much focuses on the personality of Mr Evans. His character plainly emerges from his evidence in the witness box, the autobiography which he is in the course of writing and of which the first 38 pages of have been put in evidence, and the evidence of his friends and those who had dealings with him. Mr Evans is a talented radio performer. His distinctive appearance, spontaneity, inventiveness and irreverence are his trademarks. He is very experienced in matters of publicity. He knows how to play the media and obtain a good splash. In paragraph 99 of his witness statement he says: "In terms of publicity I know what I am doing." He does not hesitate to telephone the press when he wants a splash in the newspapers or to manipulate the media to convey the message he chooses. As he says in his autobiography, in all he does, whether work, play or drink, he will only do it "to the absolute nth degree". He is given to extremes: moderation has no part to play. Drinking to excess is part of his lifestyle. He is a binge drinker. He told me with pride and no trace of embarrassment that more often than not he presented the Show with a hangover. He has a reputation for laddish behaviour including drunkenness. Despite his confident front, he is very insecure in himself and as a consequence frequently (but not invariably) has recourse to any means (legitimate or otherwise) to avoid confrontation or unpleasant or unpalatable situations, and others who know him and want any continuing future relationship with him must necessarily likewise avoid any confrontation or cause for upsetting him. (As will subsequently appear, one notable exception is that he insisted on himself informing Mr Dan McGrath ("Mr McGrath") and Mr John Revell ("Mr Revell") of their impending dismissal when he wanted to get rid of them.) To achieve what he wants without confrontation, he is manipulative and has resort to any means, fair or foul, to achieve his ends. Nowhere is this more strikingly demonstrated than in his dealings with Mr McGrath and Mr Revell leading to their being dropped from the Team. His success and character have combined to create a personality making him strong-willed and both accustomed to and insistent on getting his own way. He is petulant and given to sulking and walking away from situations whenever he considers himself thwarted. He is not ready to make concessions to others. He is a person who cannot tolerate either criticism or the exercise by management of authority over what he does. As he told me in his evidence, newspapers were necessary to provide topicality for the Show, but in May 2001 the Team had instructions to cut out any articles critical of him and any bad publicity before he saw them. He agreed with the diagnosis of his doctor that he found intolerable any conflict between the exercise of his creative talent and any perceived interference with his freedom of action by the exercise of authority by management. He was spoiled during the period between his purchase and sale of Virgin Radio, for during that period he was effectively the owner of Virgin Radio and accordingly the management. He could never acclimatise to a more subordinate role after the sale. He has the temperament of a prima donna. He always expects and demands compliance with his wishes. He has a low "tolerance" threshold and he has a marked propensity displayed throughout his career of "walking out" on his contractual commitments when (as he perceives it) the going gets hard. He has at all material times been the principal client of his agent Mr Michael Foster ("Mr Foster") and the principal (and indeed practically indispensable) asset of Virgin Radio and he has made plain to both that he knows it and has exploited his position to the whole. Neither have been able to assert themselves or stand up to him because of the very real risk that to do would jeopardise any continuing relationship in the future.
- His talent in his field and the substantial returns he has achieved have enabled him to leave to Mr Foster and to his accountant Mr Kirit Doshi ("Mr Doshi") all business decisions and thinking. He never gave any, or any proper, consideration to the obligations which he assumed under the Presenter's Agreement or the Partnership Agreement and these never figured in his thinking. It is not surprising in the circumstances that he failed to comply with those obligations. As one example Mr Evans pleaded in paragraph 142 of his reply that he recognised no obligation to prefer to his own views the views of management, and in particular Mr Anthony John Pearson ("Mr Pearson"), Virgin Radio's Chief Executive, and Mr Bobby Hain ("Mr Hain"), Virgin Radio's acting Programme Director, as to what would make the Show successful. Mr Evans in the course of his evidence on critical episodes and issues professed no recollection of events. When I asked him about the quality of his powers of recollection, he told me that indeed he did have a terrible memory. That part of his evidence I fully accept. Beyond this where it suited his purposes, he had resort to lies. He lied about the time during which, and place where, he waited for a meeting with Mr Pearson and Mr Jackson on 20 June 2001. His verified pleadings stated that he waited in his office on the first floor for three hours. His evidence finally established that he was in the zoo area on the third floor for an hour and a quarter and that he was not waiting for a meeting but waiting for his wife Mrs Billie Evans (whom I shall refer to as Billie). He lied to Mr McGrath and Mr Revell about what Mr Jackson had said to him about their futures with the Show. He was an unimpressive witness more concerned with advocacy and making an impression than answering questions. In the circumstances I can attach only limited weight to his evidence on any issue of fact where what he says is not inherently probable or corroborated.
(2) Mr Foster
- Mr Foster became Mr Evans's agent in 1990 and (save for a break between 5 September 1998 and 14 February 2001) has remained his agent ever since. As he told me, he had no role in creative matters. Mr Evans has been Mr Foster's principal client since 1995 and it is plain from his evidence that Mr Foster has had as a primary goal both whilst acting as his agent and in his evidence to this court the preservation of that valuable relationship. He cannot stand up to Mr Evans and is unwilling to give him unpalatable advice or pass on unpalatable information if in any way or at any costs this is avoidable. For this reason (for example) he would renege on assurances to Mr Pearson to consult on a matter with Mr Evans if he thought that Mr Evans would prefer not to be disturbed. In giving his evidence, he appeared to find it difficult, and was often unwilling, to give straight answers to questions, his memory was both defective and selective and he saw his role as a witness as being that of supporting Mr Evans's case so far as he could rather than assisting the court in the search for the truth.
(3) Mr Doshi
- Mr Evans's other adviser was Mr Doshi who has been Mr Evans's personal accountant for about ten years. In particular he advised Mr Evans in 1997 on the occasion of the purchase of Virgin Radio and again in 2000 on its sale. His evidence was primarily directed at establishing three things. The first was the insistence on the part of Mr Evans's advisers on the occasion of both transactions for legitimate tax reasons that Mr Evans retained his self- employed status. That proposition has never been in doubt. The second was that under the Presenter's Agreement his services should at all times be made available to Ginger Radio alone and no-one else. Mr Doshi's insistence on the second proposition was an attempt at bare advocacy on behalf of his valued client. This latter proposition is totally inconsistent with the novation provisions in clause 10 of the Presenter's Agreement and though, when referred to this clause, Mr Doshi appreciated that this was so, he nonetheless stuck to his brief. Where Mr Doshi's evidence conflicts with that of Mr Mollett (another witness for Mr Evans likewise inclined to be partisan in his favour) I unhesitatingly prefer the evidence of Mr Mollett. The third proposition was to the effect that the statements in Ginger Radio's accounts that Ginger Radio was dormant and had neither traded nor incurred liabilities was consistent with Ginger Radio continuing to be party to and fulfilling its obligations under the Presenter's Agreement by reason of the existing of alleged back-to-back arrangements between Ginger Radio and Virgin Radio. Under cross-examination Mr Doshi was forced to concede that this further blatant attempt at advocacy on behalf of Mr Evans was unsupportable.
(4) Ms Charlotte Blenkinsop ("Ms Blenkinsop")
- Ms Blenkinsop was appointed by Virgin Radio as head of communications in March 2000. She was responsible for the day to day public relations within Virgin Radio until 21 December 2001. She would regularly consult and seek the advice of Mr Callum Spreng ("Mr Spreng") who was responsible for communications across the SMG Group. She has provided three witness statements, the first two to the defendants and the third to Mr Evans. Her third witness statement and her evidence before me were primarily directed to the publicity and public relations aspects of the dispute and (in contrast with the contents of her first two witness statements) were plainly partisan favouring Mr Evans and unconvincing. I received no satisfactory explanation for the change of front from that disclosed in her two witness statements made when she was part of Virgin Radio management to that disclosed in her witness statement made after she had left. She was always bound by deep personal bands of loyalty to Mr Evans. For this reason she failed to pass on to Virgin Radio the information which she received on 3 May 2001 from Mr Gillett that Mr Evans was getting married though (as she well knew) she was duty bound to do so. The only explanation consistent with her conduct and evidence in court is that, after she ceased to be part of management, she felt free to give full vent to that loyalty. I did not find her (most particularly in respect of events on 20 June 2001) to be a satisfactory witness. Notwithstanding this fact, her evidence is significant on a number of issues where she could not gainsay Virgin Radio's case. In particular: (a) she conceded that Mr Evans could be very difficult (plainly an understatement); (b) in her professional view Mr Evans was wrong not to agree to do an interview and photo-shoot for a Radio Times feature; (c) Mr Evans's proposed "all day" show on 6 June 2001 was "a risky thing to go for" and there was a good chance that Mr Evans would have become bored by about 11 am; and (d) in her view press articles about Mr Evans damaged Virgin Radio where it appeared that Mr Evans had behaved in a manner which disclosed that Virgin Radio was not in control of the situation.
(5) Other witnesses
- Mr Evans called a number of other witnesses. In the case of Mr Revell, he was only prepared to provide and did provide a witness statement for Mr Evans after Mr Evans had paid him £1 million in settlement of a recently made claim to a (moral) entitlement. The evidence of these witnesses was of peripheral (if any) value.
B. THE DEFENDANTS' WITNESSES OF FACT
- Mr Pymont on behalf of Mr Evans made a number of challenges to the honesty and credibility of the witnesses called by Virgin Radio, and in particular he charged Mr Pearson, Mr Hain and Mr Paul Jackson ("Mr Jackson") with conspiring to conceal relevant evidence from the court, namely the meeting with Mr Ian Grace ("Mr Grace") on 16 May 2001 at the Arts Club. It is perhaps surprising that none of them recalled the meeting or referred to it in their original statements, but with so much going on at the time and (unless Mr Grace's account of what Mr Jackson said about Mr Evans is true) the absence of any relevance or significance of what occurred affords a reasonable and honest explanation which I accept. It is unfortunate that the defendants made late disclosure of SMG's Main Board Minutes. But there was nothing wilful in this regard and the default affords no basis for challenging the credibility of Mr Flanagan or Mr Pearson. I think that Mr Pearson, Mr Hain and Mr Jackson were less than forthcoming (no doubt because of embarrassment) in giving evidence as to the activities undertaken by Mr Jackson during the period of his gardening leave in respect of his previous employment. Their recollection was fallible and on occasion proved faulty but, where it did prove faulty (e.g. about when Mr Pearson was last in touch with Mr Grace), that fault was either later corrected or of marginal significance. But with the above qualification I find that all the witnesses called by Virgin Radio were honest and did their best to assist the court.
(1) Mr Pearson
- Mr Pearson has been at all material times the Chief Executive of Virgin Radio and, subject to Mr Andrew Flanagan ("Mr Flanagan") the Chief Executive of SMG plc, has had management responsibility for Mr Evans and the Show. Mr Pearson recognised the supreme importance of Mr Evans and the Show to Virgin Radio. He also had a clear understanding of Mr Evans's volatile character. He attached the highest importance to maintaining good relations with Mr Evans and to this end displayed extreme patience and tact in dealing with him. Whilst it can be seen in retrospect that his efforts to moderate Mr Evans's conduct and provide constructive assistance and incentives to him to fulfil his contractual role in the end failed to achieve the results desired, no criticism can fairly be laid at his door. Mr Evans was any management's nightmare and (as in a Greek tragedy) the eventual outcome (given Mr Evans's predisposition and the change of role forced on him following his sale of Virgin Radio) practically inevitable.
(2) Mr Hain
- Mr Hain was Assistant Programme Director of Virgin Radio from September 1996 to October 1998. He was then Programme Director until July 1999. He worked with Mr Evans on a day to day basis between 5 October 1997 and July 1999. He explains how the job of managing Mr Evans after his purchase of Virgin Radio became a delicate matter. In November 2000 he rejoined SMG as Business Development Director (Radio) of the SMG Group. In December 2000 at Mr Evans's request Mr Hain sorted out certain problems which Mr Evans had with the station. In January 2001 he started to become involved with Virgin Radio again and between March and June 2001 (after Mr Owens quit the post of Programme Director following expressions of dissatisfaction with him by Mr Evans and before Mr Jackson assumed the appointment as his replacement) Mr Hain was acting Programme Director of Virgin Radio. Mr Hain in his evidence detailed the acute problems which arose after Mr Evans relinquished his ownership and control. This is a critical period in the breakdown in relations between Virgin Radio and Mr Evans. Mr Hain had over 20 years of radio programming experience and a well developed awareness of the needs of a successful national radio station and of the demands of management of a mercurial presenter. Mr Evans told me that he had a lot of respect for Mr Hain. Mr Hain was an impressive witness who understood well both Mr Evans and the industry in which he worked.
(3) Mr Jackson
- Mr Jackson joined Virgin Radio as Programme Director on 11 June 2001 very much because he wanted to work with Mr Evans and he had two very successful meetings before he began work for Virgin Radio with Mr Evans who endorsed his appointment. His baptism at Virgin Radio was a nightmare because, for reasons totally unconnected with him, Mr Evans rejected all his overtures to meet him. Nonetheless Mr Jackson acted with the greatest tact and sensitivity in his unsuccessful attempts to defuse the situation.
(4) Mr Flanagan
- Mr Flanagan has been Chief Executive of SMG since May 1996. He met Mr Evans as part of the process leading to the purchase by SMG Jersey in 2000 of Virgin Radio, in the course of which Mr Evans assured him that, though his contract only required him to present the Show four days a week, his professionalism was such that he worked six days a week and he gave the assurance that he would continue to present the Show five days a week. Mr Flanagan recognised Mr Evans's talent and that he was temperamental and needed careful handling, and he ensured careful handling securing that Mr Evans continued in his role as presenter of the Show until the situation arose at the end of June 2001 when he made the decision to terminate the Presenter's Agreement and the Partnership Deed.
(5) Mr Callum Spreng ("Mr Spreng")
- Mr Spreng since August 1998 has been director of corporate affairs at SMG responsible for communications across the SMG Group and in particular press relations. Mr Spreng convincingly explained the extreme anxiety and caution required in dealing with the press when bad publicity was occasioned by the conduct of Mr Evans. In this regard it is plain that Virgin Radio and Mr Evans were in safe and competent hands.
(6) Ms Kathryn Jacob ("Ms Jacob")
- Ms Jacob was commercial director of Virgin Radio, responsible for managing all commercial matters including advertising campaigns, sales of air time, advertising spots, sponsorships and promotions. In her evidence she dealt with the issues relating to Mr Evans's conduct in regard to these matters and the impact of his conduct on Virgin Radio's business. There was and could be no serious challenge to her evidence which I fully accept and which I reflect throughout this judgment.
(7) Mr Lee Roberts ("Mr Roberts")
- Mr Roberts was commercial development director for SMG Radio responsible for developing and operating the systems which monitored and analysed all the commercial deals in the business generally. His evidence primarily relates to audience figures and the demand and charges for advertising and the impact of Mr Evans on them. Again there was and could be no serious challenge to his evidence which I likewise accept.
(8) Mr Grace
- Mr Grace was a programme consultant with Virgin Radio resident in Australia. Between April and December 1997 he was programme director at Virgin Radio and resided in London to fulfil this role. He provided a witness statement on behalf of the defendants and a Civil Evidence Act notice was served giving his residence in Australia as the reason for not attending the trial. The thrust of his evidence (which I accept as inherently probable and consistent with the body of evidence before me) was that the key to the success of Virgin Radio and the Show was the careful selection of the music to be played and the playing of that selected music, and that it is of the utmost importance that the music played on the station throughout the day including the Show be consistent with the station's music policy, for the music is the thread by which the listener identifies with the station; that he regularly requested Mr Evans to talk less and play more music; and that Mr Evans constantly deviated from the production schedules. His importance in this case however derives from a dramatic intervention which he made in the course of the trial. He telephoned Mr Hain and told him that he intended to inform Mr Evans that Mr Jackson had said at a meeting at the Arts Club on 16 May 2001 with Mr Pearson, Mr Hain and himself that he did not want to work with Mr Evans. Neither party sought to obtain a witness statement from Mr Grace in regard to the happenings at the meeting in question or an order directing or permitting him to give evidence by video link or otherwise. Mr Pearson, Mr Hain and Mr Jackson all gave evidence that such a meeting took place and that they had not referred to the meeting in their witness statements because nothing relevant had occurred. Most particularly they categorically denied that Mr Jackson made the statement attributed to him. I accept their evidence on this issue.
- Two video recordings and two compact discs were put in evidence in particular to throw light on the character and contents of the Show and the media perception of and response to the conduct of Mr Evans in issue in this action.
C. EXPERT EVIDENCE
- Expert evidence was called on both sides in four distinct disciplines. Although the evidence was extensive, the product of value in these proceedings was limited. I shall consider each discipline in turn. When considering the expert medical evidence, it is convenient at the same time to resolve the issue raised by Mr Evans whether he was suffering from, or prevented from fulfilling his contractual obligations by, ill-health.
- Clause 9(2) of the Partnership Agreement provided that, unless prevented by accident or ill-health, Mr Evans was required to devote the whole of his working time and attention to the business of the partnership. Mr Evans was however entitled to be absent for illness which in the case of illness for less than seven days did not need to be certified by a doctor. (There was no like provision in the Presenter's Agreement.) I may add at this point that Mr Pymont rightly conceded that, so far as Mr Evans's consumption of alcohol contributed to his condition, Mr Evans could not claim that he was ill.
- Paragraph 36 of the amended particulars of claim pleaded that on 1 May 2001 Mr Evans decided that the existing format of the Show was unworkable and that the best thing was to leave the Team to present the next few shows and spend some time away from the station recovering his confidence and planning a new format. Paragraph 37 stated that accordingly Mr Evans left for a short break in the USA. Paragraph 38 read as follows:
"Mr Foster told Mr Pearson on 1 May 2001 that Mr Evans would not be able to present the breakfast show the following day. He said Mr Evans was ill, which was, so far as he was concerned, true."
It is to be noted that ill-health is not pleaded as excusing the failure of Mr Evans to present the Show.
- Paragraph 61 of the amended particular of claim read as follows:
"61. Mr Evans's reaction to these events [the events of 20 June 2001] and the intolerable pressure placed on him by the Virgin Radio management was to drink heavily during the rest of 20 June 2001 with the result that he was not able to attend work on 21 June 2001."
Paragraph 65(b) pleaded the provisions of the Partnership Agreement entitling Mr Evans to be absent for illness.
- Paragraph 70 read as follows:
"70. [On the evening of 27 June 2001] Mr Evans was also examined by a doctor (Dr John Gayner) who concluded that Mr Evans manifested an acute anxiety state resulting from chronic stress. He advised him that he needed time off."
- Paragraphs 99(i) and 100 of the reamended defence pleaded that Mr Foster's explanation for Mr Evans's absence on 1 May was that Mr Evans was ill was false and that Mr Evans knew he was not ill. In paragraph 110 of the reply Mr Evans denied both the falsity of the statement and knowledge of the falsity.
- In paragraph 38 of the further information in answer to a request made on 29 May 2002 Mr Evans made plain that it was his case that he was ill in late June 2001 and in support of that contention he was relying on the diagnosis of Dr Gayner.
- As will subsequently appear Mr Evans consulted Dr Gayner a general practitioner whom he had never seen before and has never seen since, to arm himself with possible medical evidence for this trial. The examination took place between press interview which Mr Evans was busily conducting at the same time. Mr Evans did not tell Dr Gayner the very material fact that the purpose of the examination was to obtain evidence which would be available in later proceedings. Remarkably however though Dr Gayner communicated with Mr Evans's lawyers in July 2001, his statement is dated 7 February 2003. Dr Gayner's conclusion from his examination was that at the time of the examination Mr Evans manifested an acute anxiety state resulting from chronic stress and advised him that he needed time off. In answer to the evidence of Dr Gayner, the defendants called a specialist in psychiatry, Dr Reveley. Dr Reveley gave her diagnosis "on the papers" without ever examining Mr Evans. Mr Evans was invited (if he wished) to submit to such an examination, but that invitation was not taken up. Dr Reveley gave evidence to the effect that Mr Evans was not suffering from any form of illness, let alone a recognised form of psychiatric disorder. All she would concede was that on the evening of 27 June 2001 when Dr Gayner examined him Mr Evans disclosed a degree of distress which warranted advice to take time off work.
- Dr Reveley was a most impressive witness and I fully accept her evidence. I was not equally impressed by Dr Gayner, and still less by his attempts in the joint report by experts to extend and elaborate long after the event the ambit of his original report and suggest that Mr Evans's condition may have predated 27 June 2001. The basis put forward for this extension was his reliance on further material supplied by Mr Evans's solicitors which he did not particularise in the joint report. This part of his evidence had the flavour of advocacy on behalf of his client and patient and was not in my view credible. The conclusion to be drawn from the medical experts which accords entirely with the other evidence before me is that on 27 June 2001 (but not before) the joint effect of a lengthy period of excessive drinking and the anticipated shame and financial loss arising from imminent dismissal induced in Mr Evans a degree of distress which warranted advice to take time off work. Accordingly his state of health affords no support to Mr Evans's case.
(2) Services and standards of a first class presenter
- Clause 4 of the Presenter's Agreement provided that the Partnership shall ensure that Mr Evans shall render all services usually rendered by a first class presenter and perform his services in a first class professional manner. The parties called expert evidence on what these obligations and standards involved and on the importance of music in a commercial radio station such as Virgin Radio. In the case of Mr Evans the expert was Mr Story and in the case of the defendants Ms Oldham. Both were helpful witnesses. In particular Ms Oldham was impressive: she was demonstrably well qualified and straightforward in this discipline (as well as the other) on which she gave evidence. In their agreed report the two experts substantially agreed all that was necessary for adjudication of these issues. I set out the areas of agreement when I consider the express terms of the Presenter's Agreement. So far as there is a difference in view between them on the importance of music on the Show, I find more impelling the opinion of Ms Oldham.
(3) The business life of a commercial radio station
- Issues have arisen as to how a commercial radio station operates and is financed and the essential ingredients for its financial success. On this issue and on the issue whether Mr Evans's alleged breaches of contract were damaging and his dismissal were damaging and adverse to Virgin Radio's business and financial position, Mr Evans called Mr Morse and the defendants called Ms Oldham. Whilst Ms Oldham was impressive, Mr Morse was less so, for he adopted a somewhat defensive and argumentative stance and his reading of the papers in this case was limited. After production of their joint report and exploration and clarification of their evidence in cross-examination, the relevant areas where there was any significant difference between them were limited, and where they disagree, I favour the evidence of Ms Oldham.
(4) Accounting evidence
- The defendants called Mr Murrell and Mr Evans called Mr McGregor as their experts on accountancy matters. Accountancy expert evidence was directed essentially to three issues: (i) the accountancy meaning of the terms "material", "business", and "financial position". (One of Mr Evans's contentions was that these terms as used in the Option Deed bore this technical meaning). As will subsequently appear I reject this contention; (ii) whether the alleged breaches of contract had a material adverse effect on SMG Jersey's business and financial position; and (iii) whether (as contended for by Mr Evans) the fact that SMG's accounts for the year ended 31 December 2001 did not report any impairment in goodwill was inconsistent with the defendants' contention that the circumstances giving rise to Mr Evans's expulsion from the Partnership were materially adverse to SMG Jersey's financial position. Again as will subsequently appear I reject this contention also.
- I have already resolved the issues to which the medical expert evidence relates. The other expert evidence generally informs this judgment, and it is unnecessary in what must necessarily be an already lengthy judgment to subject it to detailed analysis. I shall accordingly only occasionally make any specific reference to it.
VIRGIN RADIO AND THE RADIO INDUSTRY
- The industrial or commercial context in which the conduct of the parties to this litigation is to be viewed is important in this case. In understanding this context I have received substantial assistance from the various witnesses of fact as well as the experts.
- The income of a commercial radio station is obtained from advertisers, sponsors and promoters and this in turn depends on the station's available audience (or "reach"). There is a five to six month lag between audience ratings and revenues. The goodwill of the listening public and advertisers, sponsors and promoters is the essential lifeblood of a station. To achieve and maintain this goodwill, the radio station is very much in the hands of its presenters: in a very real sense the station's fortune and reputation are placed in their hands and the station must feel able to place its full trust and confidence in them. A radio station's breakfast show is its most important show and may fairly be described as its flagship (Ms Jacob likened it to its Crown Jewels) and a radio station will seek to obtain for that show its most important and valued presenter. The breakfast show is the showcase determining the image perception of the station and the level of its audiences for the rest of the day. The station's reach is at its peak for the its breakfast show. There is a natural decay in a station's audience throughout the day: the larger the audience to its breakfast show, the larger the audience for the rest of the day. Hence arises the supreme importance of the presenter of the breakfast show. As Mr Pearson strikingly expressed it, the presenter of the breakfast show is the "face" of the station and Mr Evans was a paradigm example. Everything must be done to maintain and (when possible) improve the quality of the breakfast show and urgent action must be taken to rectify any problems. For this purpose it is essential that management and the presenter are at all times co-operative and fully communicate with each other.
- The maintenance of the goodwill of a radio station likewise requires that the presenter shall at all times be, and be seen by providers of advertisements, sponsorships and promotions as well as the audience to be, "under the control" of the station. For advertisers, sponsors and promoters, such control is essential if (as they must) they are to feel confident that they can rely on him as both willing and able to fulfil his obligations to them as presenter. Likewise in view of the personal and intimate relationship perceived by audiences to exist between them and the presenter, the audience expect him to be faithful to them and not (in the language of Mr Evans) to disenfranchise them e.g. by failing for sufficient reason to present their show or otherwise acting in a manner which audiences may consider to be or involve a breach of faith to them. Mr Evans, in the course of his evidence on the need to fix his holiday dates well in advance, graphically explained the importance of keeping faith with audiences and avoiding unplanned absences and their adverse effect on them. He said:
"We had to [decide dates for holidays quite a long time in advance] because we had to plan for other disc jockeys coming in, we had a massive schedule you had to do that when you are making radio shows, because you cannot disenfranchise the listeners."
- Since the presenter is the face and ambassador of the radio station, bad publicity for the presenter is likely to constitute bad publicity for the station, and bad publicity for the station threatens the future, if not the existence, of the station. (This is reflected in clause 4(c) of the Presenter's Agreement.) Mr Evans (on page 27 of his autobiography) accurately states: "Publicity is something that companies like Virgin Radio live and die by". The presenter's face must remain an acceptable face both on and off the show he presents and accordingly he must at all times act in an acceptable manner. If he appears out of control or acts in a manner which alienates listeners or advertisers, he jeopardises the goodwill, business and financial position of the radio station. News of bad experiences with presenters and radio stations travels quickly by word of mouth amongst advertisers and their reputations and goodwill are easily damaged.
- The role of presenter (and most particularly star presenter) is stressful: the stress and relative scarcity of those able to fulfil the role are reflected in his high earnings. A first class presenter must be able to fulfil his role in a responsible manner notwithstanding the stress inherent in his occupation. Indeed that is a necessary quality of such a presenter.
- It is common ground that Virgin Radio:
i) is a leading national commercial radio station;
ii) is the only national commercial station with a mainstream popular music format; and
iii) targets male and female listeners aged between 25 and 34 (a market which is highly attractive to advertisers and sponsors).
80 per cent of its revenue is derived from the sale to advertisers of advertising spots (to which nine minutes is allocated in every hour), 15 per cent from promotions and 5 per cent from sponsorship.
- The evidence establishes that Virgin Radio has two main objectives:
i) to make itself attractive to its target market, and its core listeners within that market, who are those likely to spend a considerable part of their day listening to radio. To achieve this objective, it carefully controls both the format of, and the music played on, all its shows. It conducts extensive research and, on the basis of that research, it maintains playlists of approved music and draws up schedules of the music to be played on each programme;
ii) to maintain and foster the relationships it has with clients and advertising agencies. Those relationships depend on Virgin Radio's ability to deliver the advertising services it offers in the manner and form which it has agreed with them.
- In seeking to achieve these objectives, Virgin Radio (like other stations) relies on its presenters (and particularly, its star presenter). This requires the presenters to operate within the format and music parameters set by the station, and to accept the station's ultimate right to control its output. For these purposes, presenters must communicate with the station, usually via its Programme Director. Within these constraints (most particularly in case of a star presenter such as Mr Evans) there is ample scope for individuality and self-expression by the presenter in his presentation of the Show. This freedom on his part and the high degree of dependence of the station upon the presenter places a premium on the existence and maintenance of open lines of communication of the relationship of trust and confidence between the presenter and the station.
- The audiences of radio stations are measured by "RAJAR" which publishes quarterly audience figures. The published audience figures, whilst regarded as authoritative as to those figures, afford no guidance as to why listeners are or are not listening to various radio stations. Accordingly a decline in audience figures revealed by RAJAR provides no assistance in determining the causes. A market survey is a possible method of determining the causes.
THE DETAILED CHRONOLOGICAL HISTORY
- In this chronology I shall seek to set out the principal events. There are innumerable events and innumerable issues of fact between the parties. To make this judgment manageable I must be to a degree selective in choice of events and generally resolve issues without detailing the conflicts of evidence.
- In 1993 Mr Evans obtained a contract to act as a radio presenter for Virgin Radio for 13 weeks. He walked out however after six weeks. In 1996 he obtained a contract to work as a presenter for Radio 1 presenting the Radio breakfast show with his team ("the Team") consisting of Mr McGrath (who had a production role), Mr Revell, Ms Holly Samos ("Ms Samos") and Mr Jamie Broadbent ("Mr Broadbent"). The show had a "zoo format", that is to say Mr Evans was the lead or principal presenter with the Team reacting to his conversation and contributing comments, stories, jokes and other items as appropriate.
- After working for a year Mr Evans walked out of this job because he refused to work (as was contractually required of him) on Fridays. (In his autobiography Mr Evans stated that he left because he had run out of ideas.) He left (again as he says in his autobiography) "with a bitter and self-centred on air display of arrogance and self-righteousness". Yet this did not constrain him from saying on air that "he had been forced out" and that this was "outrageous".
- By a letter dated 1 September 1997 Virgin Radio agreed to engage Ginger Radio, Mr Evans's company, and Ginger Radio agreed in return for the sum of £300,000 to procure that Mr Evans would present the Show between 13 October and 18 December 1997 four days a week Monday to Thursday 7 am until 10 am and that an ongoing contract from January 1 1998 should be negotiated. Although the contract and the subsequent Presenter's Agreement required Mr Evans only to work Mondays to Thursdays, practically from his first until his last day at Virgin Radio he worked five (and sometimes six) days a week. Indeed (as I have already recounted) at a meeting leading to the purchase of Virgin Radio by SMG Jersey Mr Evans assured Mr Flanagan that he would continue to present the Show five days a week if the takeover proceeded. This practice created an expectation on both sides that he would work Fridays such that (as he told me) Mr Evans would have been surprised (and no doubt affronted) if on any Friday he had found that Virgin Radio had drafted in another presenter to present the Show.
- Mr Evans brought the Team with him to Virgin Radio and the same zoo format was used and he began presenting the Show on 13 October 1997. It has been suggested on behalf of Mr Evans that Mr Evans through his company Ginger Radio, now a wholly owned subsidiary of SMG Jersey, produced the Show. I do not accept this allegation which is not made in Mr Evans's pleading and which is not supported by any documentation. At all material times Virgin Radio (and Virgin Radio alone): (1) employed all the staff other than the Team; (2) held the radio licence; (3) owned the studio; (4) arranged the programming; (5) sold the advertising; (6) claimed the right to exercise and (so far as necessary) exercised editorial control of, and the power to give directions regarding, the Show, its format and contents. It is beyond challenge (whatever the Presenter's Agreement said) that Virgin Radio exercised all the functions and powers of producer and was the producer and Mr Evans over the period that he was presenter recognised this fact and acted on this basis. Ginger Radio exercised none of the functions and powers and was not the producer.
- Mr Evans's office, like that of Mr Pearson and of Mr Hain was on the first floor of the building. The offices had see through glass partition walls. The layout was calculated to facilitate communication between management and Mr Evans. The studio and zoo area outside were on the third floor, The impact of Mr Evans on Virgin Radio's audiences, the press and advertisers was immediate and immense. The Times described Mr Evans as "a brilliant broadcaster who has elevated inanity almost to an art form". A surge in audience figures between the fourth quarter in 1997 and the second quarter in 1998 resulted from his arrival at the station.
- On 8 December 1997, Mr Evans through Ginger Media completed the acquisition of VRH (the parent company of Virgin Radio) from Richard Branson's Virgin Group for about £83 million. As a condition of obtaining the finance which Mr Evans needed for this acquisition, under a Shareholders' Agreement dated 6 December 1997 Mr Evans agreed to be tied into the Ginger Group of companies by several long-term contracts. The crucial agreements were: (a) the Presenter's Agreement by which Ginger Radio (now a subsidiary of Ginger Media) as producer of the Show engaged the Kentfarm Partnership to provide or procure Mr Evans's services as presenter for five years and Ginger Media as guarantor guaranteed the performance by Ginger Radio of its obligations thereunder; and (b) the Partnership Agreement which constituted a partnership between Kentfarm (a subsidiary of Ginger Media), and Mr Evans and by which Mr Evans agreed to perform the obligations of the Partnership under the Presenter's Agreement. The structure was designed to preserve for tax reasons Mr Evans's status as a freelance radio and television presenter.
- Thereafter Virgin Radio continued to produce the Show and from late December 1997 Mr Evans presented the Show on Fridays. In about March 1998 Mr Evans and Mr Pearson agreed to move the Show back from 7 am 10 am to 6.30 am 9.30 am. All invoices for payment of fees due under the Presenter's Agreement were addressed by the Partnership to Virgin Radio and paid by Virgin Radio. Ginger Radio ceased to trade by 31 July 1998 and became dormant.
- On 13 January 2000, Mr Evans agreed to sell Ginger Media to SMG Jersey. The total purchase price payable on this acquisition ("the SMG Acquisition") was to be approximately £225 million and:
i) Mr Evans was to receive some £70 million, representing 31 per cent of the total consideration;
ii) Mr Evans's consideration (or rather its value), was not all to be paid immediately. Under the Option Deed over a third of his consideration (then valued at some £26 million) was effectively payable through two tranches of share conversions over two years;
iii) the Presenter's Agreement was to continue in force without any change to the terms of or the parties to the Presenter's Agreement;
iv) to reflect the change of ownership, some changes were however made to the Partnership Agreement; and
v) the vast majority of the purchase price of £225 million was attributable to Virgin Radio.
- In the negotiations for the SMG Acquisition, SMG had proposed that there would be a new service contract directly between Mr Evans and the acquiring company. This proposal however was objected to by Mr Evans for tax reasons. He proposed that, if there were such a change, he should have a tax indemnity from SMG to cover the likely £500,000 tax charge that would arise; it was also pointed out that there was likely to be an adverse National Insurance charge for SMG (estimated at £250,000) because Mr Evans would probably be regarded as having been an employee throughout the period since December 1997. In the light of Mr Evans's response, SMG did not pursue the proposal.
- The SMG Acquisition was completed on 14 March 2000 and on the same date the agreed amendments were made to the Partnership Agreement.
- In February 2000 Mr Pearson together with Mr Grace and Mr Owens decided to change the Virgin Radio music policy away from the classic tracks of the type which had been the staple diet of Virgin Radio since its launch and which had featured on occasion in the Show towards contemporary pop music. On 11 May 2000 Virgin Radio issued a press release celebrating the fact that on the RAJAR figures for the first quarter for 2000 Mr Evans was pulling away from his breakfast show rivals increasing his audience and had retained the position of the UK's biggest commercial radio breakfast show. Mr Pearson was however concerned about the failure of Mr Evans to comply with the production schedules and instructed a Mr Feasey to make a log of records played and not played on the Show. Beyond this, however, he was satisfied with the Show itself. Later in 2000 a drop in RAJAR figures for the second and third quarters of 2000 amongst the core audience of 25-34 year olds caused management to doubt the wisdom of the change of music policy adopted earlier in the year and the policy was reversed early in 2001.
- On 26 June 2000 the Scheme dated 7 April 2000 came into effect. Pursuant to the Scheme SMG replaced Scottish Media as the ultimate parent company of the SMG Group, and all the shareholders in Scottish Media holding lop ordinary shares in that company effectively exchanged their shares for four times as many 2.5p shares in SMG. On 29 June 2000 SMG Jersey became a directly held subsidiary of Scottish Media.
- In Autumn 2000 the Programme Director Mr Owens without reference to Mr Evans took the Team to breakfast. Mr Evans was affronted, abused Mr Owens on air and thereafter refused to talk to him.
- In September 2000 Mr Evans and Mr Pearson agreed to vary the Presenter's Agreement by moving the hours back half an hour from 6.30 9.30 am to 6.00 9.00 am.
- On Friday 20 October 2000 without any prior consultation with management Mr Evans introduced the first "All Request Friday Show", on which listeners were invited to telephone in and request a particular record. The Show afforded flexibility in choosing from the requests records already on the production schedule for the day and (as was its practice) in fabricating such requests. But this novelty was the occasion for departures from the production schedule and management did not raise any complaint specifically in regard to this aspect of the novelty before Mr Jackson took on his duties in June 2001.
- The quality of the Show, and in particular of the performance of Mr Evans and the Team, declined during the latter part of 2000 as did the audience figures.
- In October 2000 Mr Evans (who had hitherto permitted Virgin Radio's sales team to organise tours to the studio for clients) made clear that he would not permit any further tours. On 25 October 2000 there was a studio tour during the Show by some graduates who had been recently employed by advertising agencies. These tours had been going on for some three years and were a way of getting the graduates excited about Virgin Radio. The surly behaviour of one graduate on this occasion annoyed Mr Evans. On the stated ground that such visits adversely affected the Show and the Team (and in particular Mr Revell) Mr Evans refused to allow further studio tours. Virgin Radio sought to persuade him to change his mind, but its attempts were largely unsuccessful. Recognising the inevitable on 29 January 2001, after another incident Mr Pearson sent out an e-mail to Virgin Radio management indicating that, in the absence of exceptional circumstances, to avoid distracting the Team there should be no more studio tours to the Show. There were, however, some further tours, including a tour by a representative of McDonalds (the sponsor of the Show) which took place in June 2001. In early February 2001 the Virgin Radio commercial team tried to get round the ban on studio tours by asking Mr Evans and a member of the Team to agree to greet a client at the end of the Show. Mr Evans however turned down the request.
- In November 2000 Mr Evans succeeded in obtaining as guests of the Show the band U2 (whom Mr Pearson described in a press release as "the biggest rock band in the world"). No doubt at least in part as an expression of appreciation for their appearance Mr Evans played nine of their records. In so doing he departed from the production schedule.
- In November 2000 Mr Revell bought a new home and decided to rebuild it with his own hands and have a television series made about this project. The concentration of effort on this project had a bad effect on his performance on air. He was tired and not so spontaneous. In January 2001 Mr Evans became annoyed on this score and on the grounds of Mr Revell's lack of commitment and reported his concerns to Mr McGrath. Mr McGrath spoke to Mr Revell, but this led to no improvement. Mr Evans did not speak to Mr Revell direct in respect of his concerns. He could not face confronting Mr Revell. On 1 December 2000 at a meeting with Mr Pearson, Mr Grace and Mr Revell, Mr Evans complained about the change of music policy effected in February 2000, and Mr Grace responded promising to refocus the music and that Virgin Radio would be dedicated to playing the right tracks. But Mr Evans did not disclose his concerns about Mr Revell or Mr McGrath's conversation with Mr Revell.
- During December 2000 the Show ran a "Christmas Album" feature playing music which was completely off the station's play list. No complaint or action was taken by management specifically in respect of this feature.
- During the latter part of 2000 and the early part of 2001, Mr Evans recognised that the Show had fallen into something of a lull and became anxious to initiate the necessary remedial action. With his decision shortly before to relinquish his role as presenter, writer and producer of TFI Friday with Ginger Television, he decided to concentrate on the Show. His efforts were reflected in an improvement in the Show during the first quarter of 2001.
- Owing to the lack of communications between Mr Evans and Mr Owens, in February 2001 Mr Pearson instituted weekly Wednesday meetings attended by Mr Pearson, Mr Hain and Mr Evans. The discussions primarily focussed on the Show. Mr Evans was not involved in management in any real sense. The meeting focused, not on managing the business, but on managing Mr Evans's talent and the Show. At these meetings (almost as an aside) Mr Evans criticised the Team and complained of tensions in the Team and the lack of support from it. But Mr Evans did not look for or request any assistance from management or indicate that any dramatic action was called for or impending. He complained that Mr Owen was not doing a good enough job, and Mr Pearson agreed and decided to replace him. Also during these meetings Mr Pearson and Mr Hain repeatedly requested Mr Evans to stick to the production schedule on the Show and in particular to play more music than he did and to play the music selected by management. Mr Grace had likewise been making such requests. Having regard to Mr Evans's sensitivities, no reference was or could be made to any breach of contract or any possible sanctions. The impact of the requests was very limited, for whatever Mr Evans's response at the time, his improvements in these regards were always temporary only.
- In February 2001 Virgin Radio ran a week-long promotion for Amazon.com which related to the British music awards of 2001. The mechanic which Virgin Radio agreed with Amazon for this promotion involved Mr Revell singing certain of the Brit Award songs in different styles so as to disguise them. Listeners were to telephone in to guess which song he was singing. Mr Evans unilaterally changed the mechanic. From the first day of the promotion Mr Revell did not sing any songs in a disguised style, which effectively gave the answers away. Virgin Radio was neither warned nor consulted about this change in mechanic. Mr Evans says the artistic and creative integrity of the Show required the change, but that did not justify his so acting without prior consent.
- Mr Flanagan in his Chief Executive's report to the SMG Board on 16 February 2001 (based on Mr Pearson's draft report) recorded that trading in January 2001 was poor. This was mostly accounted for by a reduced level of sponsorship for the Show reflecting the ratings fall and less demand for Chris Evans. But the report went on to say that the Show had performed well with gains in London.
- In March 2001 Virgin Radio ran a week-long promotion for Guinness. The mechanic agreed with Guinness involved a competition for listeners each day from Monday to Thursday of the week with the winners being entitled on the Friday to take three friends to the Guinness brewery in Dublin from where the Show was broadcast. On the Monday without any prior warning or agreement Mr Evans announced that the winners on Monday to Wednesday should compete on Thursday and the winner on Thursday could take 11 friends the following day to Dublin. Mr Evans seeks to justify the change in mechanic as called for to achieve or preserve the artistic and creative integrity of the Show, but again this afforded no justification for acting without prior consent.
- On 28 February 2001, in response to a speculative inquiry for a job by Mr Jackson, Mr Pearson and Mr Hain met him in the coffee shop of Waterstones Piccadilly. All dealings with Mr Jackson had to be discreet since he was still employed by another radio station, Capital Radio. Mr Pearson and Mr Hain were impressed and were minded to appoint him Virgin Radio's new Programme Director. Respectful of Mr Evans and to ensure that Mr Evans would be happy with this appointment, before deciding on his appointment Mr Pearson arranged for Mr Jackson to meet Mr Evans on 6 March 2001. At that meeting at Mr Evans's flat, Mr Jackson and Mr Evans discussed the station and radio in general terms. They did not, however, discuss the Show in any detail or the Team. In particular, Mr Jackson was in no position to express any views about changing the Show as he was new to it. The result of the meeting was that Mr Evans enthusiastically endorsed Mr Jackson's appointment. After a further meeting with Mr Jackson on 13 March to agree his remuneration, on 15 March 2001 Virgin Radio made a public announcement of his appointment. Mr Jackson could not however take up his new appointment until he had given notice to Capital Radio and completed the period of gardening leave on which Capital Radio insisted. This expired on 11 June 2001. With the appointment of Mr Jackson there was no need for Mr Evans to attend weekly meetings with Mr Pearson and Mr Hain and he ceased to do so. Pending Mr Jackson completing his gardening leave and joining Virgin Radio, Mr Hain took over as acting Programme Director.
- From January 2001 until 19 June 2001, negotiations proceeded between Mr Evans and SMG Jersey for the amendment of the terms of the contracts for his services under the Presenter's Agreement. This was required in particular because the TFI Agreement had come to an end and he was in future to concentrate on radio. No final contract was ever concluded, but on 9 March 2001 the principal term was agreed that Mr Evans should receive in respect of his services as presenter of the Show a fee of £1.7 million from 1 January 2001 and a bonus of £200,000. In the expectation that a contract would be concluded the management accounts of Virgin Radio thereafter reflected these figures as the sums payable for his services.
- The means by which Mr Evans decided to address the problems with the Show were to shake up and unsettle the Team and without notice to or the consent of management he implemented this decision using the imminent arrival of Mr Jackson as the catalyst. To this end in early March 2001, after his first meeting with Mr Jackson, Mr Evans had a long meeting with Mr McGrath. At this meeting (without any reference to management) he informed Mr McGrath that Mr Jackson would be joining Virgin Radio as the new Programme Director and he made up a fictitious account of his earlier meeting with Mr Jackson. He told Mr McGrath that Mr Jackson was really scary, that he wanted to sort out the station, that he was not taking any prisoners, that he was firing on all cylinders, and that he (Mr Evans) had never been so scared in all his life. Mr Evans and Mr McGrath both agreed that Mr Revell was "not very good at the moment" and a discussion followed about all or some of the Team leaving the Show. As intended, Mr McGrath was unsettled. They agreed to talk again later and to keep secret what had been said. A second meeting took place later in March at Mr McGrath's home when Mr Evans told him that he needed to assert himself as producer of the Show. This second meeting left him even more unsettled and insecure. Later in the month Mr Evans had a meeting with the whole Team, at which he told them that Mr Jackson was coming, he was scary and they had to buck up their ideas.
- In his Chief Executive's report to the Board on 30 March 2001, based on Mr Pearson's draft, Mr Flanagan stated that the Show had gained audience figures for the first time in a year and expressed the view that the Show was performing well.
- On 19 April 2001 Mr Pearson arranged a further meeting at Mr Evans's flat between Mr Jackson and Mr Evans. At this meeting Mr Evans did 75 per cent to 80 per cent of the talking. He criticised Mr McGrath and Mr Revell in particular. He stated that he was not getting the support of the Team which he needed, that the Team was no longer committed to the Show, that it was a handbrake slowing him down, that Mr Revell and Ms Samos were superfluous and that Mr John Webster ("Webbo") the sports reader was the only character. Mr Jackson had yet to assume the post of Programme Director and did not feel competent to express a view. He was (tactfully) sympathetic but non-committal. He did not suggest or agree to any change in the Team. The moving force in this direction was Mr Evans and Mr Evans alone. (Mr Jackson's later letter dated 18 June 2001 placed a tactful gloss on the course of the meeting. I do not think that the letter impels or justifies a different reading of what occurred from that given by Mr Jackson in his evidence.)
- On Friday 20 April 2001 at the instigation of Mr Pearson, Mr Jackson met another presenter Mr Steve Penk ("Mr Penk"). The purpose was to consider the use of Mr Penk on programmes other than the Show and (when Mr Evans was absent, eg on holiday) on the Show. There was no question of considering him as a replacement on the Show for Mr Evans.
- On 24 April 2001, the sixth anniversary of the Team being together, on air Mr Evans without any warning asked Mr Revell what was special about the day. Though it was plain that Mr Revell did not know the answer, Mr Evans repeatedly asked him the same question. By so doing Mr Evans humiliated Mr Revell who became flustered on air and dried up. This was not a case of normal banter. Mr Evans's conduct plainly reflected the antagonism he felt towards Mr Revell and it was cruel and unsettling for Mr Revell as well as being bad radio. After the Show Mr Evans met Mr McGrath and Mr Revell. Mr Evans showed that he was unhappy with Mr Revell and his performance and (speaking for Mr Evans) Mr McGrath told Mr Revell that he was not "up to it" and asked him what he was doing. He said that Mr Evans was disappointed with him and questioned his commitment.
- On 25 April a breakfast meeting was arranged for McDonalds after the Show which was to be attended by Mr Evans. McDonalds were in negotiations with Virgin Radio for a contract to sponsor the Show. For no good or sufficient reason Mr Evans did not attend and this was very embarrassing for Virgin Radio. Nonetheless the McDonald's sponsorship of the Show went ahead for the agreed period.
- On 26 April; 2001 Mr Evans had a meeting with Mr Revell at which he told Mr Revell that he was the one person whom either everyone or Mr Jackson was telling him should go. This was not true: it was Mr Evans and Mr Evans alone who thought that he should go, but Mr Evans falsely attributed this view to others. As intended, this action further destabilised Mr Revell. Mr Revell responded that he would leave the Show if Mr Evans wanted him to do so and agreed to go away and think about what Mr Evans said. Mr Revell saw the writing on the wall and immediately instructed Ms Marian Derham of Harbottle & Lewis to act for him in respect of his contractual position with Virgin Radio. (She later spoke to Mr Pearson who confirmed that Virgin Radio recognised and would honour all the rights which it was understood that he should have whether or not formally included in his contract.) The following day, Mr Revell declined to discuss the matter further with Mr Evans saying that he was busy, but arranged to speak with him again on Monday 30 April 2001. On that day after the Show Mr Revell again met Mr Evans. Mr Evans again falsely stated that Mr Jackson wanted Mr Revell to go. Mr Revell said that he wanted to stay, but would go if he got all the money due in respect of the full term of his contract (some £385,000).
- The meeting with Mr Revell ended with Mr Evans thinking that Mr Revell had got the message and would leave and, when Mr McGrath came in to see Mr Evans immediately after the meeting with Mr Revell had ended, Mr Evans told him that Mr Revell was going to leave. Mr McGrath was upset and, thinking that Mr Evans wanted to break up the Team, said that he was leaving also and that he had been thinking of doing so since Christmas. At the end of the meeting, however, after a further talk with Mr Evans Mr McGrath said that he intended to stay. But Mr Evans must have realised at the end of the meeting that his actions taken to destabilise the Team were likely to mean the disintegration of the Team unless he took immediate and effective action to counter them, but he was not minded to take such action.
- After these two meetings Mr Evans attended a lunch meeting which Virgin Radio had arranged between Mr Pearson, Ms Caroline Reik ("Ms Reik"), Virgin Radio's Head of Sponsorship, and a representative of a client, Umbro. Mr Pearson, Ms Reik and Mr Evans were together some 20 minutes before the client arrived and some 15 minutes after the client left. But at no time did Mr Evans give any sign that anything was wrong with him, that he was upset or ill nor did he mention any problem or development with the Team or request an opportunity for a private discussion. In particular he gave no indication that he would not be turning up for the Show the next day.
- After the lunch Mr Evans went to a party at a pub to celebrate Virgin Radio's birthday. He was the life and soul of the party. He then went on a drinking binge at a number of public houses ending up at a lap-dancing club where he could expect to be spotted and was spotted by the press.
- The same evening (30 April 2001) Mr McGrath and Mr Revell met together and agreed that they should go back to Mr Evans to reassure him as to their firm commitment to the Show and to make a list of suggestions for its improvement. Mr Evans, however, never gave them the opportunity to have such a meeting or management an opportunity to mediate and find a solution to the problems that had arisen.
- On Tuesday 1 May 2001 Mr Evans did not attend to present the Show. He gave Virgin Radio no previous notice. The reasons were that he was hung over and he could not face the problems he had created with the Team. He decided to "look after himself'. He acted in this way though he knew that (as he put it in his evidence) it was "very unhelpful for a radio station indeed" for a presenter not to turn up without warning or give the listeners an explanation. Again as he said in his evidence, it was important not to disenfranchise listeners in this way. Instead of discussing with management his problems with the Team, without any warning he ran away from them flying with Billie to the USA.
- The Team accordingly had to present the Show on its own; there was no time to substitute another presenter which was (as Mr Evans knew) Mr Pearson's more favoured alternative in any case of Mr Evans's absence. After the Show Mr Pearson learnt from Mr McGrath and Mr Revell of their recent conversations with Mr Evans and their consequent uncertainty as to their futures. Mr Pearson spent much of the day trying in vain to contact Mr Evans, making inquiries of his personal assistant Ms Barringer ("Ms Barringer") and Mr Foster. Mr Evans telephoned Mr Foster between 10 and 11 am and asked Mr Foster to visit Mr Evans at his flat which he did. Mr Evans told Mr Foster his concern about the format of the Show with the impending departures of Mr Revell and Mr McGrath and that he had decided to fly with Billie to the USA at or about 3 pm that day. He was not ill and both he and Mr Foster knew that this was so. He was running away from the problems he had created which in his alcoholic state he did not want to have to face. But nonetheless Mr Evans and Mr Foster agreed that Mr Foster should tell Virgin Radio that Mr Evans was ill and on account of illness needed to take the rest of the week off. It was also agreed that, if Mr Foster should tell Virgin Radio that Mr Evans was going abroad, he should not do so before his plane had left. They so agreed though they knew that Mr Evans was duty bound to tell Virgin Radio the full truth immediately. Mr Foster accordingly thereupon telephoned Mr Hain to say that Mr Evans was ill and was unlikely to be coming in the next day. No reference was made to the flight to the USA. Mr Foster telephoned Mr Pearson at about 5.30 pm and told him that Mr Evans was ill and needed the rest of the week off but concealed that fact that he had already left the country. Misled as to Mr Evans's health, Mr Pearson had no option but to agree to the request for the rest of the week off. A stand-in presenter was then obtained for the Show.
- On 2 May 2001 the Mirror published an article saying that Mr Evans had missed the Show "again" because he had been out boozing with chums and was last seen going into a lap dancing joint. Ms Blenkinsop was then inundated with calls from journalists asking about Mr Evans's whereabouts. Since Ms Blenkinsop did not know what was going on and accordingly how to counter the bad publicity being engendered, she decided merely to say that Mr Evans was "taking a break".
- The same day Ms Blenkinsop received a telephone call from a Daily Star journalist to the effect that Mr Evans had been seen in Palm Springs. She informed Mr Pearson, and Mr Pearson then spoke to Mr Foster who confirmed that Mr Evans was abroad. Mr Foster then relayed an offer by Mr Evans to present the Show without the Team from either the USA or Portugal. (The making of this offer confirmed that Mr Evans was perfectly well and fit to present the Show.) Mr Pearson declined the offer, but made it clear (as was the fact) that his priority was to get Mr Evans back at Virgin Radio's station. Nothing was said or agreed in the course of this conversation about getting rid of the Team.
- Over 2 and 3 May 2001, Mr Foster had a number of telephone conversations with Mr Pearson. During these conversations Mr Foster told Mr Pearson that Mr Evans would no longer broadcast with the Team (and in particular Mr Revell and Mr McGrath) and that Mr Evans required two weeks off. These two requirements were non-negotiable. To save the Show from the threat by Mr Evans to walk away from it, Mr Pearson had no alternative to agreeing to Mr Evans's stipulations and in particular to give Mr Evans the next two weeks off (ie until Monday 14 May) and to remove Mr McGrath and Mr Revell from the Team. Mr Pearson agreed that he would tell Mr Revell and Mr McGrath that they should leave the Team, but Mr Foster subsequently told Mr Pearson that Mr Evans wished to give the news to Mr Revell and Mr McGrath because of their long association.
- On Friday 4 May 2001, Mr Evans telephoned Mr McGrath and Mr Revell to tell them that they could no longer work together. The inevitable result of this was the termination of the employment of Mr Revell and Mr McGrath at a substantial cost to Virgin Radio.
- During the period Tuesday 1 May 2001 to Friday 11 May 2002, in his many conversations with Mr Foster, Mr Pearson repeatedly asked to speak with Mr Evans to discuss what was going to happen to the Show. Mr Evans however persisted in refusing to speak to him and effectively excluded management from any opportunity to participate in or give any approval to any new format of the Show or the choice of members of a new team.
- On Sunday 6 May 2001, Mr Evans married Billie in Las Vegas. The day before, Mr Foster had told Mr Pearson that Mr Evans was going to marry her, but he said that the wedding would be in New York and on Monday 7 May 2001. This was a case of deliberate misinformation. Mr Evans in the ordinary course of events had no duty to inform Virgin Radio of private events such as his wedding or to enable Virgin Radio to exploit the consequent publicity for its benefit. But the situation was far from ordinary. In flagrant breach of contract Mr Evans had taken unilateral leave of absence, thereby creating both bad publicity and media speculation about his intentions. To mitigate the consequent risk of appearing out of control, he did need to keep Virgin Radio informed, and most certainly he owed a duty not to mislead. Late in the afternoon of Monday 7 May 2001, Mr Gillett telephoned Ms Blenkinsop and left a message for her about the wedding, and Mr Foster called Mr Pearson to confirm that the wedding had taken place. Virgin Radio broadcast an announcement of the wedding and issued a press release offering the station's congratulations and stating that the station had given Mr Evans a honeymoon week off. During the day Virgin Radio was inundated with inquiries from journalists about Mr Evans's wedding. Because of Mr Foster's misinformation the previous day and Mr Evans's failure to ensure that accurate information reached Virgin Radio in a timely fashion, Virgin Radio was unable to deal satisfactorily with these inquiries. Fortunately the steps taken by Virgin Radio prevented the misinformation occasioning any real damage to Virgin Radio.
- Virgin Radio was due to run a promotion for Umbro in the week 7 May to 11 May 2001. On 4 May 2001 Ms Reik had to inform Umbro that Mr Evans and the Team would be away that week and unable to present this promotion. Umbro had no choice but to accept this, but required compensation for this disappointment.
- In his board report to Mr Flanagan of 4 May 2001 Mr Pearson reported improved listening figures for the Show of 3 per cent, but he made no mention of Mr Evans's absences from the Show or his decision to disband the Team. He hoped that Mr Evans's talent and the arrival of Mr Jackson would enable these matters to be overcome. Mr Flanagan was however fully informed and he was concerned about Mr Evans reliability and the possibility that he might walk away.
- On Thursday 10 May 2001, Mr Pearson wrote a letter to Mr Foster expressing anxiety at not having been able to speak to Mr Evans, indicating his understanding that Mr Evans would return to the Show on Monday 14 May 2001 and stating that a three week break (which Mr Evans was then requesting) was too long. Mr Evans returned to the UK on the afternoon of Thursday 11 May 2001. The same day Mr Foster told Mr Pearson that the Show would involve a completely new team ("the New Team") but did not tell him who would constitute the New Team. Leaving aside his express contractual obligation in this regard, Mr Evans accepted in his evidence that it would have been the responsible conduct of a first class presenter to talk to Mr Pearson about the new format. No criticism is justified of management for failure to contribute ideas or otherwise to the Show, for Mr Evans did not want any and precluded management from having any voice or hand.
- By Sunday 13 May 2001, Mr Evans had decided that Ms Samos and Mr Broadbent should not appear on air on the Show but that they could have production roles. (He only informed them of this at 9 am on 14 May 2001). On the afternoon of 13 May 2001 he made last minute arrangement for the New Team to appear with him. Amongst other things without first consulting anyone at Virgin Radio he telephoned Webbo, a Mr Pritchard ("Mr Pritchard") and Ms Louise Pepper ("Ms Pepper") and told them to go into that station the next morning to do something on the Show.
- At 6 am on Monday 14 May 2001, Mr Evans commenced the Show with the New Team (Webbo as co-presenter and Mr Pritchard and Ms Pepper as supporting members). When he did so, Virgin Radio did not know who was going to be in the New Team (other than that the team would not include Mr McGrath and Mr Revell) and this occasioned the need, as the full facts filtered through, for three consecutive press releases relating to Mr McGrath and Mr Revell leaving, Mr McGrath, Mr Revell and Ms Samos leaving and Mr McGrath, Mr Revell, Ms Samos and Mr Broadbent leaving. The embarrassing need for three such releases gave a damaging (if true) impression of the relationship between Mr Evans and Virgin Radio.
- The new format of the Show ("the New Format") adopted by Mr Evans on 14 May 2001 included the following changes:
i) Mr Evans no longer used any of the Team;
ii) he ceased to be the sole presenter and co-presented the Show with the previous show's sports announcer Webbo, who was not up to the job;
iii) he engaged the services of Ms Pepper and Mr Pritchard in connection with the Show;
iv) there was an increased emphasis on sport (making the Show less attractive to female listeners);
v) the show was "blokey"; and
vi) he used poor quality sound recordings.
- Of these changes, only the loss of Mr McGrath and Mr Revell was specifically discussed or agreed in advance by Virgin Radio's management. Management had no choice but to allow these changes to be made if they were to retain Mr Evans.
- During the Show on 14 May 2001, Mr Evans made no mention of the changes to the Show or its personnel. His decision not to do so had not been discussed with Virgin Radio in advance. This decision was a serious mistake, unprofessional and bad radio and provoked an unprecedented number of listener e-mails. It made it difficult for Mr Pritchard to deal with callers enquiring about the changes, which meant that the Show could not answer callers with confidence.
- After the Show on Monday 14 May 2001, Mr Evans, Mr Pearson and Mr Hain had a discussion about the New Format. Mr Pearson agreed to give Webbo, Mr Pritchard and Ms Pepper monthly rolling contracts for the Show. He had no practical alternative. Mr Pearson and Mr Hain thought the Show was poor and Mr Pearson expressed strong reservations about the New Format. Mr Evans did not think it was very good and acknowledged that it had had a rocky start and asked for a little time to get the New Team established, to which Mr Pearson had no choice but to agree. The poor quality of the New Format was reflected in the highly critical, if not damning, press response. In the period between 14May 2001 and 3 July 2001, Virgin Radio received around 330 e-mails from listeners complaining about the changes to the Show. In the same period, Virgin Radio received over 200 e-mails from listeners expressing positive views about the Show. The imbalance of positive to negative e-mails is greater than these figures suggest, because of the many requests from listeners for information as to what had happened to the Team. The Show was panned in the newspapers.
- The poor quality of the New Format was the direct result of the change of format which Mr Evans engineered and thrust on management and his refusal to allow management any part in decision-making regarding the New Format which he adopted. The poor quality gravely concerned advertisers and (most particularly) McDonalds which had only recently agreed to sponsor the Show for three months on the basis of the audience and impacts they would get. With the decline in audience and impacts below this level, McDonalds had grounds for complaint and Virgin Radio needed to take action to appease McDonalds and retain their goodwill, and to this end had need to concede free promotions to them.
- Also after the Show on 14 May 2001, Mr Evans met Ms Samos and offered her a role producing and post-producing on the Show, which she declined; Mr Evans then met Mr Broadbent and offered him the same role, which he initially accepted but then later that day rejected. These offers were made without prior discussion with Mr Pearson or anyone else at Virgin Radio, As they were rejected, the inevitable result of Mr Evans's decision to remove them from the Team was that their employments were terminated at significant cost to Virgin Radio. The termination costs incurred by Virgin Radio in relation to Mr Revell, Mr McGrath, Ms Samos and Mr Broadbent amounted in total to £392,000.
- On 14 May 2001 Mr Evans agreed with Virgin Radio the dates for his holidays for the following six or seven months, none of which fell within June 2001. Having discussed the matter with Mr Pearson, on Tuesday 15 May 2001, Mr Evans engaged Mr Gillett as the day producer on the Show. On 16 May 2001 Mr Pearson, Mr Hain and Mr Jackson met with Mr Grace at the Arts Club. I have already referred to this meeting in Part III of this judgment. The purpose of this meeting was to enable Mr Grace to make a lengthy sales pitch to Mr Jackson in an attempt to persuade him to continue to use the services of Mr Grace as a consultant when he took up the position of Programme Director. Mr Jackson was reluctant to use his services before the meeting took place and his attitude remained unchanged. In the course of a telephone conversation with Mr Hain made during the trial, Mr Grace alleged that during this meeting Mr Jackson stated that he did not want to work with Mr Evans. I totally reject this allegation. It is clear that the substantial reason why Mr Jackson wanted a job with Virgin Radio was to work with Mr Evans. Mr Pearson, Mr Hain and Mr Jackson deny that any such statement was made and I believe them. The only person with whom Mr Jackson did not want to work was Mr Grace.
- In the week commencing Tuesday 29 May 2001, Virgin Radio had agreed to run a Boddingtons promotion. This was due to take place in the week leading up to an Amnesty International Concert on Sunday 3 June 2001. Virgin Radio hoped that the promotion would be part of a wider campaign that Boddingtons might place with it. Mr Evans had agreed to produce a mechanic for the Boddingtons promotion. Mr Evans initially suggested a "Whirlwind Webbo" mechanic for the promotion. Boddingtons approved it, but Mr Evans had second thoughts and rejected it as not good enough and Boddingtons accepted Mr Evans's decision. By the afternoon of Friday 25 May 2001, there was still no mechanic for the next week's Boddingtons' promotion. The matter was therefore left on the basis that Mr Evans would inform Mr Gillett of the proposed new mechanic and that Mr Gillett then would telephone Boddingtons over the bank holiday weekend to pass on this information and obtain their approval. Mr Evans did not so inform Mr Gillett and accordingly Mr Gillett did not telephone Boddingtons. When the promotion started on Tuesday 29 May 2001, Virgin Radio and Boddingtons discovered that Mr Evans had decided to use the "Whirlwind Webbo" mechanic after all without the approval of either of them.
- Boddingtons were unhappy at this turn of events and, as a result, Mr Evans changed the mechanic for the promotion on each of Wednesday, Thursday and Friday. As part of the Boddingtons promotion, Mr Dom Joly (a comedian) had been booked to appear on the Show as a guest on 31 May 2001. At short notice, Mr Evans informed Virgin Radio that he would not accept Mr Joly as a guest and that he wanted Mr Eddie Izzard instead. But Mr Izzard was not available. Mr Evans therefore agreed to accept Mr Joly as a guest, but on Friday 1 June 2001. Mr Joly was not available at this time and so the Show did not have him as a guest. Mr Evans's unreasonable and irresponsible conduct in respect of this promotion created a degree of dissatisfaction by Boddingtons which it took great efforts by Virgin Radio and a great deal of free extra impacts and an extra promotion to allay. Only by these efforts did Virgin Radio in the face of Mr Evans's defaults manage to secure the wider campaign for Boddingtons which it had set out to obtain.
- On Wednesday 30 May 2001, Mr Pearson and Mr Hain spoke to Mr Evans to discuss the New Format of the Show and they criticised it. Mr Pearson and Mr Hain believed that the Show with the New Format was poor and that, in the two and a half weeks since it had started, it had shown no signs of improvement. They sought to explain their concerns about the Show clearly but diplomatically and avoiding any confrontation. Amongst other things, they stated that the Show with the New Format lacked the appeal of the old, that the New Format needed much more work, that they were concerned about the quality of the prerecorded items being used on the Show, that Webbo was not developing as a presenter, that his presentation was relentless and he had too much airtime, that his delivery and content were extremely poor, that he clearly lacked the necessary experience and that Virgin Radio had received a large amount of negative feedback. Mr Evans responded by saying that he wanted no "negativity" about the Show.
- During the Show on Wednesday 6 June 2001 Mr Evans and Webbo were drinking lager, and Webbo was steadily getting drunk. At about 8 a m Webbo got the idea that Mr Evans, Webbo and the New Team should continue broadcasting the Show until the World Cup qualifying match began between England and Greece which was due to be played that evening. Thereupon Mr Evans announced on air the intention to do this. Whilst with proper planning such an idea might possibly have worked (though this is highly improbable), as sprung on Virgin Radio it was hair brained. In particular in view of his drinking Webbo would not have had the stamina. Mr Evans had never done a radio show for fourteen hours on the trot or anything like what he was proposing and it is most unlikely that he could have lasted out. At Mr Evans's request Mr Gillett telephoned Mr Hain on his mobile phone to inform him of the suggestion. Mr Hain responded that it was not a good idea and he would not agree. When Mr Gillett told Mr Evans what Mr Hain had decided, Mr Evans was amazed and decided to do it anyway. Mr Gillett telephoned Mr Hain again saying that Mr Evans really wanted to stay on air until the game. Mr Hain again refused permission. After Mr Gillett reported this conversation to Mr Evans, Mr Evans accepted that they should not stay on air and with ill-grace complied with the management decision, but the decision infuriated Mr Evans. At the end of the Show that day on air Mr Evans said that he would not speak to Virgin Radio's management again (and he was true to his word) and he finished with the words "sod 'em". Mr Evans considered that management in rejecting his suggestion were showing scant respect for him. It was an affront for which he never forgave them. Any complaint on the part of Mr Evans in respect of the decision of management was totally unfair, but it was the first time that his wishes were overruled. Mr Evans told me that he knew at the time that the rejection of his idea did not entitle him to ignore or breach his existing obligations to Virgin Radio, but nonetheless his resentment was so deep and long-lasting it soured his relationship for ever with Virgin Radio and coloured everything he thereafter did: it prompted him to consider his future away from Virgin Radio and to adopt the policy of non-co-operation and indeed public hostility which led to the total breakdown of relations. Over the two weeks following 6 June 2001 (ie 7 to 20 June), Mr Evans continued to present the Show but refused to talk to Mr Pearson or Mr Hain. Mr Evans characterises this as a stand off between Virgin Radio's management and himself and says that he wanted some acknowledgement that an important mistake had been made. But it was more than this. The absolute refusal by Mr Evans to talk to Virgin Radio's management and his rejection of all conciliatory gestures were his calculated and spiteful response to a legitimate attempt by management to assert its right to manage the station.
- The next morning (Thursday 7 June 2001) in view of past experience it was not clear to Mr Pearson and Mr Hain how Mr Evans would feel about what had happened the previous day and they therefore sensibly decided that the best approach was to see if Mr Evans would make an issue of it. They waited for him in Mr Pearson's office when the Show ended. But Mr Evans walked past the glass walls and open door of the office avoiding making eye contact with them. Mr Evans ignored Mr Pearson when he said good morning though he could see that Mr Pearson and Mr Hain were waiting to speak to him. That afternoon, Mr Foster telephoned Mr Pearson to say how annoyed Mr Evans was about the events of 6 June 2001. During their conversation Mr Pearson asked Mr Foster whether he could meet Mr Evans to discuss the matter anywhere and anytime that suited Mr Evans. Mr Foster said that he would talk to Mr Evans and let Mr Pearson have Mr Evans's response to this proposal, but Mr Foster never did communicate with him because Mr Evans was unwilling to meet Mr Pearson.
- On Monday 11 June 2001, Mr Pearson waited for Mr Evans as he came from the studio to his first floor office to discuss with Mr Evans the events of 6 June 2001, but Mr Evans walked straight past him ignoring him. Mr Pearson took the view that he could not allow matters to continue in this way and so he followed him into the room, where he was just beginning a meeting with Mr Gillett and Mr Pritchard. When Mr Pearson tried to talk to him, Mr Evans was curt and dismissive: he interrupted Mr Pearson to say that he would never be talking to him again (and he never did talk to him again) and would be writing him a letter. Mr Pearson responded that he felt that this was unreasonable, particularly after an incident when he had not even been at the station. Mr Evans's actions were plainly designed to humiliate Mr Pearson.
- Later that day, Mr Evans wrote an intemperate letter to Mr Pearson complaining about the decision on 6 June 2001. It was gratuitously copied to Mr Hain, Mr Flanagan, Mr Jackson (who had arrived to take up his post as the station's Programme Director that day) and Mr Gillett (a member of Virgin Radio staff). The letter, which was designed to cause maximum embarrassment both to Mr Pearson and Mr Hain, stated that Mr Hain had "fucked up big time", that Mr Evans had lost all confidence in Mr Hain and Mr Pearson and that Mr Hain should resign.
- Mr Pearson responded to this letter by writing a characteristically conciliatory handwritten note to Mr Evans, which he gave to Mr Gillett to give to Mr Evans. Mr Evans returned the letter the next morning unopened. Mr Evans says that he returned it because it was not the big gesture from management and the formal response to his formal letter which he wanted, What he was looking for was a grovelling apology. But he never even read the letter, and if he had done so he would have seen that it was written in a deliberately modest and non-confrontational way, in order to induce Mr Evans to communicate with management again. Mr Evans in his evidence accepted that his conduct was childish and unprofessional, as indeed it was.
- Upon his arrival at the station on Monday 11 June 2001, Mr Jackson sought to arrange a meeting with Mr Evans through Mr Evans's personal assistant Ms Barringer but Mr Evans refused to meet with or speak to Mr Jackson as well as Mr Pearson and Mr Hain.
- On Tuesday 12 June 2001 when he received his note returned unopened from Mr Evans and was told by Mr Jackson that Mr Evans was not agreeing to meet him, Mr Pearson telephoned Mr Foster and told him that matters were escalating as a result of Mr Evans's actions and that damage was being done to the station. Mr Pearson warned Mr Foster that he was officially logging his concerns with Mr Foster in his capacity as Mr Evans's agent. Mr Foster told Mr Pearson that he should leave the matter with him and that he would talk to Mr Evans and resolve the problem.
- The same day Mr Pearson submitted his contribution to the composite monthly report for the SMG Board. In this document he reported on Virgin Radio's trading and audience in May and wrote:
"Following a sustained audience decline Chris Evans has decided to reformat his show using a completely new cast of characters. It is too early to gauge the success of this. Whilst this should ultimately increase the audience, it could lead to an initial fall."
As Mr Pearson made clear in his evidence, whilst he regarded the situation arising from Mr Evans's policy of non-communication and non-co-operation as critical and the decline in audience for the Show (in contrast to the success of the rest of the station) as serious, he had every confidence that the entry on the scene the previous day of Mr Jackson would see a restoration of relations and the combination of the talents of Mr Evans and Mr Jackson would bring about a restoration of fortunes for the Show. He could not anticipate that Mr Evans would maintain a continuing policy of non-communication and non-co-operation with Mr Jackson whose appointment he had so enthusiastically supported. He informed Mr Flanagan of the full situation but considered it premature to include a reference to Mr Evans's behaviour in the report to the Board until he saw how things worked out.
- On Thursday 14 June 2001 in the same spirit Mr Evans wrote a spiteful letter to Ms Reik, criticising her professionalism. This was a rude and unprofessional as well as totally unjustified letter to someone who could not answer back. On the same day Mr Pearson telephoned Mr Foster to complain of the refusal of Mr Evans to talk to Mr Jackson.
- On Friday 15 June 2001, Ms Blenkinsop asked Mr Evans to participate in an interview and photo shoot for a feature that The Radio Times was doing on all the major radio breakfast shows. Mr Evans contends that, had he been told that a front cover was guaranteed, he could well have agreed to do the feature even though his view was that he should not be involved in an article that covered all of the breakfast shows. But a front cover picture for Mr Evans was likely if he agreed to participate. Regardless of this, however, given the difficulties being encountered with the Show, it was important for Mr Evans to participate in this major public relations opportunity and it was unreasonable for Mr Evans to refuse to do so. Ms Blenkinsop thought so and that his reason for refusal was his unhappiness with management. In my judgment the reason why he refused to do it was the same pique which caused him no longer to talk to management: it had nothing to do with the guarantee of a front cover or any other reason put forward to justify Mr Evans's position.
- Either on Friday 15 June 2001 (according to SMG) or on Thursday 14 June 2001 (according to Mr Evans), Mr Pearson telephoned Mr Foster to request an urgent meeting to discuss the situation with Mr Evans. They met at Starbucks for this purpose on Friday 15 June 2001. At the meeting: (1) Mr Pearson said that he was gravely concerned that Mr Evans was continuing to refuse to talk to him and was now refusing to talk to Mr Jackson; (2) Mr Pearson said that he was also gravely concerned that, though there was a need for Mr Evans to do the Radio Times feature, he was refusing to do so. Mr Foster agreed how important this form of publicity would be for the Show; (3) Mr Pearson said that Mr Evans's conduct was unacceptable and matters could not continue as they were; and (4) Mr Pearson requested that Mr Evans meet with Mr Jackson. Mr Pearson also stressed that he was having this conversation with Mr Foster in his capacity as Mr Evans's agent. Mr Foster responded that he would speak to Mr Evans and that he was sure that he could bring Mr Evans around and fix matters over the weekend.
- Later that same day Mr Jackson, who had been trying to meet Mr Evans all week, told Ms Barringer that he would meet Mr Evans wherever and whenever suited him, whether inside or outside business hours. On Sunday 17 June 2001, Ms Barringer on instructions from Mr Evans telephoned Mr Jackson and told him that the meeting was never going to happen.
- On the morning of Monday 18 June 2001, on learning of what Ms Barringer had told Mr Jackson, Mr Pearson telephoned Mr Foster to discover that Mr Foster had not even tried to contact Mr Evans over the weekend. He then reiterated the points that he had made at his meeting with Mr Foster the previous Friday.
- The same morning, Mr Pearson wrote a letter to Mr Foster and Mr Jackson (at Mr Pearson's suggestion) wrote a letter to Mr Evans. Mr Pearson's letter stated that he was extremely concerned about the state of Mr Evans's relationship with Virgin Radio; that (as Mr Evans accepts was true) Mr Evans was refusing to speak at all on any matter to him; that (as Mr Evans accepts was true) Mr Evans was refusing to speak to or meet Mr Jackson; that (again as Mr Evans accepts) the situation was unacceptable and untenable; and that the refusal of the Radio Times photograph shoot was unacceptable. Mr Foster passed on the contents of the letter to Mr Evans the same day. Mr Evans's suggestion at the trial that Mr Pearson agreed to withdraw this letter is clearly unfounded: indeed Mr Foster replied to it by letter dated 26 June 2001. Mr Jackson's letter was an exercise in tact as well as being (as Mr Evans concedes) both constructive and conciliatory. He expressed the view that he and Mr Evans could work successfully together. He referred to the meetings they had had before he joined Virgin Radio and the references made (in fact by Mr Evans and Mr Evans alone) at that meeting to the need to refresh the Show and the more radical changes which Mr Evans had unilaterally effected. He requested Mr Evans to adhere to the production schedule. He emphasised that he could not be closely involved and contribute by letter alone: they must meet. Both letters were written because the situation was intolerable and Virgin Radio needed to stress how unacceptable Mr Evans's conduct was. They were restrained and non-confrontational in their wording and their tone.
- After seeing these two letters Mr Foster telephoned Mr Jackson to say that his letter would make Mr Evans mad and should be withdrawn. He then came round to Virgin Radio's offices to emphasise the point in person. Mr Jackson said that a decision whether to withdraw the letter was a matter for Mr Pearson. Mr Pearson stood by its contents. Mr Foster spoke to Mr Pearson over the telephone and said that, if Mr Evans saw Mr Jackson's letter, "it would all be over". Mr Pearson said that, if Mr Foster could persuade Mr Evans to have a meeting with Mr Pearson and Mr Jackson, he would not insist on the letter being shown to Mr Evans. Mr Jackson's letter was not sent to Mr Evans but Mr Foster communicated its contents to him.
- On Tuesday 19 June 2001, Mr Foster met Mr Evans on a bench in Golden Square and managed to convey to him how serious the situation was and to persuade him against his will to talk to management. Mr Evans's exact words were: "Okay fine, I will do it, we will play defence for 90 minutes". According to Mr Foster, this meant: "You lie back, take your punishment and get on with the game". Plainly what the words meant was that Mr Evans would go through the form of having a meeting, but it would have no effect on his attitude or the way he would behave in the future.
- Later that day Mr Foster told Mr Pearson that he had spoken to Mr Evans, who would now comply with Virgin Radio's requirements and would have a meeting with Mr Pearson and Mr Jackson. He also had a telephone conversation with Mr Jackson in which he said that Mr Evans would now have a meeting with them. But in neither conversation did Mr Foster give a time or place for the meeting. It was left that Ms Barringer would fix the time and place, (Mr Foster confirms this in paragraph 35 of his witness statement), but she never received the necessary instruction from Mr Evans to fix such an appointment: most certainly no appointment was fixed for 9 am the following day. Because of a prior commitment Mr Jackson could never have made or met such a commitment.
- On Wednesday 20 June 2001, there was no meeting between Mr Evans and Mr Pearson and Mr Jackson. Mr Evans has given a whole series of different accounts of what he did after the Show that day. The thrust of his case as initially presented (and as reported by him to the press) was that he waited three or two and a half hours at his office on the first floor at Virgin Radio's offices to meet Mr Pearson and Mr Jackson, but they did not come. The evidence however revealed that he spent one hour after the Show on the third floor in the "zoo" (the communal area outside the studio) drinking lager with three friends and spent fifteen minutes in the lavatory or elsewhere in the station and then left (as pre-arranged with Billie) on her arrival at 10.15 am. If Mr Evans was awaiting or wanting a meeting, he never gave any indication that this was so. He did not go down to the first floor where his and Mr Pearson's offices were, make any inquiry of his or Mr Pearson's personal assistant or enquire when or where the meeting was to take place. Neither Mr Pearson nor Mr Jackson had any reason to know that he was awaiting or wanting a meeting. Mr Evans made no effort to let them know that he was there or to inquire as to their whereabouts. Mr Pymont in his opening explained Mr Evans's reasons for so acting as attributable to fear that he was going to be fired and his wish not to be fired. He did not want a meeting because he feared the consequences. If he had wanted a meeting, Mr Pearson would immediately have seized the opportunity to have the meeting and Mr Jackson would have joined it as soon as he returned to the office. Mr Evans's presence in the building in my view had no connection with any proposed meeting. It was referable to his wish to drink with his friends whilst awaiting the arrival of Billie. My conclusion involves the total rejection of the evidence of Ms Blenkinsop that Mr Pearson stormed about the office that morning asking the whereabouts of Mr Jackson as he was needed for a meeting with Mr Evans. Ms Blenkinsop made no reference to this episode in her first witness statement given whilst part of the management of Virgin Radio: it is quite extraordinary that she should not have done so if the episode occurred as she now says. The episode is totally improbable as well as inconsistent with the thrust of the evidence before me. No meeting had been fixed. As I have already indicated, if Mr Pearson had thought that a meeting had been fixed, I have no doubt that he would have ensured that it took place whether or not for any reason Mr Jackson could attend.
- After Billie had arrived Mr Evans went to lunch at the restaurant of his friend Mr Aldo Zilli ("Mr Zilli"). According to Mr Evans he then heard that Steven Joel, a producer for Ginger Television and someone whom Mr Evans regarded as a friend, had told Mr Zilli that he was going to have nothing more to do with him, and on a separate occasion around this time he had learned that Ms Clare Barton, a production manager for Ginger Television, had reacted aggressively in response to Mr Evans's attempt to stop Webbo being a cameraman for a programme about Mr Zilli. Mr Evans says that he concluded from these separate episodes and his experience of the last six weeks or so that the management of Virgin Radio and SMG were blaming him for the departure of the Team and now wanted to get rid of him. The views and actions of Mr Joel and Ms Barton had nothing to do with the management of Virgin Radio or SMG and the stage had not been reached when the question of Mr Evans dismissal had arisen.
- At the prearranged Virgin Radio Management meeting held at 11 am on 20 June 2001 it was decided that in spite of Mr Evans's apparent agreement to hold a meeting (his fulfilment of which for good and sufficient reason was clearly in doubt) Mr Pearson should tell SMG that the situation remained critical. But no approach was made with a view to terminating his contracts. There was a prearranged SMG Radio Divisional Performance Review meeting between Mr Pearson and a Mr Donnelly and Mr Flanagan and a Mr Watt at 2 pm the same day. At this meeting, Mr Pearson did not seek SMG's permission to terminate Mr Evans's contractual arrangements.
- During the rest of Wednesday 20 June 2001, Mr Evans began a three-day drinking binge. He "hit the pub" and got drunk. He went in turn to the Blue Post in Soho, the Nag's Head, the Turk's Head, Motcombs, the Grenadier (where he had a public row with Billie and parted company) and Stringfellows. Newspapers reported that Mr Evans urinated outside a public restaurant in Covent Garden and Mr Zilli vomited in the street.
- Mr Evans pleads in paragraph 61 of his amended particulars of claim:
"Mr Evans's reaction to these events, and the intolerable pressure placed on him by the Virgin Radio management, was to drink heavily during the rest of 20 June 2001, with the result that he was not able to attend work on 21 June 2001."
- There was no such pressure placed on Mr Evans. The reverse was true: Mr Evans was throughout placing intolerable pressure on the management. Mr Evans knew (and he admits that he knew) that his drinking session beginning on 20 June 2001 was likely to be splashed across the tabloid papers and would be the subject of damaging press articles, some unfair and some unbalanced. As he stated in his evidence he was "so annoyed with everyone at Virgin Radio that [he] did not care what happened".
- On Thursday 21 June 2001 because of his excessive drinking Mr Evans did not attend to present the Show. Mr Pritchard or Ms Pepper telephoned Mr Gillett to ask where Mr Evans was and Mr Gillett knocked at Mr Evans's front door. Billie answered the door and said that Mr Evans could not do the Show. Billie called Mr Foster. Mr Foster in turn called Ms Barringer and must have told her that Mr Evans was ill and to pass this message on to Mr Pearson. Virgin Radio accordingly announced on air that he was ill. Mr Pearson telephoned Mr Foster, who confirmed that Mr Evans was ill, although he could not find him. He was not ill: he was hung-over. He had no justification for not turning up for work. Instead of going to work, Mr Evans went to Starburgers at Waterloo Station for breakfast, bought some antiques and spent the rest of 21 June 2001 at the Nag's Head where he knew he was visible to journalists and could be seen to be drinking and not to be ill. At about 7 pm that evening, Mr Foster confirmed to Mr Pearson that he had seen Mr Evans and (incorrectly) that he was ill, that because of illness Mr Evans would not present the Show on Friday and that on Friday morning Mr Evans was going to see a doctor to get a sick note. In fact when Mr Foster saw Mr Evans in the Nag's Head that day, Mr Evans was in good spirits, drinking and not ill. He had no intention of visiting a doctor the next day to obtain a sick note, The fact that Virgin Radio (as it proved) wrongly announced that Mr Evans was ill (as it had to) proved very damaging.
- On Friday 22 June 2001, Mr Evans's drinking session of 20 and 21 June 2001 resulted in lurid articles on the front page of The Sun and in The Daily Star and The Express. These articles and the ones that followed exposed Virgin Radio and SMG to ridicule, and they confirmed what Mr Evans must have already known, namely that his movements were being tracked by the press on 20 and 21 June 2001. Indeed the press had been on to Mr Evans for six years about his drinking. Mr Evans's drinking and his claims to illness became the media story of the week, causing great damage to the Virgin Radio brand by suggesting (as was the case) that Virgin Radio's management was not in control of the situation. This is not what Virgin Radio or SMG wanted (they pursued the only sensible policy of saying as little as they reasonably could to the press). There is no evidence to suggest that the media frenzy around his drinking in the week that followed was initiated and/or orchestrated by Virgin Radio (as suggested by Mr Evans). Indeed nothing could have been more damaging to their interests. Mr Evans has suggested that Virgin Radio should have issued a press statement setting out the true facts. Such a course was never suggested by Mr Evans or Mr Foster at the time and was totally impracticable in the absence of his co-operation, in view of his unpredictability and the likelihood of his taking offence at anything said which might (albeit truthfully) be critical of him.
- By reason of his drinking Mr Evans did not attend to present the Show on Friday 22 June 2001. Mr Evans contends that he was not required to present the Show, because he was ill and he was not required by the Presenter's Agreement to present the show on Fridays in any event. As I have already held he was not ill: he was hung-over. The long established course of dealing required him to present the Show on Friday, at least unless and until after he had given Virgin Radio adequate notice of the fact that he was not going to do so, and no such notice was given. The acquiescence of management in Mr Foster's late notification that Mr Evans would not attend was due to Mr Foster's false assertion that he was ill.
- On the morning of Friday 22 June 2001 Billie went shopping, spoke to a journalist from the Mirror, saw that the press was gathered in force outside their home and reported this fact to Mr Evans. Nonetheless Mr Evans continued his drinking binge. He and Billie walked in full view of the journalists to the Nag's Head at about 10.20 am. He chose the Nag's Head because it was a place where he knew everyone could find him. He and Billie climbed in through a window before opening time'. They stayed all day and evening until closing time. They telephoned various members of Virgin Radio staff and invited them to join them. On his own admission it was like Waterloo Station. On hearing that Mr Evans was at the Nag's Head, Virgin Radio instructed an assistant solicitor at Davenport Lyons, Mr Paul Mustafa, to go to the Nag's Head to see what was going on and he gave evidence of what he saw and heard. At the Nag's Head, there were journalists everywhere, inside and outside the pub. Mr Evans was drinking, talking volubly, telling jokes and giving no sign of ill-health. At one stage he crawled about on all fours on the floor. He knew that he was surrounded by journalists. Mr Evans accepts that he knew that Mr Foster had explained his failure to present the Show as due to his being ill and that his actions made Virgin Radio look completely out of control. He was holding two fingers up at management inviting Virgin Radio to take action if it dared.
- On Friday 22 June 2001, Mr Pearson spoke to Mr Flanagan and they agreed that the situation was not sustainable, with the problem of Mr Evans not turning up (again), his dubious (if not false) claims to illness (again), the negative publicity that Mr Evans was deliberately and inevitably going to generate and the fact that they still did not know when he might return to the Show. They discussed the possible reasons for Mr Evans's conduct, speculating whether he was seeking to engineer his departure from Virgin Radio in circumstances that would still allow him to qualify for the Tranche C Shares. They decided that Mr Pearson should explore whether they could induce Mr Evans to stay with Virgin Radio (and thus avoid the damage of his leaving the station), but at the same time protect the Show and Virgin Radio from exposure to further damage if Mr Evans continued in his present state of mind as presenter of the Show. The inducements took the form of offers of a variety of alternatives, including the possibility of taking a sabbatical from the Show or changing his role to presenting a weekend show.
- At about 3.45 pm on Friday 22 June, Mr Pearson had a meeting with Mr Foster at Mr Pearson's office. Mr Pearson stated that Mr Evans's conduct was unprofessional and (in the words of Mr Foster) "bad for the station". Amongst the options suggested by Mr Pearson was Mr Evans presenting a weekend show and his taking a sabbatical and then later returning to present the Show and he invited any other suggestion which Mr Evans might have. Mr Pearson indicated that he wanted to avoid Mr Evans walking out as he had at Radio 1 and asked Mr Foster if there was anything that Virgin Radio could do to avoid the same ending happening. He emphasised that he was speaking with Mr Flanagan's authority and that he was open to suggestions from Mr Foster. Mr Foster indicated that Mr Evans was in a "dark place" and asked for Mr Pearson to be patient while he spoke to Mr Evans.
- Also on Friday 22 June 2001, Mr Pearson wrote to Mr Foster indicating that in view of the events of the day and without confirmation of Mr Evans's condition in the sense of his fitness to present the Show, alternative arrangements had been made for presenting the Show on Monday 25 June 2001 and, even if Mr Evans were well, he did not need to come in for the Show on that day. Virgin Radio had no other practicable alternative but effectively to suspend Mr Evans. This action on the part of Virgin Radio was plainly reasonable and responsible and Mr Evans accepted that this was so. Mr Pearson and Mr Foster entered into an arrangement (confirmed by Mr Foster's letter dated 26 June 2001) that Mr Evans need not present the Show whilst he was ill and that Mr Foster would inform Mr Pearson when he was well enough to do so. Mr Foster did not so inform management until 27 June 2001 (the same day that he consulted Dr Gayner) when the die was already cast and accordingly Mr Evans never presented another Show.
- Mr Evans knew very well that by his conduct on Wednesday 20, Thursday 21, and Friday 22 June 2001 (as was stated in the press itself) he was exposing Virgin Radio and SMG to ridicule, humiliating them and bringing them into disrepute. Damaging press reports about Mr Evans's conduct (and in particular his drinking) and his position at Virgin Radio continued and increased over the weekend (Saturday 23 and Sunday 24 June 2001). Although Mr Evans spent Saturday, Sunday and Monday at his home in Surrey and did not speak to, nor was he seen by, the media, he resumed his media-orientated activities on Tuesday 26 June 2001.
- Mr Foster visited Mr Evans at his Surrey home over the weekend in order to discuss the offer that Mr Pearson had made on Friday 22 June 2001. Mr Evans stated that he was not interested in any of the offers made and on Monday 25 June 2001 Mr Foster telephoned Mr Pearson to pass on this message. No reference was made to any wish on the part of Mr Evans to carry on presenting the Show. Mr Foster said, however, that Mr Evans was open to a deal under which he was paid for leaving the station. They agreed to meet the following day.
- After his conversation with Mr Foster, Mr Pearson discussed with Mr Flanagan what SMG might be prepared to offer Mr Evans by way of settlement in respect of the Tranche C Shares and for leaving the Show. They came up with a package worth just under £3 million.
- In the absence of the necessary confirmation by Mr Foster that Mr Evans was fit, Mr Evans did not present the Show on Tuesday 26 June 2001. That he was not ill is made clear beyond question by the fact that he did not consider himself ill and by what he did that day. Although he knew that the press was camped outside his home, Mr Evans and Billie went in a white van from their home for anything other than a normal supermarket shopping trip. Mr Evans hid in the back of a van. Mr Evans alerted the press to his presence by jumping out of the van when he saw a photographer parked on his property and tussling with him. Mr Evans then got back into the van and, predictably, the press followed him in large numbers down to Waitrose. At Waitrose, Mr Evans and Billie bought large quantities of lager and wine and were photographed taking it into their van. By so acting Mr Evans knowingly and deliberately inflamed the already appalling publicity which Virgin Radio was getting most particularly in the popular press. In his evidence Mr Evans conceded that in view of the daily humiliation to which he was subjecting it, Virgin Radio had to act, though he added that it did not have to fire him. What else it could have done he never satisfactorily explained.
- On Tuesday 26 June 2001, Mr Pearson put to Mr Foster the £3 million package that he and Mr Flanagan had discussed the previous day. He told Mr Foster that any agreement had to be reached by the morning of Thursday 28 June 2001, failing which they would move to terminate Mr Evans's contractual arrangements. Some thirty minutes after the meeting. Mr Foster called Mr Pearson and told him that the offer was not acceptable, but that he thought £6-7 million would be. Mr Pearson said that he was seeing Mr Flanagan and that he would refer the counter offer to him.
- On Tuesday 26 June 2001, Mr Foster faxed two letters to Mr Pearson at Virgin Radio. The first (to which I have already referred) was expressed to be in reply to Mr Pearson's letter of 22 June 2001 and confirmed the agreement that "whilst Chris is ill I will keep you informed as to when I believe he can return to the radio station to broadcast the radio show" and stated that he was looking forward to their meeting that afternoon. Mr Foster wrote in these terms though he knew that Mr Evans was not ill. The second, in purported answer to Mr Pearson's letter dated l8 June 2001, stated that Mr Evans (as he acknowledged in evidence) understood the absolute need for him to converse fully with management and (falsely) that Mr Evans had made himself available until 11.30 am to meet with management on 20 June 2001. Both these letters were plainly written as a last ditch effort to head off his anticipated dismissal. By reason of an administrative error at Virgin Radio these letters did not reach Mr Pearson and he was not aware of them at the time.
- When Mr Foster met Mr Evans that evening, Mr Evans turned down the offer of £3 million and instructed Mr Foster to write to Mr Pearson saying that Mr Evans would be coming back to work the next day. This was clearly a tactical move to face out SMG in the light of the fact that he knew that Virgin Radio intended to dismiss him the following day. The offer (if it was intended seriously) removes any doubt about whether Mr Evans or Mr Foster thought that Mr Evans was ill: the letter proceeded on the basis that he was fit and well.
- Mr Pearson flew to Scotland in the afternoon of Tuesday 26 June 2001. That evening he discussed the £3 million offer and Mr Foster's counter-offer with Mr Flanagan and Mr Watt and agreed that they could not go any higher than the figure of £3 million.
- The press articles published on Wednesday 27 June 2001 were the predictable result of Mr Evans's conduct in courting press attention to his shopping trip the previous day, and were very damaging to Virgin Radio.
- Mr Pearson and Mr Foster spoke to each other on the telephone early in the morning of Wednesday 27 June 2001. Mr Pearson confirmed that £3 million was SMG's final offer. Mr Foster said that Mr Evans wanted more than £3 million and, when Mr Pearson pressed him on this, he mentioned a figure of £7-8 million. The matter was left that Mr Foster would speak to Mr Flanagan.
- At around 9.40 am on Wednesday 27 June 2001 Mr Foster and Mr Flanagan spoke with each other over the telephone. During the conversation Mr Foster again said that Mr Evans was "in a dark place". Mr Flanagan referred to Mr Evans's recent behaviour and, when he expressed the view that some of the press comment slagging "men in suits" could only have come from Mr Evans, Mr Foster became defensive and said that Mr Evans had not spoken to the press. This was not true. Mr Foster complained that SMG had published confidential information about the Tranche C Shares. Mr Flanagan rejected this complaint pointing out that this information was in the public domain. Mr Foster said that Mr Evans wanted to return to the station but, when pressed by Mr Flanagan, would not say when. Mr Flanagan said that they had now passed the point where Mr Evans could return and the conversation had to be about termination. He said that Mr Pearson had persuaded him to reach a compromise with Mr Evans rather than simply terminate the Presenter's and Partnership Agreements. If Mr Evans did not accept the £3 million, they would have no option but to terminate them. Mr Foster sought to raise management failures at Virgin Radio there were no such failures, and most certainly none of any significance Mr Flanagan cut him short and said the issue was Mr Evans's failure to comply with his contracts and the public relations damage it was causing to Virgin Radio. Mr Foster stated that the dispute would end up in court. At Mr Foster's request, Mr Flanagan confirmed that he would be willing to speak to Mr Evans directly. Mr Evans did not however call him.
- Mr Foster immediately reported the conversation to Mr Evans, who by this time knew that the game was up. Also following this conversation, SMG took steps to call board meetings for the purpose of terminating Mr Evans's contracts and notices convening the board meetings were sent out that afternoon. When later the same day Mr Foster informed Mr Evans of service of the notices, Mr Evans had to face the imminent prospect of a shameful public dismissal. This (combined with the after effects of the three day binge) made him very depressed, a depression reflected in the photograph by the press of him the following day with his head in his hands. The imminent prospect of dismissal brought with it the imminent prospect of litigation against the defendants, and as tactical measures to improve his position in that litigation: (1) Mr Foster telephoned Mr Flanagan's office and left a message with his personal assistant that Mr Evans would be turning up for work the next day; (2) on Mr Foster's advice Mr Evans wrote a letter to Mr Pearson saying that he would be coming in the following day to do the Show. Mr Pearson replied to this letter saying that Mr Evans would not be permitted to present the Show. The letter was on Ginger Radio notepaper (a company of which Mr Pearson was not an officer) and was signed on Mr Pearson's behalf by Mr Watt (who was a Ginger Radio director); and (3) at 8 pm at his flat Mr Evans arranged to be examined by a general practitioner, Dr John Gayner ("Dr Gayner") as a means of obtaining medical evidence for possible use at the anticipated trial of this action.
- As a result of seeing Dr Gayner Mr Evans decided to go on the offensive in the press and get his retaliation in first. He set out on an exercise to manipulate the press and extract from it favourable publicity for himself and adverse publicity for Virgin Radio. Accordingly even whilst Dr Gayner was still there Mr Evans telephoned Mr Piers Morgan, the editor of the Mirror, and gave him an interview which was published in the Mirror the next day. He knew exactly what he was doing. In the course of the Mirror interview he said:
"By doing this interview with you now I accept that there is a strong chance that they will fire me today. They will say that I have breached my contract and I guess I have."
He also gave interviews to the Sun and the Financial Times. On his way to a local pub, Mr Evans conducted a "walk and talk" interview with a number of the press and television journalists who had congregated outside his flat. In the course of these interviews (and in particular the interview published in the Mirror) Mr Evans made a number of false and damaging statements about Virgin Radio. These included: (1) that Mr Pearson and the other SMG bosses had left him unbelievably stifled creatively and had made it as difficult as they could for him to do his job; (2) that Virgin Radio would not speak to him; (3) that on 20 June 2001 he had waited two hours for a meeting and Virgin Radio did not come and talk to him because they did not know what to say; (4) that Virgin Radio management was not equal to his talent; (5) that he was being told what to do all the time by Virgin Radio and SMG, which he was not prepared to accept; and (6) that he was drinking to counter the stress of being ordered about. Mr Evans also referred to the offer of £3 million (without revealing his counter-offer of £6-7 million) and stated that he did not want Virgin Radio's money: he wanted his freedom. As he told me, these interviews represented his parting shot at Virgin Radio "damn the consequences". They were a public challenge to dismiss him.
- On the morning of 28 June 2001, Virgin Radio prepared press statements indicating that Virgin Radio had terminated Mr Evans's contract as a presenter at the station. Later that morning, board meetings were held for Ginger Radio and Kentfarm at which it was resolved (1) to terminate the Presenter's Agreement and (2) to expel Mr Evans from the Partnership.
- Mr Evans's solicitor, Mr Storer, attended on Mr Evans's behalf the Kentfarm board meeting. Mr Storer did not say that Mr Evans was ill or refer to the examination by Dr Gayner. The defendants had no reason to believe that any question of ill-health had any relevance as a factor in this case, any more than did Mr Evans until a late stage in this action. Indeed quite to the contrary, Mr Storer said that Mr Evans was ready, able and willing to perform his obligations and go to work.
- By letter dated 28 June 2001 written on Ginger Radio Limited notepaper Ginger Radio and Virgin Radio terminated the Presenter's Agreement. No doubt due to the haste with which the letter was drafted, there are factual errors in the letter but they do not appear to me to be of any significance. By letter dated 29 June 2001, Ginger Radio and Virgin Radio notified Mr Evans that his conduct on 21June 2001 and in particular his statements to the media constituted a further ground for his dismissal. By a letter also dated 28 June 2001 Kentfarm expelled Mr Evans from the Partnership.
- On 8 October 2001, Mr Evans's solicitors served a notice purporting to exercise his option in relation to the Tranche C Shares, on the basis that his wrongful expulsion from the Kentfarm Partnership had automatically converted the shares to ordinary shares under clause 2.4 of the Option Deed. On 11 October 2001, SMG's solicitors replied to this letter refusing to accept Evans's option notice. On 13 June 2002, Mr Evans's solicitors served a further notice exercising his option in respect of the Tranche C Shares on the alternative basis that the shares had automatically converted to ordinary shares on 14 March 2002 under clause 3.2 of the Option Deed. On 14 June 2002, SMG's solicitors replied to this letter refusing to accept Evans's option notice.
- The pre-existing decline in audiences for the Show accelerated over the period between the second quarter of 2000 and the second quarter of 2001, and whilst Virgin Radio was under-performing in the commercial radio sector, the Show was under-performing the station as a whole. This fall was reflected in the sharp fall in Virgin Radio's revenue from the third quarter of 2000 (reflecting the five to six month lag between audience ratings and revenues). After this prolonged and sharp fall in listening figures for the Show, there was a short term increase in listening in the third quarter of 2001, consistent with and attributable to listeners wanting to know what Mr Evans's replacement was like (he was irreplaceable) or mistakenly thinking that they were going to hear Mr Evans himself. This short term "spike" was followed by a decline in listening figures that plummeted at a far steeper rate than it had prior to that, In the apt language of Mr Evans's expert Mr Morse the listening figures in 2002 "went off a cliff'. Virgin Radio's revenues likewise collapsed.
- The principal contracts to which this action relates are:
a) the Presenter's Agreement, to which reference must be made in deciding whether Mr Evans was in breach of contract when engaged as presenter of the Show and whether the defendants were entitled to dismiss Mr Evans;
b) the TFI Agreement, in respect of which the defendants made a claim in this action against Mr Evans and which claim Mr Evans conceded in the course of the trial;
c) the Partnership Agreement, to which reference must be made in deciding whether Kentfarm was entitled to expel Mr Evans from the Partnership;
d) the Sale and Purchase Agreement and the Option Deed which regulate the entitlement of Mr Evans to conversion of the Tranche C Shares and ultimately to the shares themselves.
- The Presenter's Agreement, the TFI Agreement and the Partnership Agreement all formed part of one complex tax avoidance structure designed by leading tax counsel Mr Prosser QC instructed by Mr Evans in 1997 on the occasion of his purchase of Virgin Radio to enable Mr Evans to "sell" his services in the most tax advantageous way, and in particular for this purpose to ensure that he continued to be (as he was previously) self employed. The Sale Agreement and Option Deed executed in 1990 on the sale of Virgin to SMG Jersey conferred on Mr Evans share options and made provision for their exercise and the conversion of the shares. I shall consider in turn each agreement and the issues to which it is relevant. As I have already said there is no surviving issue in respect of the TFI Agreement. It is appropriate, however, that I say a short word in relation to that agreement at this stage.
- The parties to the TFI Agreement (also dated 5 March 1998) were: (1) Ginger Television Productions Limited ("Ginger TV"); (2) the Partnership; (3) Mr Evans; and (4) Ginger Media. This agreement was the template on which the Presenter's Agreement was based. By this agreement Ginger TV engaged the Partnership to provide the services of Mr Evans as a presenter of those episodes of the Series "TFI Friday" to be produced from 8 December 1997 until 31 December 2000 which Ginger TV proposed to produce on the terms set out in the agreement. It may be noted that: (1) the TFI Agreement had the same parties as the Presenter's Agreement, save that Ginger TV, rather than Ginger Radio, was a party and was defined as "the Company" in the agreement; (2) in clause 1 Ginger TV was (by common consent) correctly identified as being the producer of the TFI Friday television show; and (3) by clause 3.1 Ginger TV agreed to pay the Partnership a fee of £2.25 million per annum.
THE PRESENTER'S AGREEMENT AND RELATED ISSUES
A. THE TERMS OF THE PRESENTER'S AGREEMENT
- This agreement took effect from the date of completion of the acquisition by Ginger Media of Virgin Radio, namely 8 December 1997. Its parties were: Ginger Radio (which was defined as "the Company"); the Partnership; Mr Evans (who was defined as "the Presenter"); and Ginger Media (therein referred to under its then current name of Kewlogic Limited) which was the parent of the Ginger Group (which included Virgin Radio) and which was defined as "the Guarantor".
- Clause 1 of the Presenter's Agreement provided as follows:
"The Company hereby engages The Kentfarm Partnership with effect from 8 December 1997 to provide or procure the provision of the services of the Presenter as presenter of the Virgin Radio Breakfast Show each week for 40 weeks per year from 7.00 am to 10.00 am Monday to Thursday ("the Series") which the Company produces upon the terms and conditions set out in this agreement."
- The obligation to present the Show 40 weeks a year meant that Mr Evans was entitled to 12 weeks' holiday a year. He had, however, no right to select dates of his own choosing without reference to Virgin Radio. The dates were to be agreed, but in considering any request for agreement to any date proposed by Mr Evans Virgin Radio was obliged to act in good faith: compare Butterworth on Employment, 3rd edition, 2000. Mr Evans in his pleadings states that the parties impliedly agree to co-operate in the agreement of dates. This comes to much the same result. Both sides must co-operate, and inherent in this is an obligation on the part of Mr Evans to give reasonable notice of the dates he proposes. The imperative of Virgin Radio's business required reasonable notice to enable Virgin radio to organise its schedules, the holidays of members of the Team and the appointment of suitable "first class" presenters to cover his absence. Mr Evans in his evidence fully recognised this as appears from the passage in his evidence which I have previously quoted. In practice Mr Evans conformed to this requirement in agreeing his dates in advance. In January 1998 and 1999 he agreed holiday dates across the whole year with the Team thereby allowing everyone's commitments to be co-ordinated, and on 14 May 2001 he "booked" with Virgin Radio the dates for his holidays through to January 2002 (none of which fell within June 2001). The problems in this case relate, not to the agreement of dates, but to departures from that agreement.
- It is common ground that in the years that followed execution of the Presenter's Agreement the period of the Breakfast Show changed, in March 1998 to 6.30 am to 9.30 am, and in September 2000 to 6.00 am to 9.00 am. (The latter change is relevant to the issue of novation.) Notwithstanding the terms of clause 1 for the provision of services Monday to Thursday only, from December 1997 Mr Evans regularly presented the Show on Fridays. From that date he confidently expected that Virgin Radio would allow and enable him to do so and likewise Virgin Radio confidently expected him to do so. This practice on the part of Mr Evans accorded with an assurance to this effect which he gave Mr Flanagan in early 2000 during the negotiations for the SMG acquisition of Virgin Radio. The position indeed was (as Mr Evans told me) that he would have been surprised and (as was implicit) affronted if without notice another presenter was engaged for any Friday. In each case the expectation was subject only to the entitlement of either party on giving adequate notice of a reasonable period (which I would put at one month) of the intention to revert to the arrangement provided for in the Presenter's Agreement limiting his role as presenter to Mondays to Thursdays. The need for such notice is analogous to the need for giving proper prior notice of his holiday dates, which Mr Evans fully accepted. In the circumstances Mr Evans thereby assumed the obligation to act as presenter on Fridays also unless and until he gave reasonable (four weeks') notice to the contrary effect.
- Clauses 2, 3 and 4 (so far as material) provided as follows:
"2. The Company shall be entitled to the Presenter's Services through the Kentfarm Partnership throughout the period from 8 December 1997 until the fifth anniversary of that date ("the Expiry Date") which period shall be extended automatically upon the extension of the Kentfarm Partnership (for up to three years after the initial term) for the same period as such extension.
3. ... the Company agreed to pay the Kentfarm Partnership a fee of £750,000 per annum for the first five years.
4. The Kentfarm Partnership shall ensure that the Presenter shall:
(a) present each programme throughout the series ('Programme') and in connection with each Programme render all such services as are usually rendered by a first class presenter in connection with the presentation of radio programmes suitable for broadcast in prime time by first class radio broadcasters ... as the Company may require;
(b) perform the Presenter's services in a first class professional manner and to the best of his ability;
(c) not by his conduct bring the Company into disrepute;
. . . .
(e) do everything in the Presenter's power to ensure that each Programme be produced . . .in accordance with ... the production schedule approved by the Company (and any revisions thereto notified to [the Presenter] by the Company) ... and in accordance with the format approved by the Company (but subject to any alterations or additions thereto that Company may direct) and shall in no event add to subtract or alter such production schedule without the prior consent of Company in each instance. . .
(k) not unreasonably refuse to comply with the Company's reasonable request to make public appearances to publicise and promote the Series."
- Issues are raised as to what services (for the purposes of clause 4) are "usually" rendered by a first class presenter, but those issues are for most practical purposes resolved by agreement between the parties' experts Mr Story and Ms Oldham in their joint report. It should be noted that recourse to this provision is only required by Virgin Radio so far as the duty in question is not otherwise imposed by the Presenter's Agreement. (To like effect I hold that a first class presenter fulfils the obligations which he has otherwise assumed under his contract with his radio station). The experts' agreement includes the following: (a) a first class presenter complies with the production schedule and does not change the format of a show without prior consultation; (b) a first class presenter should use his best endeavours to fulfil the station's obligations to its clients in respect of promotions and, if an agreed promotion does not work on air, he should consult the client prior to making any changes; (c) a first class presenter should support the station's sales team in developing the station's relationship with advertisers where the requests made of the presenter are reasonable; (d) a first class presenter is expected to be an ambassador for the station outside work, should provide reasonable assistance in promoting the show and the station, and work with the station's communications team to ensure coherent and positive publicity for the show and station; (e) a first class presenter does not behave in such a way as to generate adverse publicity for the station; (f) a first class presenter and the station's programme director are required to have a professional relationship and find a way of working which fosters regular dialogue, and a first class presenter does nothing actively to obstruct communications with the Programme Director. As will be apparent in a number of respects the duties imposed by reference to a first class presenter duplicate those expressly imposed by the Presenter's Agreement.
- The meanings of the terms "production schedule" and "formats" found in clause 4(d) are common ground. The "production schedule" is the running order which is prepared for each show, specifying (inter alia) the number of records to be played, what records should be played and when. The "format" is the general form, structure and style of the show including who speaks on air, the characters of the speakers and the balance of speech to music. Clause 4(e) accordingly expressly provided that the production schedule and format for the show were under the control of "the Company".
- Clause 10 made provision for assignment and a qualified form of novation:
Company shall be entitled to assign the benefit of this Agreement to any third party and The Kentfarm Partnership shall procure that Presenter shall render such services to such assignee and if requested The Kentfarm Partnership shall enter into a direct contract with the assignee on terms similar to those contained in this agreement. Company shall remain liable to The Kentfarm Partnership for all its obligations under this Agreement notwithstanding any such assignment."
This provision is of importance on the issue of novation.
- The guarantee provided by Ginger Media reads as follows:
The Guarantor hereby guarantees to The Kentfarm Partnership and to the Presenter, and if necessary undertakes to procure, the full and proper performance of the obligations of the Company provided for under this Agreement and to hold The Kentfarm Partnership and the Presenter harmless against any failure to do so."
- Clause 14 (headed Miscellaneous) so far as material reads as follows:
"14.1 The agreement sets forth the entire agreement between the parties at the date thereof relating to Presenter's services in connection with the Series and supersedes any prior agreements or arrangements (whether oral or in writing) between the parties relating thereto. This agreement can only be modified by a written instrument signed by both parties.
14.2 The Kentfarm Partnership acknowledge that the services to be rendered by Presenter under this Agreement are of a special unique and extraordinary character, the loss of which cannot be reasonably or adequately compensated by damages in an action at law.
14.3 No waiver, express or implied, by either party of any breach by the other, of any of the provisions of the agreement shall operate as a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement."
Mr Evans does not raise any issue of waiver of breach of contract in this case.
- Any damage or loss directly occasioned by breaches of the Presenter's Agreement established in this action can only have been suffered by Virgin Radio. No damage or loss was occasioned to Ginger Radio which was at all material times dormant and had no ongoing business and had no interest in Virgin Radio. Mr Evans has submitted that the fact that Ginger Radio alone was party to the Presenter's Agreement precludes any claim and most particularly a claim by Virgin Radio. In response the defendants had put forward a series of subtle arguments designed to meet and surmount this obstacle. The primary argument on which I wish to focus (and which, if successful, dispenses with the need to consider the alternatives) is that there was a novation and that Virgin Radio was substituted as the party in place of Ginger Radio.
- The novation issue arises on the hypotheses that (1) Mr Evans did commit serious breaches of the Presenter's Agreement (and thus the Kentfarm Partnership Agreement) and (2) these breaches caused substantial damage to Virgin Radio. If Virgin Radio by reason of a novation was substituted for Ginger Radio as a party to the Presenter's Agreement, Virgin Radio can recover damages for those losses.
- There was plainly a period of uncertainty prior to execution of the Presenter's Agreement as to whether Ginger Radio or Virgin Radio should be a party. Indeed, no doubt as a relic of the prior uncertainty on this issue and by way of mistake, the 1997 Shareholders Agreement in clause 2.1(u) provided for entry into a presenter's agreement with Virgin Radio. The uncertainty was however resolved in favour of Ginger Radio. In clause 4 of the Presenter's Agreement the reference to "the Company" was clearly and unequivocally a reference to Ginger Radio. Ginger Radio entered into the Presenter's Agreement as principal in its own right (and not as agent or trustee or for the benefit of anyone else). Any such relationship with a third party was unnecessary, most particularly by reason of the assignment and novation provisions of clause 10 of the Presenter's Agreement.
- The starting point on the issue of novation is that it is common ground that the Presenter's Agreement continued in force until the end of June 2001, for each party is in the action claiming damages for breach of the Presenter's Agreement committed at the end of June 2001. The only issue between Mr Evans and the defendants is as to the identity of the parties to the Presenter's Agreement at that date and accordingly whether Virgin Radio was substituted as a party for Ginger Radio.
- It is necessary next to examine clause 10. Clause 10 establishes that the parties not merely contemplated a form of novation but conferred on Ginger Radio a contractual right to require such a novation. Clause 1 of the Presenter's Agreement provides that the Partnership will procure the provision of Mr Evans's services as presenter of the Virgin Radio breakfast show "which [Ginger Radio] produces". As is and must be common ground, clause 10 anticipates and facilitates such a novation in favour of any company which assumes the role of producer in place of Ginger Radio. The issue raised is whether such a novation should be inferred.
- The proper approach to deciding whether a novation should be inferred is to decide whether that inference is necessary to give business efficacy to what actually happened (compare Miles v Clarke  1 WLR 537 at 540). The inference is necessary for this purpose if the implication is required to provide a lawful explanation or basis for the parties' conduct. The relevant events for this purpose are as follows:
i) the directors' report for the year ended 31 July 1999 stated that Ginger Radio had been winding up its trade over the course of the current financial year and would not trade in the foreseeable future;
ii) the directors' report for the year ended 31 December 2000 stated that Ginger Radio had not traded, incurred any liabilities and consequently had made neither profit nor loss;
iii) it is clear that at no time after July 1998 did Ginger Radio fulfil the role of producer or any role in relation to the Show. Ginger Radio was, as Mr Evans pleads, dormant. Ginger Radio did not pay any of the costs of the Show even on paper. That role was fulfilled by Virgin Radio which made all payments;
iv) Ginger Radio kept no trading accounts in relation to the operation of the Presenter's Agreement or otherwise;
v) Mr Mollett, the Chief Financial Officer of Virgin Radio from 1997 to early 2000, who was called to give evidence on behalf of Mr Evans, confirmed that Virgin Radio for accounting purposes stood in the shoes of Ginger Radio;
vi) Mr Evans was at all material times a director of Ginger Radio and he and his accountant Mr Doshi knew exactly what was happening and approved it. By a letter to Virgin Radio dated 17 April 1998 Mr Doshi stated that under the Partnership Agreement the Partnership should receive the monthly income there provided for "from Virgin Radio Ltd (if this is the name of the company which is running the radio station)", and in accordance with his letter all invoices for fees due under the Presenter's Agreement from 28 April 1998 (the first date of their payment) drafted by or under the supervision of Mr Doshi were addressed directly to Virgin Radio.
- The existence of the novation is reinforced by the fact (which is common ground) that there were variations of the Presenter's Agreement by agreements made in March 1998 changing the times of the show from 7 am 10 am to 6.30 am 9.30 am, and again in September 2000 to 6 am 9 am. There is no dispute that the agreements to this effect were legally valid and binding. On both occasions the agreements were made between Mr Pearson (Chief Executive of Virgin Radio) and Mr Evans. In view of the agreed dormancy of Ginger Radio at that time, the second agreement can only have been made with Virgin Radio.
- These facts are incompatible with Ginger Radio (if its affairs were being lawfully and properly conducted) continuing to be a party to the Presenter's Agreement and consistent and consistent only with the novation for which the defendants contend. Mr Evans has however raised a series of contrary arguments each of which I must consider in turn. First, he suggests that there was a back-to-back production agreement between Ginger Radio and Virgin Radio. He thereby concedes (as he must) that some form of agreement is to be inferred between the parties and the choice is between such a production agreement and a novation. But there is no scope (even as there is no evidence) of any such back-to-back or other contractual arrangement between Ginger Radio and Virgin Radio. The existence of' such an arrangement would require reflection in Ginger Radio's accounts and its directors' reports and there is no reflection.
- Secondly, it is argued (in particular by reference to tax advice given to Mr Evans by Mr Prosser QC) that it was at all times important that Ginger Radio and Ginger Radio alone remained in contractual relations with Virgin Radio so that Mr Evans and Mr Revell alone could control the creative activities of Mr Evans. This argument confuses the distinct roles of producer and of presenter and creative contributor. But in any event there was no advice from Mr Prosser that Ginger Radio needed to be a counter-party to the Presenter's Agreement and there was no provision in any agreement that Mr Evans or Mr Revell (who were the two directors of Ginger Radio until 1 February 1999) should continue as controlling directors, or indeed directors at all, or limiting the scope for novation to a company which they controlled or indeed of which they were directors. In fact Mr Revell resigned in 1999 and in 1999 and 2000 at least three outside directors were appointed without protest. Far from insisting on the continuing role of Ginger Radio as producer, they and Mr Doshi proceeded (and were content that all parties proceeded) on the basis that Ginger Radio entirely dropped out of the picture and was replaced by Virgin Radio.
- Thirdly, it is argued that there is no evidence that the provisions of clause 10 were ever complied with, i.e. that there was an assignment and a request for a new contract with Virgin Radio. There are two answers to this: (a) these formalities can be of no significance in case of a minor internal business reorganisation within the SMG Group; and (b) a novation may be inferred outside the provisions of clause 10. Indeed this appears to me to be the preferable inference in this case, because a novation under clause 10 does not release Ginger Radio from liabilities under the Presenter's Agreement. Only a full and independent novation would achieve this objective and accordingly afford a proper legal basis and justification for the treatment in its accounts of Ginger Radio as freed from any such exposure to liabilities under the Presenter's Agreement.
- Fourthly, it is said that there is no evidence that the parties had in mind and intended to effect a "novation", If however what the parties by their action effected was a replacement with Virgin Radio of Ginger Radio as the party entitled to rights and subject to obligations under the Presenter's Agreement, a novation is effected whether or not there was any understanding on the part of those involved that what was being effected was what the law calls a novation.
- Fifthly, the suggestion is made that the actions and defaults on the part of Ginger Radio constituting the relevant events may have occurred by reason of some mistake. But there is no evidence of any mistake and no reason to infer it.
- Sixthly and finally, reliance is placed on the fact that following the SMG Acquisition several suggestions were made by SMG or its solicitors to change the contractual position, including:
i) in Spring 2001 a suggestion by SMG, when negotiating amendments to Mr Evans's contractual arrangements, that the Partnership might be dissolved and that Mr Evans might agree to work exclusively for SMG. This suggestion was not pursued after Mr Foster informed SMG that Mr Evans's lawyers were advising against the Partnership being brought to an end;
ii) in June 2001 a suggestion by Herbert Smith, SMG's solicitors, that the Presenter's Agreement be novated from Ginger Radio to Virgin Radio on the basis that Ginger Radio's business would be wound down or transferred to Virgin Radio and that there should be a reservation and assignment of rights.
The fact that in 2001 the parties discussed such a novation of the Presenter's Agreement is not a sufficient reason for concluding that no such novation had yet been effected. Rather it indicates that the solicitors and the clients concerned did not know or have in mind the full facts rendering the proposals for novation unnecessary. Far from negating any prior novation the negotiations may reinforce its existence, recognising as they do the need for a novation if business efficacy was to be given to the arrangements in force. The failure of the parties to realise that in law there had already been a novation does not preclude the recognition that such a novation had indeed taken place. It may be noted that clause 3.1(g) of the Sale Agreement (read with the definition of the Presenter's Agreement in clause 1.1) provided that completion was conditional (amongst others) on "[Mr Evans] Presenter's Agreement for Virgin Radio Breakfast Show dated 5 March 1998 between the Partnership, [Mr Evans], [Scottish Media] and a Group Company" remaining in full force and effect. The choice of words "a Group Company" was apt to cover Ginger Radio or (if a novation had taken place) Virgin Radio. A prior novation appears to have been considered a possibility even at that date.
- In the light of my holding that there was a novation I shall hereafter refer to Virgin Radio as the party to the Presenter's Agreement in place of Ginger Radio.
C. MR EVANS'S OBLIGATIONS
- The express obligations assumed by Mr Evans under the Presenter's Agreement were:
i) by clause 4(a), to present the Show every Monday to Thursday and render all the services that are usually rendered by a first class presenter in connection with prime time radio programmes by first class broadcasters;
ii) by clause 4(b) to perform his services in a first class professional manner and to the best of his ability;
iii) by clause 4(c) not to bring Virgin Radio into disrepute;
iv) by clause 4(e) (relating to the production schedule for each programme):
v) to comply with the production schedule approved by Virgin Radio and any revisions thereto notified by Virgin Radio; and
vi) not in any event to add to subtract from or alter the production schedule without Virgin. Radio's prior consent;
vii) by clause 4(e) to comply with the format approved by Virgin Radio, subject to any alterations or additions thereto that Virgin Radio may direct;
viii) by clause 4(k), not unreasonably to refuse to comply with Virgin Radio's reasonable requests to make public appearances to publicise and promote the Show.
- The defendants contend that three obligations on the part of Mr Evans must be implied into the Presenter's Agreement. The obligations are as follows:
i) a term requiring Mr Evans and Virgin Radio to co-operate together so far as necessary to ensure the performance of their obligations and enjoyment of their rights under the Presenter's Agreement (the "co-operation term);
ii) a term requiring Mr 'Evans and Virgin Radio not without reasonable and proper cause to conduct themselves in a manner calculated or likely to destroy the necessary relationship of trust and confidence between Virgin Radio and the presenter of the Show (the "trust & confidence term");
iii) a term requiring Mr Evans to give Virgin Radio reasonable notice of his desire to take a holiday from the Show (the defendants contend that at least four weeks' notice was reasonable in these circumstances) (the "holiday term").
- In my judgment the defendants' contention is fully justified. Whilst the usual test for any implied term is one of necessity (see Liverpool City Council v Irwin  AC 239, 254, 262), there are a large number of relationships in which the law conventionally implies particular types of term. In particular, in contracts which require co-operation between the contracting parties in order to ensure the performance of their obligations and the enjoyment of their rights, the law is quick to imply a co-operation term: see Mackay v Dick (1886) 6 App Cas 251, 263. The duty of co-operation is determined not by what is reasonable but by the obligations imposed by the contract itself: Mona Oil v Equipment and Supply Co Ltd v Rhodesia Railways Ltd  2 All ER 1014. Similarly, in employment-type relationships, the court will generally imply a term requiring the parties to maintain the necessary degree of trust and confidence between them: see Mahmud v Bank of Credit and Commerce International  AC 20 and Bank of Credit and Commerce International v Ali (No 2)  4 All ER 83 and  3 All ER 750.
- It seems to me that the implication of the three terms is fully justified on three independent (albeit overlapping) grounds: (1) the relationship between Virgin Radio and Mr Evans renders the implication of terms to this effect apposite and the context is analogous to that where such terms have been conventionally implied; (2) in the context of the relationship between Mr Evans and Virgin Radio constituted by the Presenter's Agreement the terms in question are necessary and their implication fully satisfies the officious bystander test. The nature of the services to be performed by Mr Evans under the Presenter's Agreement and the context in which they were to be performed 'made it necessary for the parties to co-operate together and to retain a relationship of trust and confidence with each other. The greater freedom Mr Evans required and received because of his standing free from editorial supervision and interference the greater the need for co-operation and trust and confidence. Likewise the nature of Mr Evans's role as presenter, the importance of the Show to the station, the need always for a presenter of sufficient status and ability to present the Show and the fact that Mr Evans worked with a team of four persons whose holidays needed to be co-ordinated, made it necessary for Mr Evans to give sufficient notice, which in my judgment should ordinarily be not less than four weeks, of any intended absence or holiday. Mr Evans in his evidence recognised the need to fix his holidays well in advance in order not to disenfranchise listeners and to respect the holiday plans of others involved; and (3) the implication is independently justified as necessary to give effect to Mr Evans's express obligations contained in clause 4(a) and 4(b). This accords with the expert evidence of Ms Oldham and Mr Story.
D. BREACHES OF CONTRACT
- I shall now turn to each of the alleged breaches of contract and consider in relation to each of them the consequences of them. The consequences are significant for two purposes. The first purpose is the remedy for breach and availability of a claim in damages. The second purpose is the issue which arises in relation to the Tranche C Shares if Mr Evans was lawfully expelled from the Partnership, namely whether Mr Evans can establish that the circumstances giving rise to his expulsion were not adverse to the business or financial position of SMG Jersey. I shall consider in turn first each of the Secondary Breaches and then each of the Primary Breaches.
(a) The Secondary Breaches
(1) Playing Wrong Music
- There was no real constraint upon Mr Evans in respect of the choice and amount of music played on the Show prior to the date of the Presenter's Agreement. Clause 4(e) of the Presenter's Agreement for the first time imposed on him an express obligation to comply with the production schedule. The production schedules scheduled 24 records to be played on each Show. Music is the primary means by which Virgin Radio establishes its identity with and attracts its target audience. Insistence on compliance with the production schedules was essential to preserve the station's goodwill and also to ensure that there was no breach of its radio licence. Accordingly Virgin Radio's management frequently, but necessarily tactfully, requested Mr Evans to comply. But so long as Mr Evans continued to own Virgin Radio, management was in a very weak position to enforce that obligation. The obligation only became meaningful after the sale of Virgin Radio to SMG Jersey. Mr Evans plainly knew thereafter that he was under an obligation to comply with the production schedule and, when tactfully requested to comply, agreed to do so. The fact that "contractual language" was not used by management when repeatedly pressing him to comply cannot have left Mr Evans in any doubt that it was his duty to comply and that Virgin Radio was insisting on his compliance and indeed (as I have said) he regularly agreed, and he made sporadic efforts, to do so. But there can be no doubt (and Mr Evans does not challenge it) that throughout the period that he was with Virgin Radio both in respect of the amount and type of music he regularly failed to comply. The parties have agreed a table of the average songs played and average non-schedule songs played which reads as follows:
- This table indicates that:
i) over the entire 12-month period, on average he played fewer than 20 records per Show;
ii) of the records that he played, more than four records per Show were not on the production schedule. This represents about 22 per cent of the records that he played;
iii) of the 24 records that were generally scheduled for each Show, Mr Evans only played about 15. This represents a deviation from the production schedule of 37.5 per cent.
- The records which he played included records that did not even appear on Virgin Radio's approved music lists, including both records which had scored too poorly to be included on those lists and records which were entirely outside Virgin Radio's music policy. Mr Evans thereby undermined the mix and balance of music on which Virgin Radio devoted research and expertise, acted in a way calculated to alienate listeners and demonstrated a degree of contempt for the views and wishes of management.
- Mr Evans's contention that it was "more important" to maintain the integrity of the Show than to adhere to a music policy affords no defence any more than does the regularity of his breaches. His defence is less meritorious when regard is had to the fact that the production schedule was not produced by management without discussion. It was negotiated and agreed between Virgin Radio (acting by James Curran, then Virgin Radio's Head of Music) and Mr Evans (via his producer, Mr McGrath). Mr Evans had a full opportunity to indicate the music he wanted to play. This makes Mr Evans's refusal to accept the music schedules on the ground that they contradicted the integrity of the Show even more remarkable. He cannot say that his deviations from the production schedules were all required for reasons that were unpredictable the day before.
- Mr Evans put forward a series of unmeritorious defences. At one stage he maintained that Virgin Radio approved his actions, but the evidence established the opposite. He maintained that his obligation was confined to playing six records an hour, relying for this purpose on a passage in an e-mail from Mr Owens to Mr Grace dated 6 December 2000 which referred to playing six songs per hour. The content of this e-mail is totally inconsistent with the rest of the evidence and material before the court. Mr Evans neither pleaded nor said in his evidence that he was only obliged to play six songs per hour, and I agree with Mr Pearson that the number 6 can only be a typing mistake for the number 8. Mr Evans argued that the adoption of the "zoo" format for the Show made it impossible to adhere to the production schedule. Mr Evans obtained some support for this proposition from the evidence of Mr Story. But Mr Story's evidence was based on the conception that, when a zoo format is adopted, music is very much secondary to, and a punctuation for, speech. But that was not the position in respect of the Show; Mr Evans was contractually obliged to comply with the production schedule; the zoo format left it perfectly possible to comply; and in any event his evidence gave no countenance for playing unscheduled records.
- The final defence put forward was that the figures shown in the table should be modified to reflect the exclusion in the calculation of non-scheduled songs of records played during "All Request Fridays" (which started in November 2000), novelty songs and songs by guests of the Show. But Mr Evans at all times had the opportunity to negotiate with the Programme Director the inclusion of such songs (and songs relating to any particular feature of a day's Show) in the production schedule and (when finalised) was contractually obliged to comply with it. If, however, the songs in question are removed, the table looks as follows:
- This table indicates that, even if one were to ignore All Request Fridays and to treat novelty songs and guest songs as if they were scheduled songs:
i) over the entire 12-month period, on average he still played fewer than 20 records per Show;
ii) of the records that he played, just over 2.24 records per Show were not on the Production Schedule. This represents some 11.5 per cent of the records that he played;
iii) of the 24 records that were generally scheduled for each Show, Mr Evans only played about 17. This represents a deviation from the Production Schedule of some 29 per cent.
- At one stage during the trial I expressed concern about the fairness of Mr Evans having to meet the substantial claim in damages maintained by the defendants for breach of this contractual provision, when no intimation had been given (for good reason) to Mr Evans whilst he was presenting the Show that management regarded this breach very seriously or might have a substantial claim in damages in respect of such breach. In response Mr Vos on the defendants' instructions informed me that, if this breach was established, the defendants would not seek an inquiry as to damages in respect of it. But this was without prejudice to their reliance upon it for the purposes of the claim to the Tranche C Shares. It is accordingly unnecessary to determine whether the defendants' discharged the onus of proving that Mr Evans's failure was an effective cause in the decline in audience figures of Virgin Radio, as Virgin Radio had claimed in its pleading in support of the claim in damages to recover the consequent financial loss. But the issue remains whether Mr Evans's failure did not have an adverse effect on the audience figures. Before the defendants made the concession, it appeared to me questionable whether the defendants could establish the full effect which they had pleaded. The defendants established the critical importance to Virgin Radio and the Show of playing the right music to retain its identity and audience, leaving aside only the most occasional deviation. Music is the defining element of Virgin Radio's output for most of the day and consistency is required in music policy, most particularly on the Show. Many listeners tune in to hear the music in which the station specialises and, if they hear music not to their taste, switch over to another station. The defendants' expert Ms Oldham fully established these propositions and indeed, they may fairly be said to represent the consensus of views of Mr Story and Mr Morse as well, and further that failure to comply with the music policy created a real risk of the decline in audience and that the facts were consistent with the decline being so caused. But she could not herself state that the decline was so caused: there were other possible causes. A market survey could have identified whether it was a cause, but neither party had recourse to such a survey. Ms Oldham did say that management would be best placed to know if Mr Evans's conduct was a cause for the decline, and certainly better placed than she was, and both Mr Pearson and Mr Hain in their witness statements firmly stated that at the time (as now) they were convinced that the lack of music and wrong type of music on the Show were a huge factor in the decline in audiences. I have looked at their evidence in this regard with anxious scrutiny since there is no contemporary evidence of this conviction on their part, but having reviewed their cross-examination I fully accept that this was their view on this issue. I am fully satisfied that Mr Evans's conduct was damaging and calculated to prejudice audience figures. At the end of the day with some hesitation I would have found that the defendants had discharged the burden of proof that Mr Evans's conduct was an effective cause of the decline in figures. I have to consider whether in relation to the Tranche C Shares Mr Evans has discharged the burden of proving that his conduct in the last three months before his dismissal was not an effective, (whether or not contributory), cause of the decline. For this purpose it is significant that in May and June Mr Evans played an average of 23 records per show. But playing the wrong music was calculated to cause damage in this way and Mr Evans has not satisfied me on the balance of probabilities that his conduct over this period did not contribute to the continuing decline in audiences. I should add that his breaches of this obligation throughout the term of the Presenter's Agreement demonstrate the ingrained unwillingness of Mr Evans to co-operate with management and comply with his obligations when this involved allowing his views or wishes to be overruled and damaged his relationship with management and management's capacity to manage the station.
(2) Studio tours
- Studio tours are an. important part of developing client relationships with presenters and encouraging them to advertise with the station. The experts agreed that a first class presenter should provide reasonable sales support. In their joint report they say:
"... in relation to providing other sales support a first class presenter is expected to support the sales team in developing their relationships with advertisers (where such requests are reasonable)."
- This obligation must extend to allowing actual and potential clients into the studio unless the presenter has good reason to the contrary. Mr Evans fulfilled this obligation until October 2000 by allowing such tours, but from October 2000 he refused to allow any more (as he admits in paragraph 61 of his reply) and he likewise refused to compensate for this refusal by offering other forms of sales support when requested by Ms Jacob and Ms Blenkinsop. Mr Evans seeks to justify his ban on the ground that the tours upset the Team. I am not satisfied that they did upset the Team or that Mr Evans really thought that they did nor am I satisfied that Mr Evans had any sufficient excuse for his ban. The ban had serious adverse consequences depriving Virgin Radio of an established means of developing relationships with clients. Mr Evans was aware of this and his position can only be classed as unreasonable and a breach of contract. The ban imposed in January 2001 by Mr Pearson was not any form of endorsement of Mr Evans's decision: it was an acknowledgement that in the light of Mr Evans's attitude tours were out of the question.
(3) False Information about wedding
- I have dealt with this incident in the Chronological History: Mr Evans was an ambassador for Virgin Radio outside work and obliged "to co-operate in ensuring positive and coherent publicity for Virgin Radio". As I have already stated in the Chronological History, having regard to the circumstances in which it took place, and in particular Mr Evans's wrongful and abrupt absence from the Show and press speculation of a rift with Virgin Radio, his wedding was an event which was likely to attract a spotlight and frenzied press attention which from a public relations point of view plainly was likely to affect Virgin Radio and was an event in respect of which it was entitled to be consulted, even if in any ordinary circumstances it was to be regarded as a private matter and not the proper matter for exploitation by Virgin Radio. To avoid inflaming the potential damage arising from any perceived rift, it was necessary that Virgin Radio should not appear excluded from being in "on the act". There was no reason not to consult Virgin Radio: indeed Mr Evans told me that it did not matter to him whether Virgin Radio knew about the wedding or not. Misleading Virgin Radio as to the time and place of the wedding could only aggravate the position further and constitute a serious breach of duty to communicate, co-operate, retain trust and confidence and take steps to avoid adverse publicity.
- The parties' radio experts agree that presenters are required to comply with the terms regarding promotions which a station has agreed with its clients. As Mr Evans admits, the form and execution of each promotion had to be agreed both by Virgin Radio (which wanted to be sure that the promotion fitted in with the format for the Show) and the client (which wanted to be sure that the right message was being broadcast). Virgin Radio employed a dedicated promotions team to deal with matters of this sort. As Mr Evans well knew, no presenter, even one of Mr Evans's stature, has the right to overrule what his employer and the client had agreed. The deliberate and repeated breach of duty had the effect of undermining the confidence of clients in the station's ability to deliver its promotion. Yet Mr Evans, as he admits in paragraph 72 of his reply, frequently without notice changed the format and execution of promotions. Three particular instances of such breaches of contract are specifically pleaded and established by the defendants, namely in respect of promotions for Amazon in February 2001, Guinness in March 2001 and Boddingtons in May 2001, full details of which I have already set out in the Chronological History. The defendants seek an inquiry as to damages in respect of the Boddingtons promotion and have established the necessary damages arising from the breach in the Boddingtons promotion to entitle them to the inquiry which I accordingly direct. Mr Evans's "explanation" for his conduct rests on a suggested tension between the artistic and creative integrity of the Show and the execution of promotions. But promotions were generally agreed weeks in advance and Mr Evans (through his producer) was involved in that process. If Mr Evans was doing his job properly, by the time each promotion began, all queries and suggestions should have been made and resolved. In any event the explanation affords no defence. Mr Evans's wrongful absence from the Show between 1 and 14 May 2001 meant that he did not present (after the first day) the McVities promotion due to run between 30 April and 4 May 2001 and the Umbro promotion due to run between 7 and 11 May 2001. The necessary likelihood of damage is established in respect of each of these to entitle Virgin Radio to an inquiry as to damages in respect of both these promotions.
(5) Interviews and photo-shoots
- The experts agree that "a first class breakfast presenter is expected to be an ambassador for the station outside of work"; that "a first class presenter uses his or her best endeavours to publicise the station and the show" and that "the extent to which a presenter is expected to comply depends on the reasonableness of the request". It is clear that Mr Evans would not generally co-operate with respect to interviews. He claims that a ban on interviews was agreed with Virgin Radio's management and this claim is supported in the witness statement of Ms Blenkinsop. But I unhesitatingly prefer the evidence to the contrary of Mr Pearson and Ms Jacob. Ms Jacob specifically refers to Ms Blenkinsop's frustration at Mr Evans's refusal to assist with publicity. This was not challenged in Ms Jacob's cross-examination. I accordingly reject the suggestion that a ban on interviews was agreed. Mr Evans simply refused to co-operate. This accords with what Ms Blenkinsop said in her first witness statement and in evidence.
- Mr Pearson recalls asking Mr Evans to do an interview for the Sunday Times in October 2000 which Mr Evans refused to do. Mr Pearson was not challenged on this in cross-examination. For her own part, Ms Blenkinsop admitted in evidence that Mr Evans refused to do "at least two interviews, one daily broadsheet and one Sunday". In the Chronological History I refer to the occasion on Friday 15 June 2001, when Ms Blenkinsop asked Mr Evans to give an interview and do a photo-shoot for the Radio Times. The request was reasonable. Mr Evans admits that he refused to be involved in the feature. Mr Evans's refusal was unreasonable. His reason is quite clear. Mr Evans was engaged in a vendetta against Virgin Radio's management. If he was not going to talk to Virgin Radio, he was certainly not going to help it with publicity, as Ms Blenkinsop herself recognised at the time.
- The consequence of refusing to assist in publicising the station is clear: it meant that Virgin Radio's ability to promote itself both with listeners and advertisers was impaired and the greater Virgin Radio's need to promote itself, the greater the damage done by an impairment of its ability to do so.
(6) The 6 June Show
- Mr Evans's petulant conduct on 6 June 2001 and in particular his abuse of management on air for the decision which management was fully entitled to make in refusing to let him stay on air all day was plainly unprofessional, a breach of his obligation to maintain the standard of a first class presenter and a deliberate act calculated to undermine trust and confidence of Virgin Radio in him and of the public (and advertisers) in the future relations between Mr Evans and Virgin Radio. He was showing that he was a loose cannon who thought nothing of bringing Virgin Radio into disrepute.
(b) The Primary Breaches
- Had Mr Evans's misconduct been limited to the Secondary Breaches, such was the value placed by Virgin Radio on Mr Evans that the Presenter's Agreement would not have been terminated. But they were indicators of Mr Evans's underlying attitude to Virgin Radio and its management which progressed over time from a form of indifference to the interests of Virgin Radio and its management into contempt and ultimately into open and aggressive defiance.
- The Primary Breaches relied on by the defendants are as follows:
i) failing without warning to appear to present the Show (and falsely claiming illness) between 1 and 11 May 2001;
ii) effectively dismissing the Team without management approval;
iii) changing the format of the Show without management approval;
iv) refusing to talk to management after 6 June 2001;
v) again failing without warning to appear to present the Show (and falsely claiming illness) between 21 June and 26 June 2001; and
vi) generating and indeed courting adverse publicity over the period until his dismissal.
(1) Failing without warning to appear to present the Show (and falsely claiming illness) between 1 and 11 May 2001
- Mr Evans had no excuse for failing to turn up for work on 1 May 2001, and he does not seriously advance any. It was a breach of his primary obligation under the Presenter's Agreement to present the Show. Clause 4(b) of the Presenter's Agreement required professionalism and, in connection with the presentation of radio programmes (as Ms Oldham stated in her first report), turning up and presenting the Show, come what may, is one of the most fundamental requirements of professionalism. The truth is that Mr Evans woke up and decided to "look after himself for a while". That was a clear breach of contract. The period during which he decided to look after himself was the period of two weeks a period during which he went abroad, married and honeymooned, ending when he returned to work on 14 May 2001 Mr Evans's excuses for failing to turn up are (a) that the situation between himself and Mr Revell and Mr McGrath had become unworkable; and (b) that he could not, therefore, present the Show.
- Leaving aside that by his unilateral and improper action Mr Evans had single-handedly created the situation, the decision whether the situation was unworkable was one for management: at the least management was entitled to a voice. In any event the situation was not unworkable. Mr McGrath and Mr Revell were anxious to continue with the Show and join in revitalising it. Mr Revell, after having discussed the matter with Mr McGrath and after Mr McGrath's meeting with Mr Evans, realised that his real priority should be the Show and Mr Revell and Mr McGrath agreed that they should go back to Mr Evans to express their commitment to the Show and provide a list of concrete suggestions as to how Mr Revell was going to improve. Mr Evans by "running away" frustrated this move. Management, if given a chance, might have resolved or ameliorated the situation, but Mr Evans kept management in the dark and likewise prevented management doing anything.
- A first class presenter in Mr Evans's position, acting in a first class professional manner and to the best of his ability, would have given Virgin Radio this information and the opportunity to resolve the problems perceived by Mr Evans. Mr Evans did not do this, thereby seriously breaching his obligations under the Presenter's Agreement. Had he complied with this obligation (in particular in the light of the agreement reached between Mr McGrath and Mr Revell) there is every reason to think that Virgin Radio could have brought the parties together, cleared up their misunderstanding and thereby sorted out the situation. One solution might have been (if this was necessary) that Mr Evans should for a period present the Show without the Team. This is what he later offered to do, albeit from another country. By his actions, Mr Evans made this impossible. For these reasons, the situation that arose on the 30 April 2001 did not justify his disappearance from the Show (and the country) the following day. On the contrary, it made it all the more imperative for Mr Evans to stay in the country and talk to Virgin Radio.
- Mr Pearson's initial agreement to Mr Evans's absence was procured by Mr Foster's misrepresentation to both Mr Hain and Mr Pearson that Mr Evans was ill when in fact he was not and when Mr Foster knew that Mr Evans was not ill. Mr Pearson was presented with a fait accompli. Mr Evans had left the country before Mr Foster spoke to him. Mr Pearson's subsequent agreement to give Mr Evans the full two weeks off (as his agreement to remove Mr McGrath and Mr Revell from the Team) was extracted by stipulations to this effect resting on the plain threat by Mr Evans not to return to the Show at all unless the stipulations were met. In using the threats which he did to extract Mr Pearson's consent in this matter, Mr Evans was in clear breach of his duties under the Presenter's Agreement. Further in bowing to the unlawful threats, there was in law no true consent given by Mr Pearson.
- Mr Evans's failure to attend on 1 May 2001 and his subsequent absence until 13 May 2001 inevitably had adverse consequences for Virgin Radio in relation to its staff, its listeners and clients. Mr Evans conceded that his disappearance on 1 May 2001 was unhelpful to Virgin Radio. But it went far beyond this. Mr Evans's unplanned absence visibly challenged the powers of management and inevitably affected the morale of the staff, a most important part of its business. His sudden absence without warning inevitably affected listeners adversely who would interpret his action as a breach of faith to them.
- Mr Evans's disappearance also adversely affected advertisers. The scheduled promotions bought by two clients (McVities and Umbro) were ruined by Mr Evans's disappearance. Special arrangements (including the provision of free air time) were necessary to appease these valued clients. Virgin Radio are entitled to an inquiry as to damages in respect of the loss so occasioned. The impact on Virgin Radio went beyond those two clients. As Ms Jacob explained in paragraphs 59 and 60 of her statement (paragraphs with which Mr Morse did not disagree) a good relationship with its clients is essential for Virgin Radio. Advertising is a very small business, bad experiences travel quickly by word of mouth and reputations can be easily damaged. This was confirmed by Ms Oldham, who pointed out that advertisers have to have trust and confidence in the stations with whom they place their business and unplanned absences inevitably damage that trust and confidence.
- I am satisfied that on its own and in an aggravated form when considered together with Mr Evans's other actions of May and June 2001, his May disappearance was bound to (and did) have a substantial adverse effect most particularly on advertisers.
(2) Effectively dismissing the Team without management approval
- I have in the chronology set out the sequence of events. Mr Evans had been planning to do something about the Team since the end of 2000. He mentioned the problem to Mr Hain and Mr Pearson in the Wednesday meetings, but never told them he thought that the situation had reached crisis point or needed urgent action. Mr Evans never sought their guidance or approval for the removal of the Team. What he did was (in particular by false attributions about and to Mr Jackson) totally to unsettle the Team and (by his failure to communicate with management and his abrupt absence abroad) preclude any possibility for restoration of normal relations. He then aggravated the situation by refusing to communicate directly with Mr Pearson and through Mr Foster by stipulating for their removal. He acted unilaterally without regard to Virgin Radio or his contractual obligations. Mr Evans presented Mr Pearson with a fait accompli. Mr Pearson and Mr Hain had no choice but to agree to the removal of the Team, for Mr Evans made clear that he had made up his mind to remove the Team and that Mr Evans would not rejoin the Show if Mr Pearson refused to go along with that decision.
- Mr Pearson's and Mr Hain's overwhelming desire was to keep their star presenter on air. To salvage this situation they had to capitulate. In law the dismissal of the Team was effected by Virgin Radio, not Mr Evans, but the action of Virgin Radio in dismissing them was a formality recognising the inevitable consequences of Mr Evans's previous actions and bowing to Mr Evans's demands. In acting as he did, Mr Evans acted in clear and deliberate breach of his obligation to act professionally and as a first class presenter, properly to communicate with management and to maintain, and not place in jeopardy, the relationship of trust and confidence between himself and Virgin Radio and (by implication) not to force a change in format of the Show.
- The defendants are plainly entitled to an inquiry as to damages occasioned by this breach of contact. Virgin Radio considered and was itself bound to pay and did pay damages for breach of contract to the members of the Team. The cost to Virgin Radio of severance payments to the four members of the Team was £392,000. The expert evidence before me establishes that the quantum of these payments could almost certainly have been reduced (or avoided altogether) had management been consulted in advance before Mr Evans acted as he did. It is open to Mr Evans on the inquiry as to damages to seek to limit or cut down the damages recoverable. He may seek to show that Virgin Radio could or should in some way have mitigated their loss, but on the evidence before me that would appear to be an uphill task. A more significant effect of Mr Evans's conduct in respect of the Team was the inevitable result of his insisting upon and effecting the removal of a successful team and the established format of the Show without making provision for any adequate replacement. His conduct was substantially responsible for the low quality makeshift format which Mr Evans adopted in its place, with the inevitable repercussions on audience levels and advertising revenue. In the circumstances Virgin Radio is likewise entitled to an Inquiry as to Damages in respect of the compensation which Virgin Radio was obliged to provide to McDonalds by reason of the reduction in audience for the Show for which Mr Evans's breaches of contract were an effective cause.
(3) Changing the format of the Show without prior management approval
- Clause 4(e) of the Presenter's Agreement prohibited any change of format without the prior consent of Virgin Radio. Mr Evans refused to speak to Mr Pearson and Mr Hain about any new format between 30 April and 14 May 2001. He gave Virgin Radio no opportunity to have any input into the New Format. He simply flung the Show together on the day before it was due to be broadcast. He telephoned Webbo, Mr Pritchard and Ms Pepper to ask them "as a favour" to come in at 5 am the next morning. He told them that they were going to help him with the Show, but he did not tell them what they were going to do. He just said "turn up, we will get in early, and let's go for it." The new format adopted (beyond the change of personnel) included:
i) the fundamental change from Mr Evans acting as sole lead presenter to his acting as co-presenter with Webbo, though Webbo lacked the necessary experience and simply was not up to the job;
ii) the change to a more sport-based Show;
iii) the change to a more 'blokey' Show.
- In paragraph 134 of his statement Mr Pearson summarised the position that Virgin Radio was in:
"By the morning of 14 May 2001, Virgin Radio still had no idea who would be on air with Chris or what the Breakfast Show would consist of. The situation was incredible. Virgin Radio was going to broadcast its breakfast show with no idea as to who would be presenting it with Chris or what its content would be and there had been no chance to forewarn the audience. We were unable to issue any press releases or undertake any other PR exercises in order to prepare listeners, sponsors and the media for the changes that were to take place to the Breakfast Show which is what we would do as a matter of course ordinarily."
- This was a clear and deliberate breach of clause 4(e) of the Presenter's Agreement. Mr Evans did not seek (let alone obtain) prior agreement. All that Virgin Radio knew by 14 May 2001 was that there would be a change in the members of the Team. Virgin Radio did not and could not know that there was going to be any further change of format over and above a change of personnel. Mr Evans contends that Virgin Radio was at fault in not suggesting a new format or giving Mr Evans another week off to formulate a new format. The fact is that Mr Evans acted unilaterally without consulting management and refusing to talk directly to management. Mr Evans did not request an extra week off for this purpose and I am not satisfied that the extra week would have made any significant difference. Virgin Radio was blameless. Mr Pearson asked repeatedly to speak to Mr Evans about the New Format, but Mr Evans would not speak to him.
- Mr Evans's submission that these changes were all approved or affirmed by Virgin Radio after the event is nothing to the point. Approval was required ahead of time. The reality is that Virgin Radio was again presented with a fait accompli, and Mr Pearson and Mr Hain had to accept the new format in order to keep Mr Evans. Mr Pearson fairly described Mr Evans throughout this period as virtually blackmailing the station to do what he wanted. Without Mr Evans, Virgin Radio would have had no star presenter for its flagship show: Virgin Radio perfectly reasonably did not have available in reserve an alternative Show presenter, let alone of the requisite calibre. It is true that Virgin Radio did not take the Show off the air, that it agreed to give the new Team members monthly rolling contracts and that it agreed to give Mr Evans a little time to get the New Format established. This however did not mean that Virgin Radio approved the New Format of the Show. What it in fact did was to reserve its opinion for a short time. As indicated above, it had no practical alternative.
- The unilateral adoption of the New Format was plainly damaging internally and externally. Virgin Radio was damaged internally by the New Format:
i) it was denied the opportunity to manage its own business as it saw fit, and to format the Show as it wished;
ii) it was forced to have a male-orientated sports based Show with a substandard co-presenter which it did not want;
iii) Mr Evans's imposition of a new format on Virgin Radio created a very unsatisfactory stand-off between Mr Evans and management and adversely damaged the relationship of trust and confidence between them and affected the morale and confidence of Virgin Radio's staff;
iv) Virgin Radio was deprived of the opportunity to have any dry runs to ensure that Webbo and the Team were comfortable with it or to require something to be said on air about the changes in the format being effected and in particular the removal of the Team which had been together for six years.
- The new Show plainly damaged Virgin Radio externally and in particular the relationship between Mr Evans and many of his listeners which was calculated to exacerbate the ongoing decline in audiences.
- An unprecedented number of complaints and queries were received from listeners both by telephone and e-mail. In paragraphs 55 and 56 of his statement, Mr Gillett refers to the "wall" of e-mails that were received concerning the Team and the difficulty that Virgin Radio had in taking calls from listeners. About 330 e-mails complained about the changes. Some 200 c-mails were in favour of the new Show or Mr Evans. Clearly listeners were liable to think that Mr Evans was treating them with a degree of contempt, and clearly a number did so. An adverse effect on audiences may confidently be inferred and an adverse effect on the station's relationship with advertisers (and necessarily as a consequence on revenue) is established by the evidence (most particularly of Ms Jacob).
(4) Refusal to talk to management after 6 June 2001
- This was a very serious (if not the most serious) breach of Mr Evans's obligations in respect of trust and confidence and co-operation. It was also a breach of his obligations to act professionally and as a first class presenter. Mr Evans seeks to justify his non-communication by questioning the decision to refuse to allow him to stay on air on 6 June 2001. This is misconceived. Whether the decision was good or bad, it was one for Virgin Radio to make. Mr Evans's refusing to talk to management entirely destroyed the relationship between Mr Evans and Virgin Radio. Mr Evans contends that, by agreeing to meet management on 19 June 2001, the non-communication is somehow swept away. It was not. Not only did Mr Evans lie about the attempts he made to meet management between 9 am and 10.15 am on 20 June 2001, but in fact he never did attempt to meet management. As I have already held, he never intended to attend a meeting with management on that day.
- The consequences of this continuing breach on the station were extremely severe. Most particularly:
i) it destroyed all trust and confidence between Mr Evans and management;
ii) it damaged the morale of the staff;
iii) it prevented the station from taking steps to improve its most important show.
(5) Failing without warning to appear to present the Show (and falsely claiming illness) between 21 June and 27 June 2001
- Mr Evans had no excuse for failing to turn up for work on 21 June 2001. Again, he does not seriously advance any. This, too, was a breach of his primary obligation under the Presenter's Agreement to present the Show and of his obligation to act professionally and as a first class presenter. Mr Evans relied on Mr Pearson's letter of 22 June 2001 requiring him not to attend on Monday 25 June 2001. This does not help him. For the letter was written because of Mr Evans's misrepresentation to Virgin Radio that he was ill, when (as he knew) he was not ill and because of Mr Foster's failure to confirm that Mr Evans would be in a fit state to present the Show on Monday 25 June 2001, a confirmation plainly needed in the circumstances.
- Mr Evans's unplanned absence after 20 June 2001 adversely affected Virgin Radio's internal position. For his unplanned absence made it impossible for Virgin Radio to manage the Show. Virgin Radio was unable to announce on air what Mr Evans was doing or the true reason for his absence (because Mr Pearson was not told the truth by Mr Foster). Virgin Radio announced that he was ill (as Mr Foster said) when in fact Mr Evans was engaged on a public drinking binge. This damaged Virgin Radio internally with its staff who can only have thought that management had no control over Mr Evans. Mr Evans's sudden absence, without warning, inevitably further damaged his close relationship with listeners. Listeners were told that Mr Evans was ill, and then later they became aware that he was out drinking. This was not merely a complete loss of face for Virgin Radio; it was a breach of faith with its listeners.
- Mr Evans's disappearance adversely affected advertisers. As Ms Oldham told me, unplanned absences inevitably damage that trust and confidence. Bad experiences with presenters travel fast. Ms Jacob explained the bad effect that Mr Evans's absences had on advertisers at paragraphs 73, 75 to 77, 78.2 and 78.5 of her witness statement.
(6) Generating adverse publicity for Virgin Radio over the period until Mr Evans's dismissal
- Mr Evans brought Virgin Radio into disrepute in breach of clause 4(c) of the Presenter's Agreement. Mr Evans does not seriously contend otherwise. Mr Evans acted deliberately to discredit Virgin Radio by:
i) going on a three-day drunken binge knowing the press were following his every move;
ii) continuing with his public drinking activities even after he became aware that the press was making a serious issue out of it on 22 June 2001;
iii) buying alcohol on Tuesday 26 June 2001 knowing that the press would photograph him and interpret his conduct as a massive two fingers to Virgin Radio; and
iv) bad mouthing Virgin Radio on 27 June 2001.
- The media circus that Mr Evans created was inevitably extremely damaging for Virgin Radio. Mr Evans was not merely bringing Virgin Radio into disrepute; he was damaging the Virgin Radio brand. As the face of the station he was telling the world that he had nothing but contempt for Virgin Radio and, by extension, for its listeners and its advertisers. Mr Evans did not seriously dispute the fact that the adverse publicity was damaging to Virgin Radio. Mr Evans accepted that the FT reporter's comments that: "By day 7, Virgin is in trouble. SMG, the share price has gone down massively. It's been humiliated on a daily basis in the press and audience figures are falling" were "a reasonable reaction to the conduct reported in the press" (although he did not accept the fall in share price had in fact happened). Mr Evans also accepted that "Virgin had to act".
- Mr Pearson explained how damaging the position was (in a way that was hardly challenged). As he says (at paragraph 244) in the context of the decision to dismiss:
"... To allow Chris to continue effectively deciding to do what he wanted when he wanted and without any thought for Virgin Radio would have been disastrous for the business. It would have sent a very clear public message that despite the fact that he had sold the radio station Chris still controlled it and could do what he liked. That in turn would have damaged the station's relationship with its clients. Who would want to place business with a station who management had no control over its star presenter? It would also continue to damage morale within the station. Why should the rest of the staff listen to the management of a station or have any faith in them when its star presenter clearly has no regard for them? By this stage it was clear that the relationship between the management and Chris had broken down and that breakdown had been made very public as a result of Chris's actions. We could no longer trust him and had no confidence that he would act in the best interests of Virgin radio. In those circumstances it was clear that things had gone too far and that there was no hope of the necessary relationship between the star presenter and management being rebuilt."
- The decision to terminate Mr Evans's contract was made in the knowledge that termination would damage the business. This is a reflection of management's view that even greater damage would be done, if the contract was not terminated and there was ample reason and justification for this view. Mr Pearson explained his reasons for terminating the contract in the following terms at paragraph 245 of his statement in a way that was unchallenged:
"We were of course aware of the extremely damaging adverse consequences of terminating the Breakfast Show Presenter's Agreement and losing our biggest star at a time when we had no tried and tested replacement for him. Steve Penk was due to join the Station as the Drive Time disc jockey but was yet to do so and therefore remained a very untried commodity with the Virgin Radio listeners. The publicity generated by terminating the Presenter's Agreement of course would also be damaging for Virgin Radio, That we felt it necessary to adopt this course is a reflection of the serious threat under which we recognised Chris's conduct had put the business. Quite simply, we could not take the risk of allowing Chris to continue as the face of the Station. We did seek to try all we could to deal with the matter on an amicable basis but that proved to be impossible."
- The effect of the adverse publicity on the station itself, listeners and advertisers can never be quantitatively evaluated, but it is absolutely obvious that Mr Evans's conduct in publicly abusing Virgin Radio was highly damaging to Virgin Radio's business and financial position. As Mr Pearson said in paragraph 207 of his statement:
"The publicity was very damaging for Virgin Radio. Chris was making a fool of the Station and its management and demonstrating his contempt for us. Clearly any trust or hope of a professional working relationship had evaporated. We were left with nothing we could say to sponsors and advertisers to try and salvage the situation; what was going on was fairly and squarely in the public domain as a result of Chris's actions."
Ms Jacob's evidence is to the same effect.
- Mr Pymont has sought to counter this evidence by relying on a banker's research paper suggesting that the publicity was good for Virgin Radio in the third quarter of 2001. This was never put to SMG's witnesses of fact, and in any event it is clearly unmaintainable. It is correct that the RAJAR figure for that quarter did show a rise, preceding a continuing and steeper collapse in figures, but that was a freak occurrence explicable (as I have already stated) as referable to a short period of uncertainty and curiosity on the part of listeners as to what was going to happen.
E. DISCHARGE BY BREACH
- In my judgment the breaches by Mr Evans of his obligations under the Presenter's Agreement, and most particularly his breaches commencing 1 May 2001, entitled Virgin Radio on 28 June 2001 to treat the Presenter's Agreement as discharged. Mr Evans had evinced by his conduct an intention not to fulfil his part of the contract and his breaches of contract went to the root of the contract. Looking at the history of events since the date of the Presenter's Agreement, with the passage of time ever more clearly Mr Evans made it clear that, so far as he was concerned, he was a law unto himself. He would comply with his obligations only so far as it suited him. He would absent himself from the Show (as he did on l May 2001 and 21 June 2001) when he wanted; he would take it upon himself without reference to management to destroy the long established format of the Show (ie the Team) and adopt a new format; after his unacceptable behaviour on the Show on 6 June 2001 (to punish management for the effrontery of refusing to accede to his wishes) he renounced once and for all perhaps his most fundamental obligation, namely to co-operate and communicate with management, and made plain once and for all that he was out of control; he quite deliberately destroyed the relationship of trust and confidence with Virgin Radio and he committed the cardinal sin for a presenter, the face and ambassador of Virgin Radio, of deliberately provoking and indeed instigating an appalling press campaign directed against Virgin Radio and inevitably (although perhaps unintended) against himself. Virgin Radio had to do something (as Mr Evans conceded), and as it seems to me Virgin Radio was not only entitled, but to save itself obliged, to take the action (which for it was the action of last resort) of treating his breaches of contract as a repudiation which it accepted. Mr Pearson explained in paragraph 226 of his statement the necessity for this drastic step.
"We certainly did not want any of this, but we were put in a position where we could not manage the situation properly, we could not trust Chris to do his job or even behave professionally. By taking the actions he did Chris undoubtedly knew the damage he would do to the Station. The whole situation was disastrous but Chris pushed us passed [sic] the point of no return. Whilst we knew the adverse consequences there would be in terminating Chris's contract, the alternative was even worse. The direct and inevitable consequence of Chris's conduct was to put the business under threat."
- It is no answer to the defendants' case to say that Mr Evans, when he saw the writing on the wall, (as a tactic to avoid the inevitable), offered to return to the Show or that his solicitor at the time that the decision was made said that Mr Evans was ready, willing and able to fulfil his obligations. Virgin Radio had every reason to believe (judged by his past conduct) that these were hollow gestures and that Mr Evans would continue as before; in any event fundamental obligations had been broken. The relationship of trust and confidence could never be restored nor could Virgin radio re-establish standing as a radio station under the control of its management so long as Mr Evans continued as presenter of its show-case. Nor is the legal position effected by the fact that until the 19 June 2001 negotiations had continued for the new contract. The existence of those negotiations merely goes to underline the fact that the dismissal of Mr Evans was extremely painful for Virgin Radio and a recourse of last resort.
- Virgin Radio is entitled to an inquiry as to damages arising from the discharge of the Presenter's Agreement. This includes the cost to Virgin Radio of engaging alternative presenters in place of Mr Evans for the remaining period of Mr Evans's contract.
- There can be no serious dispute that Mr Evans's dismissal caused substantial damage to Virgin Radio. Mr Evans himself described himself in interviews with the media as Virgin Radio's biggest asset (as indeed he was) and his expert Mr Morse in paragraph 7.93 of his report stated that "it would be naοve to believe that the fact of Chris Evans's departure did not result in some adverse impact on the business". Mr Morse also noted that from the third quarter of 2001 Virgin Radio's audience plummeted at a far steeper rate and (as I have already stated) that (after a short term increase in Virgin Radio's listening figures for the third quarter of 2001 no doubt referable to curiosity to hear his replacement) in 2002 the audience of the Show "went off a cliff".
THE PARTNERSHIP AGREEMENT AND RELATED ISSUES
- The Partnership Agreement (also dated 5 March 1998) was amended on the acquisition of Ginger Media by SMG and restated by a Deed of Amendment dated March 2000 between Kentfarm and Mr Evans. It is the amended version that covers the period which is relevant to this action and to which alone I shall refer.
- The parties to the agreement were Mr Evans and Kentfarm. Kentfarm was the managing partner of the Partnership. By clause 3 the parties agreed to become partners from 8 December 1997. By clause 4 they agreed that the business of the Partnership should be carried on under the name of the Kentfarm Partnership. By clause 6.1 it was agreed that (subject to clause 32) the Partnership was to continue for a period of five years terminating on 7 December 2002. By clause 6.3 Kentfarm had an option to extend the Partnership for a fixed term up to three further years. By clause 7.1, unless prevented by ill-health or accident, Mr Evans was required while he remained a partner to devote the whole of his working time and attention to the business of the Partnership and diligently and faithfully employ himself in that business for the greatest advantage of the Partnership. Clause 7.2 provided that Mr Evans should devote such hours to his duties as a partner as were necessary for their proper performance and in connection with the presentation of the Show his working hours would not be less than three hours, from 7 am to 10 am each day Monday to Thursday for 40 weeks per year.
- By clause 8, each partner was (amongst other things) required:
a) to be just and faithful to the other partner in all transactions and dealings with the partners and with third parties relating to the business and all other affairs of the Partnership; and
b) to comply with all obligations directly or indirectly affecting the Partnership.
- By clause 9.1, it was provided that Mr Evans's duties as a partner included performing the Partnership's obligations under the Presenter's Agreement and performing the Partnership's obligations under the TFI Agreement.
- By clause 9.2, Mr Evans acknowledged that he would:
a) unless prevented by ill-health or accident devote the whole of his working hours and of his attention and abilities exclusively to carrying out his duties under the Partnership Agreement; and
b) perform his duties in a first class professional manner and to the best of his ability and use his best endeavours to promote and maintain the interests and reputation of the partnership.
- By clause 9.2, Mr Evans was required to give priority to his duties as a partner so that presenting the Breakfast Show would be his first priority and presenting TFI Friday or any substitute programmes would be his second priority. By clause 9.5, it was agreed that Mr Evans would not unreasonably refuse to comply with Kentfarm's reasonable requests to make public appearances to further the interests of the business. By clause 12.1, the capital of the Partnership was divided 99 per cent to Kentfarm and 1 per cent to Mr Evans. However, pursuant to clause 15, Mr Evans had a fixed profit share of the first £1.5 million of each year's profits (this sum being increased by 10 per cent per annum), plus the prospect of a further variable profit share in certain circumstances. Clause 17.1 entitled Mr Evans to draw generally on account of his accruing share of net profits for each accounting year a sum equal to £125,000 per month for the first accounting year increasing by 10 per cent in each subsequent accounting year.
- By clause 19.1, Mr Evans was entitled to 12 weeks' holiday. Subject to his obligations to the Partnership and in particular the scheduling requirements of TFI Friday or its replacement programme, his holiday was to be chosen from certain periods, including two weeks over the Easter period and a week in June. (As I have already stated, on 14 May 2001, Mr Evans chose for his holidays over the following six or seven months dates none of which fell within June 2001.)
- By clause 31.1, Mr Evans was required to notify the Partnership's office as soon as possible if he was absent from work due to accident or illness and, if his incapacity continued for seven or more consecutive days or more than 14 working days in any year, he was required to submit a doctor's certificate to the Partnership.
- By clause 32.1(b), in the event of a partner (inter alia):
a) being guilty of gross negligence in the performance of his or its duties;
b) failing or wilfully refusing to perform some material part of his or its duties;
c) being guilty of any gross misconduct or committing any material or persistent (after warning) breach of any of his or its obligations under the Partnership; or
d) being guilty of any conduct bringing the Partnership into disrepute
the other partner was entitled within three months of becoming aware of the default, to serve a notice expelling the defaulting partner from the Partnership with immediate effect. Kentfarm invoked this clause in expelling Mr Evans from the Partnership on 28 June 2001.
- It is relevant to an argument raised in respect of the Tranche C Shares that clause 32 vested in Kentfarm the right to serve the notice in a whole series of circumstances involving no breach of obligation under the Presenter's or Partnership Agreements, eg bankruptcy or insolvency, conviction of a criminal offence, failure to comply with a material term of any key man insurance or the prohibition or disqualification from holding any office which he held (eg as director) in any Ginger Group Company.
- By clause 42.3, no failure by the partners in exercising any right, power or privilege under the Partnership Agreement was to operate as a waiver thereof.
- Clause 45 provided as follows:
"With effect from [date] 2000, all provisions of this Deed, save for clauses 11.5, 30.4 and 33.5, will be interpreted and applied in a manner which is consistent with the practice adopted by the parties prior to the date of this Deed in relation to the rights and obligations arising under this Deed and, in the event of any conflict between a strict interpretation and application of the provisions of this Deed and interpretation and application of such provisions consistent with such practice, it is agreed that an interpretation and application consistent with such practice will prevail."
This clause (referred to by the parties as "the Hair Trigger Clause") perhaps surprisingly, but no doubt for good reason, is not pleaded or relied on by Mr Evans in this action.
- It is in my view quite clear that Kentfarm was entitled to expel Mr Evans on each of the grounds on which they relied. The key duty in respect of which the necessary default is made out is that imposed by clause 9(1)(a) to perform the Partnership's obligations under the Presenter's Agreement. As clause 9.2 made plain, this duty was his first priority, and his breach of this duty left Virgin Radio with no option but to terminate and accordingly caused the termination of the Presenter's Agreement: the matter is so clear and obvious that sensibly at the opening of this case Mr Pymont conceded that, if Virgin Radio or Ginger Radio was discharged from the Presenter's Agreement by reason of the repudiatory conduct of Mr Evans, likewise Kentfarm was entitled by reason of such conduct to expel Mr Evans. It is accordingly unnecessary to say anything further on this matter. I would however for completeness add one caveat. Clause 32.1(b) conferred on Kentfarm the right to rely on breaches of which it became aware no longer than three months before the date of service of the notice. No point has was taken in this regard by Mr Pymont. It cannot however have any significance in this context.
THE SALE AGREEMENT AND OPTION DEED AND RELATED ISSUES
A. TERMS OF AGREEMENTS
- The Sale Agreement was entered into on 13 January 2000 and was completed on l4 March 2000. The parties included: (1) Mr Evans; (2) the other shareholders and option holders in Ginger Media; (3) SMG Jersey; and (4) SMG Television.
- By clause 2 of the Sale Agreement, each of the then owners of the entire issued share capital of Ginger Media sold their shares in Ginger Media to the SMG Jersey for a total consideration of £225 million, of which £185 million was to be satisfied in cash (including the assumption of Ginger Media's debt of approximately £75 million); and £40 million in shares in SMG Jersey (in the form of 1,280,303 ordinary l0p shares, 1,366,068 class A deferred non-equity shares and 1,366,070 class B deferred non-equity shares). Mr Evans's share of this consideration on completion was some £70 million, consisting of (net of expenses) £31.7 million in cash and 1,245,355 ordinary l0p shares, 1,245,355 class A deferred non-equity shares and 1,245,355 class B deferred non-equity shares in SMG Jersey all of which shares were for the purposes of the agreement valued at £38.4 million. Despite this valuation the shares carried virtually no rights and were not marketable. Unlocking their value depended on converting them into shares in the ultimate parent of the SMG Group. This could only be done pursuant to the Option Deed, which provided a mechanism for conversion. Clause 3.1(g) of the Sale Agreement provided as conditions precedent to completion that the Presenter's Agreement remained in full force and effect.
- The Option Deed was also entered into on 13 January 2000. Its parties included: (1) Mr Evans; (2) the other Ginger Media group managers who held shares in Ginger Media; (3) SMG Jersey; and (4) Scottish Media.
- The Option Deed defined the circumstances in which Mr Evans and other managers could unlock the value of their ordinary and deferred shares in SMG Jersey by: (1) converting their deferred shares in SMG Jersey into ordinary shares in SMG Jersey; and (2) converting their ordinary shares in SMG Jersey into shares in Scottish Media or (in the event that, pursuant to a scheme of arrangement, Scottish Media was replaced as the ultimate parent company of the SMG Group) shares in the new parent company. Pursuant to the Scheme in June 2001 Scottish Media was replaced by SMG.
- Clause 3.2 of the Option Deed gave Mr Evans an option to convert his 1,245,355 ordinary l0p shares in SMG Jersey (defined in clause 1 of the Option Deed as "the Tranche A Shares") into shares in Scottish Media at any time after their issue. Mr Evans duly exercised this option, ultimately converting his Scottish Media shares into SMG shares. He retains those SMG shares.
- Provision was made for the automatic conversion of deferred shares in SMG Jersey into ordinary shares in SMG Jersey. Clause 2 of the Option Deed dealt with the conversion into ordinary SMG Jersey shares of the two classes of deferred SMG Jersey shares held by Mr Evans, namely: his 1,245,355 class A deferred non-equity shares (defined in clause 1 of the Option Deed as "the Tranche B Shares"); and his 1,245,355 class B deferred non-equity shares (defined and herein referred to as "the Tranche C Shares"). Pursuant to clause 2.1 of the Option Agreement: Mr Evans's Tranche B Shares were to be automatically converted into ordinary SMG Jersey shares on the first anniversary of the completion date of the SMG Acquisition (ie on 14 March 2001); and his Tranche C Shares were to be automatically converted on the second anniversary of that date (ie on 14 March 2002). In each case, however, this automatic conversion was only to take place in the event that certain defined conditions precedent were satisfied at the relevant time. The conditions applicable to Mr Evans were set out in clause 2.3. The relevant part of that clause (clause 2.3(B)) specifies the following condition:
"a notice has not been served on Christopher Evans pursuant to clause 32.1 of the Partnership Deed expelling Christopher Evans from the Partnership where the circumstances giving rise to expulsion are materially adverse to the business or financial position of [SMG (Jersey)] PROVIDED THAT this clause shall not apply where the termination notice is served for reasons of the death, disability ... injury or ill-health of Christopher Evans or where Christopher Evans is wrongfully expelled from the Partnership."
In other words, Mr Evans was entitled to automatic conversion of his Tranche B and Tranche C Shares in SMG Jersey shares if, at the relevant time:
a) no notice expelling him from the Partnership had been served; or
b) such a notice had been wrongfully served; or
c) such a notice had been rightfully served but the circumstances giving rise to his expulsion were not materially adverse to the business or financial position of SMG Jersey.
- These conditions were satisfied as at 14 March 2001 when Mr Evans exercised his option to convert and converted his Tranche B Shares. Pursuant to such exercise on 16 March 2001 Scottish Media duly registered him as holder of 1,245,355 shares in itself. Thereafter pursuant to the Scheme on 26 June 2001 these shares were converted into 4,981,420 shares in SMG. The issue whether the conditions remained satisfied as at 14 March 2002, when Mr Evans was due to convert his Tranche C Shares is effectively pre-empted by clause 2.4(a) of the Option Deed, which provides for early conversion of deferred SMG Jersey shares into ordinary SMG Jersey shares in certain circumstances. Clause 2.4(c) provided that:
"... in the event that .. .notice is served pursuant to clause 32.1 of the Partnership Deed expelling Christopher Evans from the Partnership in circumstances where clauses 2.3(A) or (B) do not apply to Christopher Evans by reason of the provisos of those subclauses any Deferred Shares held by [him] shall automatically be converted into the same number of Ordinary Shares on the date of such . . . expulsion from the Partnership of Christopher Evans ..."
- Mr Evans was expelled on the 28 June 2001 and I have held that his expulsion was not wrongful. In those circumstances I have to decide whether clause 2.3(B) applies to the issue whether the circumstances giving rise to the expulsion were not materially adverse to the business or financial position of SMG Jersey. If it is established that those circumstances were not materially adverse, Mr Evans's Tranche C Shares were automatically converted into ordinary SMG Jersey shares on 14 March 2002 and Mr Evans is entitled to the shares in SMG into which they in turn have been converted. If it is not so established, his Tranche C Shares were not converted and they can never be converted. In those circumstances:
(i) Article 6(a)(iv)(B) of SMG Jersey's Articles of Association applies. This provides, in the context of the conversion of the Tranche B Shares and Tranche C Shares from deferred into ordinary shares in SMG Jersey pursuant to clause 2 of the Option Deed, that:
Where ... the circumstances in which conversion can take place (as described in the Option Agreement) can no longer occur, the Company [ie SMG (Jersey)] will appoint any person to execute on behalf of any holder of Class "A" or Class "B" Deferred Non-Equity Shares a transfer of all or any thereof and/or an agreement to transfer the same (without making any payment therefore) to such person as the Directors [of SMG (Jersey)] may determine ... who is willing to accept the same."
(ii) conversion can no longer occur within the meaning of this Article and consequently, pursuant to the power of attorney provided for in the Article, SMG Jersey is entitled to transfer (as in fact it has transferred) the Tranche C Shares to SMG.
- The critical issue determining entitlement to the Tranche C Shares is accordingly whether the circumstances giving rise to Mr Evans's expulsion were not at the relevant date materially adverse to the business or financial position of SMG Jersey within the meaning of clause 2.3(B) of the Option Deed.
B. ISSUES OF CONSTRUCTION
- Clause 2.3(B) gives rise to a number of questions of construction. But before I address each of them in turn I shall say a word about the purpose of clause 2.3(B). The role of SMG Jersey under the Sale Agreement was to acquire and hold Ginger Media and (through Ginger Media) Virgin Radio, Ginger Radio and Ginger Television. It was to be a holding company. It was never intended to receive any of Mr Evans's services. Its subsidiary was to receive the services. It would however indirectly receive the benefit of his services as the holding company of the group of companies including the other party to the Presenter's Agreement. Clause 2.3(B) is an essential part of a deferred consideration arrangement designed to provide Mr Evans with an incentive to comply (in particular) with his contractual obligations as presenter under the Presenter's and Partnership Agreements and an incentive to avoid damaging Virgin Radio and its holding company SMG Jersey. The significance of the clause is underlined by two facts. First, Virgin Radio was at all times from the date of its acquisition the most valuable business owned by SMG Jersey. At the time of its acquisition by SMG Jersey, Virgin Radio and Ginger Television were the only businesses of any significance within the Ginger Group and SMG Jersey fairly and properly regarded Virgin Radio as accounting for 90 per cent of the purchase price it paid for the Ginger Group. Secondly, the Show accounted for the majority of the entire value of Virgin Radio. The Show and the compliance by Mr Evans with his obligations under the Presenter's Agreement were accordingly of crucial importance to SMG Jersey as purchaser and required securing in this manner. The clause has accordingly a clear commercial purpose and in construing its language a practical business and common-sense approach should be adopted with that purpose in mind. There is no indication that the language used has or is intended to have any special or technical meaning. The expert evidence as to the technical accountancy meaning of the language used is accordingly of no help.
(1) Burden of proof
- The first issue is as to the incidence of the burden of proof. It is clear as a matter of construction that the legal (or persuasive) burden of proof that the circumstances are not adverse is placed on Mr Evans. Only if that negative state of affairs is established is Mr Evans to be entitled to convert his (valueless) shares in SMG Jersey into valuable shares in SMG. Indeed this has been the common ground upon which both parties proceeded at the trial. But in his concluding submissions Mr Pymont submitted that the evidential burden of proof lay upon SMG in view of its peculiar and exclusive knowledge of the relevant facts. In support of this submission Mr Pymont cited and relied on a passage and footnote in Cross & Tapper on Evidence, 9th edition at p121 which reads as follows:
"Bayley J said that he had always regarded it as general rule that:
'If a negative averment be made by one party which is peculiarly within the knowledge of the other, the party within whose knowledge it lies, and who asserts the affirmative, is to prove it and not he who asserts the negative.'
It is important to grant the limited extent of Bayley J's general rule. It is a rule of statutory interpretation confined to cases in which the affirmative of negative averments is peculiarly within the knowledge of the accused."
Cross & Tapper in the footnote giving the law report reference of Bayley J's dictum goes on to say:
"For a civil case in which the doctrine was, applied, see General Accident Fire and Life Assurance Corpn v Robertson  AC 404 at 413."
- In Robertson's case, the appellant agreed to pay £1,000 to the executors of the owner of a diary if he was fatally injured in a railway accident within twelve months of his name being registered at its head office. The respondent's husband filled up and forwarded an application for registration which the appellant acknowledged. The appellant did not keep a register, but it arranged and flied the applications for registration in alphabetical order. The issue arose whether the respondent's application was registered (interpreted as meaning arranged alphabetically with other applications and filed) within the year. The House of Lords underlined the fact that the date of registration rested peculiarly and solely within the knowledge of the appellant. This was plainly relevant to the issue on whom the parties to the contract must have intended to impose the burden of proving compliance or non-compliance with the 12-month time limit. This clearly emerges in the speech of Lord Shaw (at p 416) who held that "in the case of a transaction of this kind" the onus of satisfying the court as to when registration was effected (and accordingly that it was effected more than twelve months prior to the accident) rested on the appellant. In a word, upon a fair reading of the contract construed in the light of the circumstances that the appellant assumed responsibility for effecting registration and would alone know when it took place, the persuasive burden of proof that registration was effected more than 12 months before the accident rested on the appellant and the appellant had failed to discharge that burden.
- In my judgment Mr Pymont cannot invoke the passage in the textbook or the decision as establishing that the burden of proof (whether persuasive or evidential) in respect of the presence or absence of adverse circumstances is on the defendants for a whole series of reasons. First (as I have said), the provisions of the clause in this case clearly and explicitly place the persuasive burden on Mr Evans and the general rule is that a party bearing the persuasive burden on an issue also bears the evidential burden (see Cross & Tapper at p 116) and no sufficient exceptional circumstances are alleged or established. Whilst the exclusive knowledge of the relevant facts of one party to a contract may afford an indication of intention that the burden of proof shall be on that party, such an indication cannot prevail when the language is clearly to the contrary effect. Secondly, the relevant facts in this case are in nowise exclusively within the knowledge of the defendants. In particular on the much argued issue of the effect on audience figures of Mr Evans playing too little and the wrong music on the Show, the RAJAR figures tell us nothing about why listeners were listening or not listening to various radio stations. But a market survey could have afforded light on this issue and Mr Evans could have commissioned such a survey as much as could Virgin Radio. Thirdly (again as I have said), Mr Evans assumed the burden of proof when the case was opened (drawing no distinction between the persuasive and the evidential burden) and the trial has proceeded on this basis. It is too late to change his mind now. Accordingly, I hold that both the persuasive and the evidential burden proof are on Mr Evans and that he cannot rely on the textbook or authority as establishing that either burden is transferred to the defendants.
- The second issue is the meaning of the term "the circumstances which gave rise to the expulsion". In my view the term in this context means the facts and matters which both constituted the grounds on which in fact Mr Evans was expelled and which in law could and did constitute sufficient and proper grounds for such expulsion. The term is not limited to Mr Evans's breaches of obligation. As I have already pointed out, clause 32.1 vested in Kentfarm grounds for expulsion going beyond breaches of duty and these grounds go beyond those excluded as grounds for expulsion by the proviso to clause 2.3(B) of the Option Deed. I should go on to say that the formula "the circumstances which gave rise to Mr Evans's expulsion" does not include his expulsion itself and therefore the consequences of his expulsion are not to be taken into account. Mr Evans entitlement is in nowise at risk if all that happens is that he is expelled, even though his expulsion may be expected to have serious adverse consequences. There is no provision penalising him in this way for his expulsion or (without more) occasioning his expulsion. The attention of the clause is directed exclusively at the "circumstances" giving rise to the expulsion and the consequences of those circumstances. But the clause is apt to include as circumstances the repudiatory breaches giving rise to discharge for breach of the Presenter's Agreement and the consequent discharge of the Presenter's Agreement which all predated the expulsion if and so far as they also gave rise to the expulsion.
(3) "Business" and "Financial Position" of SMG Jersey
- The clause clearly distinguishes between the business and the financial position of SMG Jersey. These terms view the subject from two different (albeit to a degree overlapping) perspectives. The "business" is (in a word) the commercial activity carried on including its workforce, product, goodwill, customer base and prospects. The "financial position" embraces the overall picture of the existing and prospective "asset and liability", solvency and "profit and loss" position. The critical issue between the parties is whether for the purpose of the exercise to be undertaken SMG Jersey should be viewed in isolation as a mere holding company or whether what is in mind is the consolidated position of SMG Jersey and its subsidiaries (and most particularly Virgin Radio). For this purpose it is proper to bear in mind that at the date of the Option Deed Virgin Radio and Ginger Television were the only two businesses of any significance within the Ginger Group. Viewed as a mere holding company SMG Jersey could have no relevant business susceptible of damage by the circumstances giving rise to expulsion. To read the clause as protecting only the business of SMG Jersey as a holding company is to deprive the word "business" of all practical meaning and remove the incentive for compliance by Mr Evans with his obligations of any real scope for application. The business of SMG Jersey must encompass the businesses of its subsidiaries. Likewise in any commercial document such as the present the term "the financial position" of SMG Jersey, a holding company, connotes the financial position of the group including its underlying subsidiaries. This is reflected in: (i) the requirements of sections 227 and 230 of the Companies Act 1985 that United Kingdom holding companies are to prepare group accounts as if the group was one entity; and (ii) paragraph 1.15 of the Statement of Principles for Financing Reporting which provides that a company's financial position "encompasses the economic resources it controls, its financial structure, its liquidity and solvency, its risk profile and risk management approach and its capacity to adapt to changes in the environment in which it operates". In my judgment it belies common and commercial sense to view the provisions (which are directed as incentivising Mr Evans to promote and preserve from damage (in particular) the audience and revenue dependent on the due performance of his services) as requiring focus to be made on SMG Jersey as a holding company alone: the requirement is to focus on SMG Jersey and its subsidiaries as one entity, and having regard to the critical importance to the group of Virgin Radio, most particularly on Virgin Radio itself.
(4) "Materially Adverse"
- The fourth is the meaning of the phrase "materially adverse". There is and can be no issue that the word "materially" means "appreciably": the circumstances must be adverse in a way or to a degree which is not immaterial or insignificant. The issue is one of judgment. Circumstances are "materially adverse" if they are apt to have or do have such an effect on audience or revenue or value as an investment, or more generally, eg on staff morale or (temporarily) on goodwill.
(5) "Adverse" - Nature or effect
- The fifth is whether for the clause to be triggered (as submitted by Mr Vos) regard should be paid to the circumstances and their character alone, namely whether they are by their nature adverse or calculated to have an adverse effect, or whether (as submitted by Mr Pymont) the criterion laid down is existence or non-existence of such an adverse effect. In a word, the question raised is whether the criterion is merely prospective or is actual adverse effect. This question of construction (at any rate as elaborated before me by Mr Pymont) could and should have been decided as a preliminary issue, for a decision in favour of the former construction would have saved the substantial cost of a large body of expert evidence directed to evaluating the effect. This question of construction is very much one of impression, and I am firmly of the view that Mr Vos is right. The language of the clause concentrates attention on the adverse character rather than to the adverse effect of the circumstances. This view may find support in the absence of provision for the time period (let alone a fixed time period) in which the existence of any required adverse effect is to manifest itself. Fortunately however the entitlement of Mr Evans does not turn on this issue of construction, for (as I shall shortly explain) whatever the construction, and whether or not reference is to be made to the effect of the circumstances the outcome of Mr Evans's claim is the same.
- 'The sixth issue is the date on which the character or (if I am wrong) the effect of the circumstances is to be determined, and in particular whether the critical date is the date of the expulsion or the date on which the conversion of the shares is to take place. My mind has wavered on this issue, but I incline to the view that on the language of the clause the relevant date is the date of expulsion and the character or (if I am wrong) the effect of the circumstances must be judged as at that date. As a practical matter, whichever test is applied, this issue of timing can have no significance in this case. The only relevance of any gap in time between the date of the expulsion and the later date is that, with the lapse of time, the true character and effect of the "circumstances" may be easier to determine and a provision in the clause for a sufficient gap which would enable the effects of the circumstances to be ascertained may facilitate a construction of the clause which requires regard to the effect, as opposed to the character, of the circumstances. But the formula in the Option Deed makes the length of any gap between the date of expulsion and the date of conversion fortuitous: it may only be one day and it may be considerably longer. The clause accordingly cannot be construed on the premise that any period of time will necessarily be allowed which is sufficient for effects to materialise.
(7) Relevance of claim in damages
- The seventh is whether, where a circumstance giving rise to expulsion constitutes a breach of contract or other civil wrong, the existence of a claim in damages against Mr Evans operates to preclude or cancel out a finding that the circumstance is adverse or has an adverse effect. My Pymont submits that, where the ground for expulsion is a breach of contract by Mr Evans, there can be nothing adverse to Virgin Radio, for Virgin Radio has the entitlement to full compensation by way of damages. If this is correct in principle, the provisions of clause 2.3(B) misfire: a breach of contract leading to expulsion cannot operate to exclude any entitlement to the Tranche C Shares and the provisions cannot operate as any form of incentive for compliance with his obligations. I am satisfied that the clause does not admit of the approach adopted by Mr Evans which is calculated to frustrate its purpose. But even if (contrary to my view) the approach can be adopted, as it seems to me it is necessary to consider in a practical business sense whether Mr Evans can show that the business and financial position of SMG Jersey is absolved from risk of actual damage by the claim it may have against Mr Evans, and for this purpose regard must be paid (amongst other things) to the following: (1) in a case such as the present damages are not an adequate remedy. This is recognised in clause 14(2) of the Presenter's Agreement under which the Partnership acknowledged that the services to be rendered by Mr Evans under the Presenter's Agreement were of a special, unique and extraordinary character, the loss of which could not reasonably or adequately be compensated by damages in an action at law; (2) when it comes to assessment of damages the court will be forced to undergo a process which is "shot through with imprecision": see Thompson v Smith Repairers  QB 405 and Terrell v Mobie Todd  WN 434. It will not be able to determine the exact compensation for loss; (3) whether the claim in damages is likely to be defended and the likely period before judgment in any action and consequently the period that SMG Jersey or its subsidiary is out of pocket for the loss suffered and costs incurred. In this case the defence has been tenacious and the judgment on liability is some two years after the expulsion and Mr Evans has yet to pay one penny; (4) the likely costs (and irrecoverable costs) of litigation; (5) the necessary expenditure of management time involved; (6) the damaging publicity which any litigation may be likely to occasion. In short in a case such as the present the hurdles in the way of Mr Evans are likely to prove (and indeed are) insuperable.
THE CHARACTER AND EFFECT OF THE CIRCUMSTANCES
- The circumstances which gave rise to and justified the expulsion were cumulatively the Primary and Secondary Breaches or at any rate the breaches which came to the knowledge of Kentfarm within the period of three months prior to the notice. I have already examined each of the breaches and indeed considered their consequences.
- The first issue before me is whether Mr Evans has satisfied me that the breaches viewed individually and cumulatively were not materially adverse to the business or financial position of SMG Jersey, viewing that company and its subsidiaries (and in particular Virgin Radio) as one entity In my view Mr Evans does not begin to do so. His conduct, and most particularly his conduct beginning 1 May 2001, was calculated to occasion the most serious damage to Virgin Radio's business as a commercial radio company, its relations with listeners, its relations with advertisers and its relations with promoters and sponsors and consequently its revenue and profits, and hence the anticipated dividends available to SMG Jersey and the value of its investment in Virgin Radio itself. In every real sense, the business of Virgin Radio was the business of SMG Jersey and the financial position of SMG Jersey was a reflection of the financial position of Virgin Radio. This view is placed beyond serious argument if regard is paid to the repudiatory character of the breaches and real risk (if not inevitability) of his repudiation of the Presenter's Agreement being accepted. Far from being satisfied by Mr Evans that the circumstances did not have an adverse character, I am amply satisfied that they did.
- In case I am wrong on construction, the question must be determined whether Mr Evans has satisfied me that the circumstances giving rise to the expulsion did not have an adverse effect on either the business or the financial position of SMG Jersey. Neither party has asked me to hold over deciding this question until after the inquiry as to damages, although both agree that this course is open to me. The course would have the advantage that I could take into account the actual loss established by Virgin Radio. After anxious consideration I have decided that, having heard the full evidence addressed to me on this issue I can and should decide it now and save the costs of requiring a further hearing.
- I have already detailed the consequences of his various breaches of contract. It is appropriate to consider the cumulative effect of the breaches that occurred within three months of his expulsion. It is unnecessary to particularise any individual breach, but each and every one of the Primary Breaches are sufficient on their own. To select one of the many adverse effects amply established by the evidence it is sufficient to refer to the discharge of the Presenter's Agreement. The Presenter's Agreement provided Virgin Radio with the "jewel in its crown". Although Mr Evans's misconduct (most particularly since 1 May 2001) clouded its lustre, it remained a jewel which Virgin Radio was loath to the end to lose but which in the end to their regret and as a last resort they were impelled to part with. I have already fully considered the consequences of his dismissal and its effect on audience and revenue figures. Mr Evans has not even started satisfying me that this was not a sufficient adverse effect. I am sure (with the high regard for himself) that he could never believe that this was so.
- Beyond the loss of the Presenter's Agreement, Mr Evans has in nowise persuaded me on the balance of probabilities that his absences from the Show on 1 May and 21 and 22 June 2001, his false excuses of ill-health for his absences when attributable to his own whim and drink, his contrived removal of the Team, his refusal to co-operate with management most particularly in relation to the new format for the Show, and the bad publicity which he generated for Virgin Radio did not have an adverse effect. He has not even persuaded me that his failure to abide by the production schedule (even if limited to the last three months) did not have a substantial part in the decline in the audiences for the Show and his failure to deliver promotions as he should and provide proper sales support and publicity did not also have such an adverse effect.
- I have already detailed the dramatic deterioration in Virgin Radio's fortunes between the second quarter of 2000 and the second quarter of 2001 and after the third quarter in 2001. Mr Evans's expert Mr Morse was called to support a series of possible causes pleaded in Mr Evans's reply, but he was unable to substantiate any of them, He did, however, suggest two possible causes, namely that the Show was becoming stale and that Mr Evans no longer retained his previous drawing power. He did not however suggest that there may not have been other causes and he could not possibly have done so. Even if Mr Morse is correct in attributing some part of the responsibility to the two causes which I have mentioned, I am fully satisfied that the breaches of contract giving rise to the expulsion (and in particular the breaches in the last three months prior to expulsion) did have a material adverse effect and were an effective cause for the decline; and (even if I am wrong) it must be clear beyond any doubt that Mr Evans has failed to establish on the balance of probabilities that they were not an effective cause of the decline or of an adverse effect.
- For completeness it is appropriate to mention two matters raised respectively by Mr Pymont and one point raised by Mr Evans's expert Mr McGregor. Mr Pymont placed great reliance on the existence of the claim in damages on the part of Virgin Radio as cancelling out the adverse effect on his breaches of contract. The available claim in damages against Mr Evans for breach of contract could in no way compensate or make good the adverse effect, very much for the reasons I have given when considering the relevance of this consideration. Most certainly Mr Evans has not satisfied me that it materially, let alone sufficiently, modified or abated or cancelled out the adverse effect. Mr Pymont also has taken the point that if Mr Evans had not forced Virgin Radio to sack him, the negotiations with him for a new contract would in all likelihood have been concluded successfully and this would have increased the costs of Virgin Radio, and he says that this should be taken into account in determining whether his dismissal was adverse. I do not think that it is necessary or proper to take this factor into account. If Virgin Radio had not decided to treat the Presenter's Agreement as discharged on 28 June 2001 in the light of the totality of Mr Evans's misconduct, it may nonetheless have wished to review the line to be taken in the negotiations. But in any event that increase in costs is a minimal consideration in this context, a fact exemplified by 'the fact that Virgin Radio was willing to pay this increase to incentivise if Mr Evans would fulfil his contractual obligations. A matter to which Mr Evans's expert Mr McGregor devoted a great deal of attention in his report was the manner in which SMG Jersey accounted for the goodwill arising on its acquisition of Virgin Radio in its accounts for the year 2001. For in those accounts SMG Jersey took the view that there had been no impairment of that goodwill by 31 December 2001. Mr McGregor suggested that there was an inconsistency between SMG Jersey saying that the circumstances of Mr Evans's expulsion were materially adverse to SMG Jersey's financial position and the view taken in those accounts. But, as Mr McGregor later had to acknowledge in the joint report and in his evidence, there was no such inconsistency. There had been a substantial write down in goodwill by that later date and any adverse effect of the circumstances can have been counterbalanced by others (unparticularised) advances in the fortunes of SMG Jersey.
- Finally, I should add that, even if upon the proper construction of the Option Deed and contrary to my view regard must be given to the position of SMG Jersey alone as a holding company, I would be satisfied that its financial position was adversely effected by Mr Evans's breaches. The fortunes of its primary wholly owned subsidiary, its value, goodwill and revenue must have affected the financial position of SMG Jersey. At the least Mr Evans has not satisfied me on the balance of probabilities that the contrary is the case.
- I am comforted in reaching this conclusion by the consideration that the entitlement of Mr Evans under the Option Deed was intended as an incentive to fulfil his contractual obligations and indeed as part of the consideration for their assumption and fulfilment. For Mr Evans to establish the entitlement which he claims would entirely defeat the 'object of the contractual provisions.
- For the reasons which I have given I accordingly hold that: (i) by reason of the breaches of contract by Mr Evans, Virgin Radio (as party by novation in place of Ginger Radio to the Presenter's Agreement) was entitled to accept such breaches as discharging the Presenter's Agreement and did so accept, and that Virgin Radio is entitled to an inquiry as to damages in respect of the breaches of contract which I have found in this judgment and in particular those relating to the dismissal of the Team, the Boddingtons, Umbro and McVities promotions and the McDonalds sponsorship as well as in respect of the discharge of the Presenter's Agreement (including the cost of replacement presenters); (ii) Kentfarm was legally entitled to expel Mr Evans from the Partnership and is entitled to an Inquiry as to Damages in respect of his breaches of the Partnership Agreement; (iii) the claims by Mr Evans for damages for breach of contract must be dismissed; and (iv) under the Option Deed Mr Evans is not entitled to any rights to convert the Tranche C Shares or indeed any longer to the ownership of the shares. Counsel should draft and endeavour to agree a Minute of Order giving effect to this judgment.
- I feel impelled to conclude this judgment with a comment on the ever-increasing cost and complication of legal proceedings vividly exemplified in this case. The only real issues in this case are short and simple, namely whether the conduct of Mr Evans was such that the defendants could no longer reasonably continue his engagement as star presenter of the Show and whether his conduct was damaging to Virgin Radio and SMG Jersey. To a layman these issues would appear to be of limited compass and capable of speedy and economic resolution. But they have for their resolution occasioned mammoth litigation and a 20-day trial at a horrendous cost to the parties. In an effort to save at least part of this cost, when this case first came before me on a case management conference a few days before the date fixed for the trial (far too late for an effective and cost saving exercise of case management powers) I ordered the parties to seek a solution through mediation, but this proved unsuccessful. The lateness of the attempt and the costs already incurred by both sides on the litigation may well have been a factor in the failure of the attempt. At the trial I was faced (as is the lot of trial judges today) with some 30 (frequently very lengthy) witness statements from the witnesses of fact, expert reports on both sides in four distinct disciplines, and over 50 (largely unread) heavy and tightly packed volumes of documents. Such "overkill" is the bane of modern day litigation. The overriding objective of the Civil Procedure Rules of conducting litigation in a way which saves expense (ie economically) has yet to find its full reflection in litigation practice. In the vain hope of cutting the case down to manageable proportions I suggested that little (if any) more was required to determine this case than to hear the cross-examination and re-examination of Mr Evans. Such an abbreviation of the trial (no doubt for good reasons) was not adopted. At the close of the case it is clear that Mr Evans's evidence under cross-examination effectively decided the outcome of the litigation and Mr Vos in his final submissions acknowledged that this was so. This trial underlines the urgent need for a more economic and affordable trial process. Large trials are becoming increasingly unmanageable and unaffordable. This is very much a case in point.