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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Square Global Ltd v Leonard [2020] EWHC 1008 (QB) (28 April 2020) URL: https://www.bailii.org/ew/cases/EWHC/QB/2020/1008.html Cite as: [2020] EWHC 1008 (QB), [2020] IRLR 607 |
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
____________________
SQUARE GLOBAL LIMITED |
Claimant |
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| - and - |
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| JULIEN LEONARD |
Defendant |
____________________
Mr. Thomas Croxford Q.C. and Ms Kerenza Davis (instructed by Wallace LLP) for the Defendant
Hearing dates: 12, 13 and 16 March 2020
____________________
Crown Copyright ©
Covid-19 Protocol: This judgment was handed down remotely by circulation to the parties' representatives by email, release to BAILII and publication on the Courts and Tribunals Judiciary website. The date and time for hand-down is deemed to be 12 noon on 28 April 2020
Jon Turner Q.C. sitting as a Deputy High Court Judge:
Square
Global
Limited ("
Square").
It is a relatively young business established in 2012, which focuses on providing inter-dealer and agency broking services. The Defendant, Mr. Leonard, was recruited by
Square
in February 2015 as a broker. He resigned summarily on 11 November 2019. At that time, he had been in advanced discussions for over 7 months with a rival financial services business called Market Securities, about leaving
Square
to join them instead.
Square
on 4 December 2019.
Square
contends that Mr. Leonard has breached various terms of his contract of employment, including a clause requiring Mr. Leonard to give six months' written notice of termination. It treats Mr. Leonard's actions on 11 November 2019 as amounting to notice of an intention to end his employment in 6 months. It now sues, first, for a declaration that Mr. Leonard remains an employee of
Square's
until 11 May 2020, coupled with an order prohibiting Mr. Leonard from undertaking competitive employment or any other form of work with a third party while he remains an employee of
Square.
Secondly,
Square
asks for injunctive relief to enforce certain PTRs in the contract of employment. Those PTRs are in essence intended to prevent Mr. Leonard from involvement in competitive activity against
Square
for 6 months following 11 May 2020, that is, until 11 November 2020. (One of the PTRs sought to be enforced by the claim form and particulars of claim concerned a 12-month prohibition on poaching employees from
Square,
but
Square's
counsel confirmed subsequent to the hearing that this element of the relief was no longer pursued). Thirdly,
Square
also seeks damages resulting from Mr. Leonard's refusal to perform his duties as a broker, estimated in the region of £396,000 as lost net profits (before interest).
Square
has also indicated that if it is successful in this claim, it intends to apply (should it prove necessary) for a "third party independent forensic examination" of Mr. Leonard's electronic devices to search for any confidential information belonging to it that has been taken and retained by him, together with an order for it to be delivered up.
Square
over several years that destroyed or seriously damaged the necessary relationship of trust and confidence between the parties, in breach of the implied term in the contract of employment. Mr. Leonard says in the "Summary of Defence" that the course of conduct culminated in certain behaviour by Mr. Uzan,
Square's
CEO and compliance officer, when Mr. Uzan brushed off Mr. Leonard's attempts to raise a grievance in October 2019.
Square.
His primary position is that each of them individually constituted a repudiatory breach of contract by
Square,
but in the alternative they constituted a course of conduct that cumulatively breached the implied term of trust and confidence. This conduct continued throughout Mr. Leonard's employment, and it consisted of broadly three categories of behaviour: (i) bullying / aggressive environment; (ii) unfairness over the allocation of remuneration; and (iii) a failure and/or refusal to deal with complaints and grievances.
Square
was failing to ensure that employees' personal data was kept securely. The second discovery was information which Mr. Leonard obtained that same day after going for a coffee near Holborn station for a general catch-up with a former colleague at
Square,
at around 11am. The former colleague told Mr. Leonard that another former colleague at
Square,
called Tidiane Diallo, had executed trades on the instruction of the senior management while he was prohibited by the Financial Conduct Authority ("FCA") from doing so. Mr. Leonard says that this put him personally at risk from a professional and reputational perspective.
Square's
repudiatory breach of the employment contract, and he says that he is consequently also freed from his obligations under the PTRs, which he contends were unenforceable in any event.
Square
has paid some of this and has confirmed that it intends to pay the rest.
Square.
Any remaining issues of damages and interest were to be the subject of directions to be given at the conclusion of this expedited trial.
Square
acted as it should have done in accordance with the employment contract, and/or pursuant to the proper exercise of any discretion in calculating Mr. Leonard's bonus. I gave an extempore ruling refusing the amendment application, essentially on the grounds that (a) this was not (as contended for on behalf of Mr. Leonard) a matter that was in effect already adequately set out in the existing Defence and Counterclaim: on the contrary, it was an attempt to introduce a significant new head of damage; (b)
Square
had not prepared to deal with the amendment, and it would suffer prejudice from the addition; (c) the probable result of allowing the amendment would be to derail the trial, which was on a very tight timetable to be completed within the allotted 3 hearing-days. The amendment ruling can be found under neutral citation number [2020] EWHC 903 (QB).
Square
led evidence from five witnesses, three of whom were called for cross-examination. These were:
i) Harold Uzan: a co-founder of
Square
in 2012 and its Chief Executive Officer since 2016. Mr. Uzan also became the line manager of Mr. Leonard from early 2017. He was the main witness on the Claimant's side, and was cross-examined extensively during the first two days of the trial.
ii) Jeremy Louis: a "junior broker" at
Square,
who joined in October 2018. Mr. Leonard's pleaded case was that he became concerned during the course of his employment at
Square
that Mr. Louis was performing regulatory tasks on behalf of
Square
in London and Hong Kong, despite lacking the necessary qualifications. As clarified in submissions at the trial, however, Mr. Leonard's case was put differently: it was that he had been alarmed when working with Mr. Louis by his lack of basic financial knowledge, in a context where Mr. Louis was carrying out regulatory activities on behalf of
Square;
then, after leaving
Square,
Mr. Leonard checked Mr. Louis' FCA status, which revealed that he was not authorised to perform regulated tasks out of London. Mr. Louis was cross-examined relatively briefly at the trial.
iii) Guy Belot: now a "senior broker" at
Square,
who joined the company as a "junior broker" straight from secondary school, when he was 18-years old. He left at the end of July 2019 to take up a job at Glencore plc, but he returned to
Square
in the autumn after only a few weeks. Mr. Belot was also cross-examined only briefly on behalf of Mr. Leonard.
iv) Konstantinos Evangelou: an IT consultant at
Square
who was not cross-examined on his written statement. The gist of his statement concerned approaches made to him by Mr. Leonard in late November 2019, after Mr. Leonard's resignation, asking among other things whether he had had any "bad experiences" during his time at
Square,
and if he knew of "any bad things [he] can use against
Square?".
Mr. Evangelou was not cross-examined on this statement. Mr. Leonard's own witness statement - which was exchanged and served simultaneously on 28 February 2020 - in fact confirmed some of the contents of Mr. Evangelou's written evidence. It stated among other things: "I asked him [Mr. Evangelou] about what "bad things the Claimant had done to him or that he would be aware of". However, when Mr. Leonard took the stand at trial, he said in brief examination-in-chief that in fact he had not said the final words "or that he would be aware of", and that his written evidence should be corrected to that extent.
v) Cyril Berdugo: an equity derivative broker at
Square
since January 2015, who started as a "junior broker". Mr. Berdugo gave written evidence in support of
Square
about the office environment and "culture", which he described as pressurised with occasional swearing, but nonetheless very friendly and supportive. He also gave written evidence specifically about the management style of Mr. Uzan. He described him as approachable, non-aggressive, and his style as friendly but focussed. Mr. Berdugo was not called for cross-examination either.
i) Mr. Leonard himself: like Mr. Uzan, he was cross-examined extensively at the trial over much of two days.
ii) Mr. Cheickh Tidiane Diallo: he worked at
Square
between early 2014 and December 2017. Mr. Diallo says in his statement that he was "subject to an FCA prohibition on trading" from the time he joined
Square,
although "there was a provision in the Tribunal decision placing [him] under the prohibition allowing [him] to return to work in finance". He was permitted to take up a research job, with a view to establishing a track record which would allow him to "address all previous concerns of the FCA so that
Square
could opt to sponsor [his] application [for the prohibition to be lifted]". In his statement, Mr. Diallo refers to having nonetheless been asked to carry out the execution of trades at
Square
on numerous occasions. He says that, in September 2015, he met with a well-respected solicitor and former prosecutor for the FCA to ask about the process for regaining his licence, but it never crossed his mind to ask her about the appropriateness of the equity instructions he had received at
Square,
since he had been assured that there was no need to worry and that it was the company's responsibility, and all the executions were logged transparently in the trading platform of Bloomberg. His statement concludes: "With hindsight, I realise that there might have been something questionable with regard to the trades I was instructed to execute". Mr. Diallo was called to attend the hearing with a view to cross-examination by
Square's
leading counsel, Mr. Laddie Q.C. Ultimately, however, Mr. Laddie Q.C. chose to use the limited time at trial to extend the cross-examination of Mr. Leonard himself, and did not question Mr. Diallo on his statement.
iii) Mr. Ryan Dann: he is a former broker on the Equity Index Derivatives Desk at
Square,
who worked there between November 2016 and October 2017. He gave written evidence covering some of the same ground as Mr. Berdugo, but to precisely the opposite effect. He was not called for cross-examination. Mr. Dann described the overall environment at
Square
as "unpleasant, intimidating and toxic", and as the "worst work environment I have ever worked in". He described one of the shareholders in
Square
called Mr. Ari Boublil, who was also a director and a senior broker acting as the head of desk in charge of Mr. Dann (as well as related by marriage to Mr. Uzan), as verbally and - on one occasion - physically aggressive. Mr. Dann also described Mr. Boublil as taking an approach to management decisions that was unfair to him in various ways.
The issues for determination
i) Was the Defendant constructively dismissed on 11 November 2019?
a) Did the Claimant repudiate the contract of employment?
b) If so, did the Defendant affirm the contract prior to resignation?
c) If not, did the Defendant resign in response (or partly in response) to the repudiation?
ii) If the Defendant was not constructively dismissed:
a) Did the Claimant affirm the contract and if so, should the Court enforce the contract for the remainder of the Defendant's notice period until 11 May 2020?
b) Should the PTRs be enforced? In this regard:
(1) Does the Claimant have legitimate business interests capable of requiring protection via PTRs?
(2) If so, do these PTRs go no further than is reasonably necessary to protect the legitimate business interests?
(3) If so, should the Court exercise its discretion to enforce the PTRs and, if so, to what extent?
iii) Did the Defendant breach a clause in the employment contract requiring him to notify the Claimant of the acceptance of a new job?
Square's
counsel in their skeleton argument for the trial, on which I asked Mr. Leonard's counsel to comment. The only real point of difference between the parties is in relation to the issue outlined at paragraph 15(15.i)c) above, i.e. the question whether or not Mr. Leonard resigned in response to a repudiatory breach by
Square.
This is because Mr. Leonard contends that, as a matter of law:
"an employee claiming to have been constructively wrongfully dismissed is entitled to rely on a repudiatory breach by his employer even if that was not the reason he left his employment at the time."
Square
did not in fact repudiate the contract of employment, either (a) through an individual act or omission that was not followed by affirmation of the contract on Mr. Leonard's side, or (b) by reason of a course of conduct comprising a number of acts and/or omissions, which, viewed cumulatively, amounted to a breach of the implied term of trust and confidence, and which was not followed by affirmation of the contract on Mr. Leonard's side. As a result, the point of law concerning the relevance of the reasons for resignation does not strictly arise.
The facts
Square
amounting to a repudiatory breach. Given the intricacy of the facts of the case, it is appropriate to start by assessing the main facts with care. I adopt a broadly chronological approach.
The nature of
Square's
business
Square
was founded in 2012. The two founders were Mr. Uzan, previously a broker at Sunrise Brokers, and Mr. Elie Scemama. In his oral evidence, Mr. Uzan described the challenges of setting up the business from scratch:
"We have to deal with everything in the same time, compliance, IT, accountant, and different, you know, approach -- I'm sorry, part of the -- of the compliance. It does not mean [because] it was a start-up, that we were, you know, having scant regards to compliance. Actually, if anything, we were trying at that time to structure more and more the company and to tick all the boxes that were sometimes missing, just because it was an organic growth, it grows very fast. We have to deal with thousands of things and I've personally slept something like 4 to 5 hours a day during these first three years."
Square
has grown from a small broking firm with 4 members of staff to a business employing or engaging roughly 40 members of staff in three different countries in 2019/2020.
Square
also has clients across continental Europe and Asia, as well as in Canada and the USA.
Square's
client contacts are typically individual traders in the large investment banks and hedge funds.
Square's
workforce is organised into teams called "desks". Each desk focuses on a particular financial product. One of these desks was the exotics desk.
i) Single stocks: these are typically shares in an individual company.
ii) Indices: these are typically a bundle of shares in a range of companies across a market index (such as the FTSE 100).
iii) Sectoral indices: these are typically a bundle of shares in a range of companies across a particular industrial sector (such as companies in the telecommunications sector).
i) "Call vs Call" ("Correlation") Products: these are derivative instruments that allow the buyer and seller to trade on the correlation between two or more underlying products. This could mean, for example, trading on the correlation between indices (such as between the FTSE 100 and the Nikkei), or between a basket of single stocks (such as between Vodafone and AT&T), or between sectoral indices.
ii) "Worst of"/"Best of" Products: these are derivative instruments that allow the buyer and seller to have exposure on the best or worst performers within a selected basket of underlying assets.
iii) "Quanto" Products: these instruments arise where the underlying asset is denominated in one currency, but the instrument itself is settled in another currency.
i) Mr. Uzan explained that OTFs will only be used if the trade is multilateral (i.e. it involves more than two parties). OTFs were introduced by the regulators following the 2008 financial crisis to obtain greater visibility over OTC trades. Most broking houses that trade in equity derivative OTC products will have their own OTF, including
Square.
Brokers are required to publish details of their multilateral trades on their OTF within 15 minutes of the trade. Trading data on OTFs is published on an "Authorised Publication Arrangement", or "APA", and is principally available for the regulator, although it can be accessed by third parties. Third parties who access an APA can see limited details of trades which have been published, including the price, volume and type of product. Third parties cannot see details of the parties involved in the trade.
ii) If the trade is bilateral (involving two parties only) no OTF is involved at all. When a product has been traded in this way, it is almost impossible for any third party to know about the existence of the trade, or relevant details such as the structure, the price, the size, or the parties.
The recruitment of Mr. Leonard and his contract of employment
Square
in February 2015. As he puts it in his written statement: "On index, I would join the existing team and on stocks/dispersion I was to be in charge of setting up the business. My past experience as a trader on those products meant that I had a deep understanding in that field, and also a good network of former colleagues". It appears that Mr. Scemama in particular was delighted with the recruitment. He wrote in an email on 18 February 2015 to the other shareholders in the company (which included, as well as Mr. Uzan, Mr. Even, Mr. Sarfati, and Mr. Boublil):
"Julien Leonard is arriving this morning, we have a dream team on correl with him now, let's give him a proper welcome! :-)"
Square.
The contract contains a number of terms that are relevant to the present dispute. These include:
i) Remuneration (clauses 6 and 8): at the time of his hiring, Mr. Leonard was paid a base salary of £80,000 per annum. This increased during his employment. As at November 2019, his salary was £120,000 per annum. Mr. Leonard was also entitled to receive a bonus calculated in accordance with a formula contained in the Schedule to the Contract. The formula involved, as the main input, allocating an amount of revenue from
Square's
revenues, which was referred to as the employee's "Production". The term "Production" was not formally defined, and there was no specific formula given for calculating it. In practice, as a "Producing Broker", the bonus constituted the main form of remuneration.
ii) Notice of termination (clause 2.1): Mr. Leonard was required to give six months' written notice to
Square
in order to terminate the contract.
iii) Fidelity (clause 3.2): various obligations were imposed requiring Mr. Leonard to provide exclusive and loyal service to
Square,
including at clause 3.2(a) a duty to devote the whole of his time, attention, and abilities to the business of the employer unless prevented from doing so by incapacity.
iv) Garden leave (clause 15): after notice to terminate was given by either Mr. Leonard or
Square,
Square
had the discretion to require him not to perform any services (or to perform only certain services).
v) The relevant PTRs (clause 17):
a) for six months after the termination of his employment, Mr. Leonard was prevented from being involved in any business concern which is (or intends to be) in competition withSquare
(clause 17.1(c)) (the "Non-Compete");
b) for six months after the termination of his employment, Mr. Leonard was prevented from: (i) soliciting the business of; (ii) endeavouring to entice away fromSquare;
or (iii) having any business dealings with, certain of
Square's
customers or clients (clause 17.1(a) and (d)) (the "Non-Deal").
vi) Job notification (clause 17.4): whilst still employed by
Square,
and for the duration of the PTRs, Mr. Leonard was required to provide a copy of clause 17 to any person making him an offer to be involved in a business competitive to
Square;
if Mr. Leonard were to accept an offer from any person to be involved in a business competitive to
Square,
he was also required to notify
Square
of the identity of the person making that offer.
The first period of employment: February 2015 to the end of 2016
"23. The word Production was not defined in the contract but in my understanding, and in market standard, it meant the business that I secured for the Claimant. In this litigation, the Claimant has pleaded that the Production to be allocated to me was a matter for its discretion. That was not my understanding and there was nothing to that effect in my contract.
24. Rather, I understood on the basis of conversations with the management and practice that from the time I joined until mid-2016/early 2017 Production should have been allocated according to an agreed rule, namely that if your client was involved in a trade (either as a buyer or a seller) the brokerage in respect of that client (i.e. the feeSquare
![]()
Global
charged the client for brokering that trade) would be allocated to your Production.
25. Usually you would conduct trades on behalf of your own clients, so allocation of Production would match up with the work you were doing. However, the rule was supposed to apply irrespective of who actually conducted the trade (i.e. who spoke to the client during the trade). In conversations I had with management about the rule this was justified by the argument that it meant you could go on vacation or a business trip, or even step away from the desk if you needed to, for example to use the bathroom, without the risk of seeing your clients being "stolen" by a colleague who covered the trades you were working on in your absence. "Client" in this context would mean a specific individual at an entity rather than the entity itself as many of us would have our own contacts at any given bank."
Square.
Mr. Uzan stated that, in that initial period, for the purposes of calculating Production, revenue generated from exotics products was indeed primarily allocated by reference to which clients were involved in the trade and which broker(s) was/were associated with those clients. He explained, however:
"The market in exotics products generally is relatively small. As such, Elie and I had already established a good presence in and coverage of the market. There was therefore naturally an overlap between what we were already doing and what Julien wanted to do. As a result of the way we calculated Gross Production, Julien wanted to generate revenue (and be allocated revenue) from as many sources and products as possible, regardless of whether anyone else atSquare
was already covering that client or that type of product. This naturally caused tensions over allocation of revenue for the purposes of Gross Production, in particular between Elie and Julien.
As a result, throughout the course of 2015 and 2016 there were regular discussions about the issues of revenue and work allocation and the best way of altering the structure to best suit the needs of the business and the brokers involved. I was already conscious then that, as the business continued to grow, it would not be feasible for "everyone to do a bit of everything", which would naturally lead to clashes between brokers wanting to do the same thing and would be an inefficient way of conducting business. This is not an issue unique toSquare;
it is the nature of broking as a result of the way in which brokers are typically remunerated, and disagreements in relation to this happen on broking floors across the world on a daily basis. In my experience, these disagreements happen relatively infrequently at
Square
(and certainly much less than at other broking houses)."
"…we were, as I said, in this period … often on the case-by-case, you know, almost at every trade, okay, waiting, looking, does it make sense? No. Is it dangerous from a broking point of view? Did you make any -- any mistake? Is this client happy?"
"It is true to say this was not technically a breach of the agreed rule, since according to that I should have only been allocated the brokerage relating to my client, but in the circumstances - where I was pressured to offer my clients zero brokerage to make sure the trade got done - I feel it would have been fair to allocate me some of the brokerage from the other side. This is a good example of the senior managers manipulating things to their benefit and my detriment: I was made to sacrifice my chance of adding to my Production to make sure they added to theirs, but nothing was said about how allocation would be handled until after the trade was completed, when it was too late for me to insist that brokerage be charged on my client's side of the trade."
"…1. It's great that you have found common ground. 2. We do a business review every week and a review of the line allocations every three months …".
Mr. Leonard's response, which interpreted Mr. Scemama's comment as relating to the allocation as between himself and the other broker, was:
"Super. For the line review, can you leave it with me? Jamie and I were thinking that we would discuss this so that it would not be too formal. And if we could not come to an agreement you would be the referee."
Square,
as well as how those arrangements operated in practice, is correct. In relation to the first of these issues, it is also relevant to observe that Mr. Leonard's new employment contract with Market Securities (the final version of which was disclosed in the course of this trial, at my request, and which was closely negotiated by Mr. Leonard) reveal that Market Securities similarly exercises a discretion in the allocation of remuneration, albeit that the contract expressly stipulates that this must be done by the employer "in good faith". Mr. Laddie Q.C. on behalf of
Square
cross-examined Mr. Leonard on this point:
"Q: So let's see if we can agree about this. Apart from the fact that … we have the words "in good faith", is there any material difference between these two contracts, in terms of how production is to be approached and attributed?
A: Well, if you take out for me which is a very relevant point about in good faith and the fact that it was not defined in my -- in my previous contract atSquare,
you could say that there's no -- not much difference. You're comparing nothing to something and in good faith."
Square's
counsel placed emphasis in their submissions on the fact that Mr. Leonard was generally asked to confirm the accuracy of the Production allocated to him at the end of each quarter year, all the way from Q2 2016 until November 2019. He sometimes offered corrections, and these were made. They were otherwise accepted without demurral. Mr. Laddie Q.C. asked Mr. Uzan about the purpose of this practice, in re-examination. Mr. Uzan responded:
"To make sure that there is no issue in terms of allocation, to make sure that no one is unhappy about any type of allocation and to make sure that he can start, you know, inputting his file with the right numbers for him to be paid, for employees to be paid properly, and for client to be charged properly."
Square's
counsel sought to infer from Mr. Leonard's lack of any contemporaneous complaints about issues of unfairness, within this framework, that Mr. Leonard did not in fact have real and well-founded complaints about unfairness, along the lines that he now seeks to allege in these proceedings.
"My Lord, this process was purely an admin process and it was to say whether -- you know, what had been decided at the time of the trade, if it was correct or not. So it was more a matter of agreeing the number that could go into the bonus calculation.
…Mr. Herriger had no input whatsoever with regard to say whether it was fair enough, so I just only agreed the numbers as in what was -- what had been decided against me or not at the time of the trade".
On this point, Mr. Leonard's explanation was convincing, and I regard the matter as neutral.
Square,
Mr. Elie Scemama. According to Mr. Leonard, he was subject to persistent bullying by Mr. Scemama during this time. In written closing submissions, reference was made to the following matters:
i) He was verbally abused (called a "pussy", "a woman", "a big shit") and accused of being "a liar" and "a whiner" when he needed to attend a medical appointment with his wife.
ii) He was accused of having a bad attitude, pressurised to give away clients, punished for minor mistakes, and criticised for activities others were not.
iii) His personal conversations were monitored, he was implicitly threatened that he was being watched via CCTV, he was sat with a colleague he was known not to get on with, and removed from chats with clients.
iv) He was subjected to repeated references to him leaving, with Mr. Scemama suggesting he would be happy about this.
"This revised structure and method of determining Gross Production [of which the changes in around May 2016 were the first of two phases] was intended to provide much clearer delineation of mandate and revenue allocation, and to reduce significantly the disagreements regarding allocation of revenue arising from transactions. It was also intended to enable Julien to specialise even more in this product. This meant that client relationships that Elie and I had developed in the market were effectively passed to Julien to manage in relation to single stocks exotics.
This was a decision inSquare's
best commercial and business interest. However, this was also a structure intended to benefit Julien and to respond to his complaints about clarity and allocation of trade."
Square
unfairly manipulated the allocation of remuneration to their own benefit and to Mr. Leonard's detriment, but it is impossible safely to draw that conclusion from the very short account given in Mr. Leonard's witness statement and any disclosure document referred to alongside it. There was very limited development of these allegations at the trial, and very cursory cross-examination of Mr. Uzan directed to any of these individual instances. The main cross-examination that did take place (which focused on a trade in September 2015, outlined in paragraph 29.3 of Mr. Leonard's statement) illustrated the impossibility of concluding that there was unfairness in all the circumstances: Mr. Uzan emphasised in his answers to counsel that, during this period, allocation took place on a case-by-case basis and that it would be necessary to have much more information about the circumstances of the individual trade before one could properly infer that there was unfairness.
"I am sending this short and factual mail to you only on purpose in order not to put any more oil on the fire. However, I need to put things in written [sic] in order to draw a line in the sand."
"… we are Dec 16, so a few months after that and he ceased to be a director. We dealt with that -- I'm insisting on this because I've been the one taking the risk to explain to my partner that he has to -- to cease being a director, and as you may imagine, when you set up a company with someone, especially if this person have such a big personality, it is not an easy thing to deal with. You need to take your time, you need to spend a lot of energy, you need to put everything you have on the table to convince this person to do so because it was right for the company, not only for Julien Leonard but for the company itself and I really consider this has been dealt."
Square,
Mr. Uzan was a conscientious, supportive and sensitive manager.
Square,
he says that a pattern emerged whereby he repeatedly raised concerns with the senior management, and these were largely ignored or resulted in ridicule, criticism or punishment. I do not find that this is proven either. To take each of the last three such events in this period which are referred to in the written closing submissions on behalf of Mr. Leonard:
i) Mr. Leonard points to his email in May 2016 to Mr. Scemama, in which he complained about the inconsistent allocation of Production, indicating that this was affecting his health. Although Mr. Leonard contends that he was punished for raising this concern, as stated above, I find that the evidence shows the contrary: the senior managers of
Square
responded sensibly and appropriately to the fact that there had been considerable friction over the past months concerning the allocation of Production, culminating in Mr. Leonard's email.
ii) Mr. Leonard says that around 14 November 2016, he complained to Mr. Herriger about unfair allocation of Production. He says that Mr. Herriger passed the complaint on to Mr. Scemema without asking him first, and that Mr. Scemama responded: "so you are leaving us", "you want quit
Square".
On inspection of the relevant contemporaneous document showing the exchange between the two men, one actually sees that Mr. Scemama invited Mr. Leonard to a lunch in order to talk about his concerns. He expressed himself in constructive and conciliatory language, stating for example: "Anyway, we're going to have to improve this set up on the singles correl side and really start working as a team to grow this business."
iii) Mr. Leonard refers to his email of 9 December 2016 complaining about Mr. Scemama's bullying. He says that
Square
failed to treat this as a formal grievance, and that no substantive action was taken. He says he was just moved to a different manager. I find that these allegations are misconceived. Mr. Leonard's email was framed so as not to raise a formal grievance, and robust substantive action was indeed taken to deal with Mr. Scemama. Mr. Scemama was asked to step down as a director, in view of his unacceptable management style and treatment of Mr. Leonard (although he remained in the company), and he was removed as Mr. Leonard's line manager.
The second period of employment: January 2017 to December 2018
"This revised structure and method of determining Gross Production was intended to provide much clearer delineation of mandate and revenue allocation, and to reduce significantly the disagreements regarding allocation of revenue arising from transactions. It was also intended to enable Julien to specialise even more in this product. This meant that client relationships that Elie and I had developed in the market were effectively passed to Julien to manage in relation to single stocks exotics.
This was a decision inSquare's
best commercial and business interest. However, this was also a structure intended to benefit Julien and to respond to his complaints about clarity and allocation of trade. It was certainly not a punishment. Indeed, the new system proved to be to Julien's significant benefit: he has made a huge success of this opportunity. In Q1 2016, before this change was made, Julien's quarterly bonus was £22,279.11. Less than three years later, in Q3 2019, the last full quarter Julien worked before he resigned, his quarterly bonus was more than 10 times greater: £277,227.86. Julien's bonuses have been consistently higher since he was given the single stock exotic mandate.
Since these changes,Square's
business structure has become more and more organised by reference to product mandates. We believe the best way for
Square
to continue growing is for brokers to develop true expertise in certain product(s), rather than being stretched across a wide range of products. We want to encourage brokers to cross-refer their contacts to other individuals who have the specific expertise in a particular product."
Square
which showed lower figures for Q2 2016, and consequently no dip: he explained that he had previously only been looking at the "ballpark", and so had failed to spot this). Nonetheless, taking the broad sweep of the period from 2016 until his departure from
Square
in November 2019, it was common ground that there was a substantial increase in Mr. Leonard's remuneration. Mr. Leonard commented, in particular:
"What should really be looked at is the bonus plus draw. If you look at this multiplied, it's only five times, not 10."
Square
did not on its face cause Mr. Leonard any financial disadvantage, and I find that it is probable that the adoption of this system was indeed conducive to a more harmonious and far better-functioning working environment.
"I'm not having a bad relationship with Julien Leonard. All of this does not mirror, effectively, what is happening here. I spent a lot of my time having some jokes during the day with Julien Leonard. You can see in the bundles, the type of relationship to the chats, wishing to each other for the birthdays, for the Christmas, for New Year. My partner, Daniel Even, went often with him, I mean many times with him, having you know, to some cigar bar at some private club. We tried everything we could to satisfy him when it was possible, for example, increasing his numbers of draw at the time of his wedding. He was the only employee, there's no one who received that from me because I'm quite of a busy man, an end of year meeting to top end restaurant, you know, every year ….".
Square:
"Q. Now, around this time, I put to you that you were getting on pretty well with Mr. Uzan. I'm going to suggest to you that throughout this period, he was extremely supportive to you, was he not?
A. You could say he was supportive. Extremely is another word, but –
Q. Okay, let's not quibble over words. Would you agree he was supportive to you?
A. Yes, I would agree with that. … I never said that Mr. Uzan wasn't pleasant toward me in 2019."
"Mr. Boubil was swearing and yelling on pretty much a daily basis and has been the case for throughout the whole of my employment, not just 2018, but also 2017, anyway, pretty much all the years and I mentioned several times that it was affecting my concentration and it was disturbing my client calls. Mr. Ronnie Feiereisen, as well, was out loud and outspoken about that and he would yell across the floor to tell Ari to lower his voice because it would again affect his client calls and it was -- it seemed unprofessional for his clients to hear yelling and swearing in the background. So the -- and as well, on a less frequent but still very frequent, maybe let's say, weekly basis, the swearing and abuse of Mr. Boubil towards his junior and also towards Ms Assor, working on his desk, those were also events that, you know, were part of the aggressive environment."
"Most of the time he's shouting at himself, you know, like F words, it, why did I do this, and so on, and as I said yesterday, he's sometimes -- he's sometimes yelling, he sometimes also having some outburst, it happened. With the market moving, for example, these days, they are crazy, I'm sure it happened, even though I was focusing on something else, I have no doubt it may well have happened, it very rarely, almost never, turn personally".
Square
during the period 2017-2018.
Square,
to help him pay for his wedding. (Mr. Leonard accepted, in oral evidence, that this was an example of generosity or at least flexibility shown towards him by
Square).
He said that his salary then reverted back to £80,000 in October 2016.
Square
led to him agreeing to enter into a variation of certain terms in his contract (the "Variation Letter"), on 15 December 2017. In the Variation Letter:
i)
Square
agreed to increase Mr. Leonard's basic salary to £120,000 per annum gross.
ii) In return, Mr. Leonard agreed not to give notice for his employment to terminate on any date before 24 November 2019 (i.e. committing to
Square's
employment for roughly two further years).
"Without mentioning it first, Mr. Uzan tried also to increase the duration of my post-termination restrictions termination [sic] from six to nine months but I spotted this and insisted he remove that term."
Moreover, neither party in this litigation relies on the Variation Letter as having contractual force: on
Square's
side, this is said to be because they considered that the consideration which they thought they were providing – an increased base salary – had already been provided by the point of variation. Instead, the main way that this event is deployed by
Square
(via Mr. Uzan's written statement) is to argue that the fact Mr. Leonard agreed to the terms of the Variation Letter:
"strongly reflected the overall positive relationship betweenSquare
and [Mr. Leonard] at that time such that he would commit himself to the business for at least a further two years."
Mr. Uzan also stated (albeit straying into legal submission):
"The proposed increase of the Post-Termination Restrictions to nine months reflected what we considered to be a reasonable period of time in all the circumstances, and is further demonstration that the six-month period we do seek to enforce is more than reasonable."
Square
grew, and, specifically, that he would benefit from an increase in volume of single stocks vanilla options (that is, vanilla transactions as opposed to exotics) with some future new hires. Mr. Leonard responded by asking to be kept in the loop on this process.
Square?")
which were inappropriate in the context of the social dinner, and that he replied in a similar tone to Mr. Leonard's with a focus on moving the conversation along.
The final period of employment: 2019
Square
continued to prevail in 2019 (despite the departure of Mr. Scemama in 2017, who had been the main focus of concerns in the early period).
"[About the first event:] I have raised several times this type of behaviour. Hearing this type of yelling on a daily basis is not promoting an environment where it is pleasant to work. It is getting on the nerves of everyone at work and affecting concentration/performance. Turning a blind eye on this bullying behaviour is sanctioning an attitude where people hide their incompetencies/unprofessional attitude behind aggressive behaviour. …
[About the second event:] I have endured/witnessed this type of unsanctioned attitude in this company for a long time and I am thinking some changes could be beneficial to everyone."
"We do not condone such behaviour atSquare,
and never will. These matters are being looked into and dealt with.
Also, even though we want theSquare
trading floor to remain vibrant and lively, please make sure you also keep to the same respectful standard with everybody here."
"I am happy to hear that things are being looked into. I was simply flagging again a behaviour that is happening on a regular basis on the vol desk. I pride myself with applying professional, compliant and respectful standard with everyone on the floor. Should anything being viewed differently by anyone, I would take this at heart and would be happy to have a conversation about it."
"…he raised an issue about Ari, who called badly an execution trader, and for these issues we went into the room, we discussed. I clearly stated to Ari that he should not be talking to people like this, they can take this personally. Ari got -- I mean apologies to this person. They then went to have a beer and the day after, they came back like as nothing happened. This issue got treated".
"…I then went to … the other two directors who were at that time following the situation. They both told me that, if anything, it was Julien being aggressive. It was what they call a non-event. And in regards to the rest, I said clearly "Let's", you know, "if you want to make any comment about the other, I'm more than happy to accept it, but let's make sure that you also take care in the way you talk to people."
Square
claiming constructive dismissal. Mr. Leonard responded that his motivation for writing the email had been unrelated. He pointed out that the email in part concerned Mr. Boublil, who was the brother-in-law of Mr. Uzan. He said:
"… I decided to take a defence for an employee that could not defend himself because he was not in a position to do so. I was in a stronger financial position, I was in a stronger political position at that time, and I took it on me to help employees that were not able to defend myself and try to do so."
"Q: Why did you not just speak to Mr. Uzan who sat opposite you?
A. My Lord, Mr. Uzan might sit, indeed, opposite me but we have two rows of screen between us, so we don't have - you need to actually stand up to speak to him. Also, because of the attitude of the company not to write anything down, I was concerned that, you know, history might be ignored and the matter, you know, raised verbally, would be written like it's been the case.
Q. So you wanted a written record of this; is that right?
A. That's correct, yes.
Q. Why did you want a written record of it?
A. In order to make sure that history was not rewritten several months later."
Square,
even if it was uncertain at that stage whether he would leave for Market Securities. I do not regard his email as reliable evidence supporting the proposition that there was an unacceptable aggressive environment at
Square.
Nor do I regard the response from Mr. Uzan to his email as proper evidence that
Square's
approach to complaints and grievances raised by Mr. Leonard was dismissive, or otherwise unacceptable (either on this individual occasion, or as part of a course of conduct over time).
Square.
He agreed too, that the draft agreement could be said colloquially to constitute an offer to him by Market Securities. Although he initially resisted the proposition that it was in fact an offer capable of being accepted, as opposed to being a valid offer where the terms were simply not favourable enough, in his mind, he did finally accept the proposition:
"Q. Could you turn, please, to page 1063. 1063 is the commission sharing arrangement. Yes?
A. Yes.
Q. And we can see at clause 2.1 that the commission sharing arrangement there was 60 per cent on the production, up to £1.2 million, and 65 per cent thereafter?
A. That's correct.
Q. So that appears to have been a more favourable arrangement for you than the one that you were at that point enjoying atSquare
![]()
Global;
do you agree?
Yes, that's correct.
Q. Let me ask you this. The contract being sent to you, you say you hadn't agreed it, but it was at the very least an offer, was it not?
A. You could say it was an offer from their point of view and in my mind it was not an acceptable offer.
…
Q. If you had been minded, it would have been possible to accept this offer; do you agree?
A. Yes, I do.
Q. And, therefore, it follows that you accept it was an offer?
A. You could say colloquially that it was.
…
And would you agree with this, Mr. Leonard, that it would have been open to you, had you so desired, to sign these documents and indicate your acceptance?
A. Yes, like I said, yes, if I had agreed any of those, I would have been in a position to sign them."
Square
on 11 November 2019. The first of these was sent to him in late May 2019; the second was sent on 6 November 2019 (i.e., a few days before he left, and one day prior to events that Mr. Leonard treats under one of his alternative cases as the operative "final straw" triggering a constructive dismissal). The final executed contract was eventually signed by Mr. Leonard after his departure from
Square,
on 6 March 2020.
Square's
representatives carried out a comparison between the executed contract made between Mr. Leonard and Market Securities, and the draft version sent to Mr. Leonard on 9 November 2019. For their part, Mr. Leonard's representatives carried out an analysis comparing the draft provided on 26 March 2019 against the final version. Both these comparison exercises help to illustrate that the changes made between each of the successive drafts were fairly minor, and similarly that the changes made between the November 2019 draft and the executed version of the contract were fairly minor. The latter changes did include, among other matters, a new clause regarding garden leave (requested by Mr. Leonard during the currency of this litigation, on 14 February 2020), and the specification that the determination of Mr. Leonard's "commission share" by Market Securities should be "in good faith", which Mr. Leonard said was an important point for him after his experience at
Square.
Square
to join them. Mr. Leonard was asked, in cross-examination, whether he was in a hurry to finalise his negotiations with Market Securities, after receiving the draft contract from them in March 2019. He explained that he was "in no rush at all":
"Q. So the question I have to ask you is this: why didn't you accept it there and then?
A. Because like I said, schedule 1, paragraph 1, I wouldn't want to accept, so I wouldn't want to put myself again in a position where a company would have full discretion over the allocation of my commission.
Q. But presumably you would have been in a hurry to nail that down?
A. No, I was not in a hurry at all.
Q. Why not?
A. Like you said, you know, I was making some decent money atSquare
and despite being unhappy for quite a long time there, I was in no rush at all. At the time, I was like -- I mean I'm 42, and I'm thinking my next move is going to be an important one because I don't want to end up in situation where I'm getting abused."
"…I replied that I would like to talk to him about his "attitude". I was frustrated that I was again having to have discussions around allocation of revenue on transactions which clearly did not fall within Julien's mandate, for which no bilateral agreement had been made, and in respect of which there was simply no good reason the revenue should be allocated to Julien. In order to keep the client happy, I ended up agreeing to split the revenue from Guillaume on this trade with Julien 50/50.
This episode triggered a discussion between Julien and myself about general coverage and revenue allocation of sector indices. It was decided that (apart from Quanto products on sector indices which the Index Exotics Desk would continue to cover) Call vs Call sector index vs sector index would now fall within Julien's mandate. However, Call vs Call index vs sector index would remain within the Index Exotics Desk mandate. This was applied from May 2019 onwards."
"I read the chat, but I don't understand why you are trying to create an issue around something like that, Julien? Nothing was said about the bad guy, so I don't see why you're trying to build up something."
squarely
within Mr. Leonard's mandate. On inspection of the facts, Mr. Uzan's behaviour appears to me to have been justified, and not to have constituted unfair treatment of Mr. Leonard. There were exceptional circumstances in this particular case. The trade concerned was the second of two trades with Asia-based clients, which was a region in which Mr. Leonard had no market presence. Mr. Uzan had proposed a bilateral (revenue-sharing) agreement between the two exotics desks in relation to trades in this market, in circumstances where one of his own junior brokers, Jeremy Louis, did have connections in Asia and was in a position to interact with the Asian client. The first trade took place successfully, with Mr. Louis working hard to generate the business. Mr. Leonard said to Mr. Louis that he would reward him by contributing to his own bonus at the end of the year, and kept the entire Production. On the occasion of the second trade, where Mr. Louis was again of special assistance (and did significantly more than merely effect an introduction), Mr. Uzan stepped in to ensure that fairness was achieved. He said, in cross-examination:
"Julien tried to cross the line, to avoid me, to talk directly to this guy and to say: oh, I'm gonna pay you one day. It should have been a desk-to-desk bilateral agreement and in a sense here, it looks like he did everything he could to avoid this. And I've tried -- I've tried to put some equity after the second attempt."
Square
recruited a broker called Mr. Chichportich without informing or involving him. He says, in his written statement:
"Mr. Chichportich was not introduced to me by anyone, and his mandate was to cover all clients including mine. Therefore, I was not going to benefit from the synergies to which Mr. Uzan had referred during our 2018 dinner and my remuneration would not increase as promised. This compounded my belief that Mr. Uzan was not to be trusted."
"…so he would basically work these as his mandate, and I -- I would have been able to speak to my client about the product that -- and refer to him some interest, due to my relationship with my clients."
Square's
counsel on this issue: it is not at all clear why Mr. Leonard thought he would not benefit from synergies, nor why Mr. Leonard (who was not a member of the management team) should have been involved in this recruitment.
Square
was "clear and given." Mr. Leonard's response (having failed to take up the offer of a meeting made the previous week) was to raise the same essential issues of perceived unfairness resulting from the operation of the system as he had already raised before. It is against that context that Mr. Uzan wrote back:
"Julien please stop insisting, you have a clear mandate, there is a rule in place and we will not come back on this. Same as we did our side I invited you to make things clear to your clients. We are business specialists … There has been too many attempts recently so looking fwd I will authorise myself not to answer to avoid wasting anymore time on this."
"Harold has recently mentioned to me that you have on several occasions communicated on BBG chats to him some frustrations about the manner and fairness with which you perceive certain product and coverage mandates are being allocated and managed, between specific desks and individuals. I would just like to clarify if these frustrations are to be viewed as part of usual frictions and disagreements on a brokerage floor which would you prefer to continue addressing in an informal manner as you have done so far, or if you would rather engage a formal grievance process, according to the ACAS Code of Practice whichSquare
adheres to".
Square
in a legal dispute. I find, however, that the email from Mr. Herriger was genuine (and would reasonably have been regarded as genuine), and I accept the evidence of Mr. Uzan about the reasons why it came to be written.
"I just happened to, at some stage, look at the screen. Maybe I looked -- I went to the window to see what was going on in the street, turned my head, saw this file on the screen and then went back to my desk to check what it was, when I saw my name on it … I think I must have seen the name of the file at the top of Excel."
Square
is probably correct: Mr. Leonard's account of a fortuitous discovery on 7 November 2019 was unconvincing, and the available evidence does indeed suggest that two other (non-accountant) employees accessed the pay information file prior to Mr. Leonard's discovery.
Square
when subject to an FCA prohibition. Although Mr. Leonard served a witness statement from Mr. Diallo in these proceedings, on which Mr. Diallo was ultimately not cross-examined (see paragraph 13.ii) above), Mr. Diallo's statement gives no sufficient details either of the FCA prohibition or of the activities said to constitute breaches of the prohibition. As indicated above, the conclusion of the statement is in qualified terms: "With hindsight, I realise that there might have been something questionable with regard to the trades I was instructed to execute." Mr. Uzan was cross-examined extremely shortly about this allegation:
"Q. And the last point is in relation to Mr. Diallo: and it's correct, isn't it, that he was trading without authorisation?
A. No, it's not correct. To the best of my knowledge, it is absolutely not.
Q. And Mr. Diallo will give evidence, but Mr. Leonard discovered this, that it would cause concern to any employee, wouldn't it, if there was trading without authorisation?
A. Again, I've given you my answer. I don't think he was, I'm happy to give some context if you wish.
Q. No, no."
Square
knew of and encouraged them.
Square,
he went to check Mr. Louis' FCA status, and this revealed that Mr. Louis was not authorised to perform regulated tasks out of London. As in the case of Mr. Diallo, I do not find this allegation proved. Mr. Louis was specifically questioned about his activities at
Square:
he was clear that he did not arrange or bring about trades, and that his role was "bringing interest only". I find that this proposition is likely to be correct. I note, moreover, that Mr. Louis' evidence was that Mr. Leonard himself knew at the time he was at
Square
that Mr. Louis did not have a regulatory authorisation to trade: he said that the point was brought up many times on the trading floor, within earshot of Mr. Leonard. The relevance of this observation is not that Mr. Leonard was in some way barred from complaining about the fact that Mr. Louis was unregulated. It is that if, as appears to me to be probable, Mr. Leonard was aware of Mr. Louis' status, then if Mr. Louis was breaking the rules I would have expected Mr. Leonard to have noticed this and to have objected to it. The fact that he did not do so tends to suggest that there was no good reason for concern.
Mr. Leonard's resignation and the subsequent events
i) At around 8.30pm on 11 November 2019, he sent an email to Mr. Uzan stating:
"It came to my attention that my salary, current and past bonuses and other extremely confidential terms of my contract, along with the ones of a lot of other employees, have been made easily accessible and available to everyone in the company. I have serious concerns on how the company is handling confidential and private information. I would also like to know if the ICO was made aware of the use of CCTV in the office in accordance with the Data Protection Act of 1998. I also never saw any signs of the use of CCTV in the office."
ii) At around 11.05pm on 13 November 2019, he wrote a "private and confidential" email to Mr. Uzan in his capacity as compliance officer. He said in it:
"I overheard a conversation between a partner and a director of the company that I find could represent an issue with regards to the regulating authorities. Apparently a few years back senior members of staff were directing/forcing an individual to perform regulated duties and execute market orders. This was done despite those members of staff knowing that the employee was unable to trade due to being under a prohibition to perform regulated duties and execute market orders from the FCA. You might already have been made aware of this, but in any case as a compliance officer I thought I should make you aware of it so that you could take the appropriate actions if necessary.
I shall try to think about other possible sensitive situations such as this one, that I could have come across during my time but missed then and let you know if I can think of something else that could have skipped my mind at the time."
Square).
I am not prepared to make any findings about Mr. Leonard's motivations in this regard, and do not need to do so. It remains unclear whether, if what he says is right, Mr. Leonard had in mind a need to protect that other employee from a possible defamation action brought by
Square,
or from some other unspecified consequences.
Square
has consistently taken the position that Mr. Leonard remains an employee, and that his resignation letter on 11 November 2019 is to be regarded as a notice of intention to cease his employment on 11 May 2020 (i.e. after six months).
Square,
they stated: "…our client has not accepted an offer with a competitor of your client." In a letter two days later, on 20 November 2019, Wallace wrote: "[our client] also confirms, again on an entirely voluntary basis, that he has no offers of employment from competitors." Mr. Leonard was questioned about this at the trial, given the successive draft contracts which he had been sent by Market Securities by this point. His explanation, when pressed, was that he did not view the drafts as amounting to an offer of employment at the time, but had in mind that an offer would be a document already signed by the offeror, and only awaiting a signature by the offeree. I do not find this explanation convincing, particularly in the light of his acceptance at the trial that, if he had been so minded, it would have been possible to accept the offers in the draft contracts. That is not to say that I consider Mr. Leonard to have acted in a level-headed, collected and composed manner: I consider it probable, based on the totality of the evidence, that Mr. Leonard was acting under very considerable stress following his resignation from
Square,
and that he was anxious at the prospect that information about the offers made to him by Market Securities would be harmful in this dispute when learned of by
Square
and its lawyers.
Square
called Konstantinos Evangelou. Mr. Evangelou had at that time been working at
Square
for roughly 18 months, and he had had only a handful of dealings with Mr. Leonard over that period. He says in his statement that he was surprised to receive the call. According to Mr. Evangelou, Mr. Leonard asked him if the CCTV cameras on the broking floor and elsewhere were operational, and Mr. Evangelou replied that as far as he was aware they were not. Mr. Leonard asked him if he had had any "bad experiences" during his time at
Square,
and Mr. Evangelou told him that he had not. He says that Mr. Leonard asked him for the contact details of two former employees of
Square
(which Mr. Evangelou did not provide, then or later). He adds that, towards the end of the conversation, Mr. Leonard asked him if he knew of "any bad things [he] can use against
Square?"
Square,
but denies that he went further than that by asking about other bad things Mr. Evangelou was aware of, or that he asked for the contact details of at least one of the other former two employees mentioned by Mr. Evangelou.
Square
to see how much help they might be able to give in terms of tracking down copies of CCTV recordings. He said: "The reason why I did so is I wanted to expose the lies, possibly, alleged lies." He agreed: "You could say it was a fishing expedition." When asked the reason why he had asked Mr. Evangelou about the bad things that
Square
had done to him, he responded: "I was trying to find allies in a possible – in a future dispute."
Constructive dismissal: the relevant law
Square
of the implied term of trust and confidence in his contract of employment. It is necessary to consider both the content of the duty imposed under that term, and the standard that must be reached in order to show a breach.
"The employee is entitled in those circumstances to leave at the instant without giving any notice at all, or alternatively, he may give notice and say he is leaving at the end of the notice. But the conduct must in either case be sufficiently serious to entitle him to leave at once. Moreover, he must make up his mind soon after the conduct of which he complains: for if he continues for any length of time without leaving, he will lose his right to treat himself as discharged. He will be regarded as having elected to affirm the contract."
"In the normal case where an employee claims to have been constructively dismissed it is sufficient for a tribunal to ask itself the following questions:
(1) What was the most recent act (or omission) on the part of the employer which the employee says caused, or triggered, his or her resignation?
(2) Has he or she affirmed the contract since that act?
(3) If not, was that act (or omission) by itself a repudiatory breach of contract?
(4) If not, was it nevertheless a part (applying the approach explained in Omilaju [2005] ICR 481) of a course of conduct comprising several acts and omissions which, viewed cumulatively, amounted to a (repudiatory) 8 breach of the Malik term? (If it was, there is no need for any separate consideration of a possible previous affirmation, for the reason given at the end of para 45 above.)
(5) Did the employee resign in response (or partly in response) to that breach?
None of those questions is conceptually problematic, though of course answering them in the circumstances of a particular case may not be easy."
"In the nature of things, the remedy of treating the conduct as a repudiatory breach, entitling the employee to leave, can only avail an employee who learns of the facts while still employed. If he does not discover the facts while his employment is still continuing, perforce this remedy is not open to him. But this does not mean he has no remedy. In the ordinary course breach of a contractual term entitles the innocent party to damages."
Lord Steyn stated, at 624E-F:
"In truth the ignorance of an employee of a breach of the implied obligation is only relevant to the choice of remedies: obviously the employee cannot decide to terminate on a ground of which he is unaware. Moreover, if counsel's submission were right it would mean that an employer who successfully concealed dishonest and corrupt practices before termination of the relationship cannot in law commit a breach of the implied obligation whereas the dishonest and corrupt employer who is exposed during the relationship can be held liable in damages. That cannot be right."
"… as Malik shows, breach of the duty as to trust and confidence may have other consequences besides founding a claim for unfair or wrongful constructive dismissal. Even though the employee does not know of the breach when his employment terminates, he may have a claim for damages. It can also be used to justify his leaving, whether or not he left because of it. So if an employer asserts that the employee should not have left, the employee may show that he was entitled to leave because of the employer's conduct, regardless of why he in fact left.
It is well-established that an employer who dismisses his employee can rely on grounds of which he was unaware at the time of dismissal: Chitty on Contracts, 30th Edition, volume 2, paragraph 39-183, citing in particular Boston Deep Sea Fishing Co v Ansell (1888) 39 Ch D 339. This is an application of the general principle that a party who refuses to perform a contract, giving a wrong or inadequate reason, may subsequently justify his refusal if there were facts in existence at the time of the refusal which would have provided a good reason for it. I refer to volume 1 of Chitty at paragraph 24-014. The application of other principles such as those relating to waiver or estoppel may prevent him from doing so. Turning to the situation with which I am concerned, the converse of that in Boston Deep Sea Fishing, it follows that an employee may justify his refusal to perform his contract of employment by any grounds which existed at the time of his leaving. So, if he simply walks out without apparent justification, but later discovers that his employer was fraudulently deducting from his pay on account of tax more money than he should, his employer would fail in any action brought against him, whether for damages or for an injunction to restrain him on the basis that the employment was continuing. Likewise, taking some of the facts in Malik, if the employees had left to work for another bank before they were free to do so, and BCCI had sought to restrain them from doing so, it would have defeated BCCI's claim for the employees to show that the bank was run in a dishonest and corrupt manner even though the employees did not know that when they left."
Square
is treating the contract of employment as subsisting, and it seeks enforcement of the fidelity clause and the clause requiring Mr. Leonard to respect the period of six months' written notice (by not working for a third party during this period), and enforcement of PTRs. However, if it were correct that
Square
was in repudiatory breach as a result of (say) dishonest and corrupt operations, then, even if these were learned about by Mr. Leonard after he had resigned, I consider that he must still be able to rely on them in order to oppose
Square's
action.
Square's
counsel submitted a "Note on the Law" in which, among other matters, they contend that Jack J.'s judgment is both obiter and wrong. They attack his reconciliation of the apparent tension between Malik and Meikle, which I have referred to above. I do not need to examine this in detail: it suffices to say that I do not consider that their attack on Jack J.'s reasoning is well-founded. They argue that Malik does not support the proposition for which Jack J. cites it (i.e., the need to consider the issue from the perspective of the remedy which the Court is being asked to grant), whereas – as appears from the extracts I have cited above – I consider it does. They argue that Jack J. was wrong to consider that in a wrongful dismissal claim the employee must establish "causation" of loss, since, in a contract claim, demonstration of loss is not an essential ingredient. However, this misses the basic point that the gist of the claim which Jack J. was discussing was a claim for compensation caused by the unfair or wrongful dismissal.
Square
on which Mr. Leonard can rely, whether or not one takes account of matters extraneous to his reasons for resignation on 11 November 2019.
Was there a repudiatory breach by
Square:
Discussion and findings
Square.
Whether the individual acts referred to are relied on in their own right, or as part of a wider course of conduct over time, the case is not proved.
Square
did not show "an intention to abandon and altogether refuse to perform the contract", to take the language of Etherton LJ (as he then was) in Eminence Property Developments. I start with the final group of acts and events relied on by Mr. Leonard, in October/November 2019.
Square
allowed or required both Mr. Diallo and Mr. Louis to engage in regulated conduct when they were not authorised to do so by the FCA. In the case of Mr. Diallo, Mr. Leonard was informed on 7 November 2019 at his coffee catch-up with a former employee that
Square
had permitted Mr. Diallo to execute financial trades while subject to a prohibition; in the case of Mr. Louis, it was discovered by Mr. Leonard only after his resignation (but confirming suspicions which Mr. Leonard had held during his employment) that Mr. Louis was not authorised to bring about, arrange or execute trades and yet he had been doing so.
Square
knew of this and sanctioned it.
Square's
counsel submitted that, had I reached those findings, then although this would be a very serious matter for
Square,
it would nonetheless be altogether different in its character and consequences from the situation in Malik where the entire business operation of the employer was dishonest and corrupt. In the particular circumstances of the present case, they argued that it would not impinge sufficiently on the employment relationship between
Square
and Mr. Leonard to amount to a repudiatory breach of the contract between them. Although this point does not arise for determination in view of the facts I have found, I accept this submission. I note the point made by Mr. Leonard's counsel in their post-hearing submissions:
"The Claimant operates in a tightly regulated financial services environment. It necessarily (objectively) undermines the trust and confidence of its other employees if its management are instructing unauthorised individuals to carry out regulated tasks. This behaviour creates a risk for all employees, especially in such a small office, not least because it creates a risk that others will unknowingly get caught up in trading with an unauthorised individual …".
In my view, this is a question of scale and degree. Where the conduct of the employer in relation to certain individual employees can properly be said to reveal that the business as a whole is run in a dishonest fashion, that may well amount to a breach of the implied term of trust and confidence. In my view, even assuming that
Square
had wrongly authorised Mr. Louis and Mr. Diallo to engage in regulated trading activity, the factual position in the present case would fall short of that.
Square's
counsel that the fact that a document with pay information was mistakenly not password-protected is not an indication that the employer is refusing to perform the contract; nor, in the present case, does it form part of a wider course of conduct amounting to a repudiatory breach because of the reputational or other professional implications for Mr. Leonard. In this connection, I recall the remarks of Lord Nicholls in Malik that, in the ordinary way, even gross incompetence on the part of an employer would not be sufficient to amount to a breach of the implied term.
Square,
of which the alleged behaviour by Mr. Boublil or Mr. Scemama during this period were examples. I firmly reject too the suggestion that, when disputes arose involving Mr. Leonard on one side and senior managers on the other side, Mr. Uzan always took the part of his fellow senior managers. As shown by, in particular, the matters referred to in paragraphs 66 - 67, 84 and 98 above, the evidence establishes that Mr. Uzan was a fair and conscientious manager, who was certainly prepared to tackle his fellow senior managers over allegations of unfairness, aggressiveness, or any other misbehaviour.
Square
in the period 2015-2016, this could be "revived" in 2019. That would be the case even if, in the meantime, Mr. Leonard had taken steps which affirmed the contract of employment. (In fact, I do consider that Mr. Leonard's acts in continuing to work at
Square
during 2017 and following, and by formally signing the Variation Letter in December 2017 whereby he committed to remain at the firm for roughly two more years, would have amounted to affirmation of the contract.)
Square
to work for Market Securities as soon as possible, but chose to spend roughly nine months building up a dossier against
Square.
It is argued on behalf of Mr. Leonard that, if he had really resolved to leave
Square
in March 2019, the sensible thing for him to have done would have been to hand in his notice straight away, so that at least time was running. He could still have taken advantage of any developments during the six-month notice period that might have allowed him to allege constructive dismissal, and by that means he might have hoped to avoid the constraints from the PTRs under his contract with
Square
(and any outstanding balance of his notice period too).
Square
three years earlier, might make the calculation that he had a good chance of escaping what was potentially at least a 12-month contractual prohibition on working for the new employer, if he were able to set up a case that he had been constructively dismissed so that the PTRs fell away.
Square's
counsel, in short, that from at least that point Mr. Leonard was particularly keen to find fault with the way he was treated at
Square,
and to ensure that there was a written record of all interactions that might prove useful in the event of an employment dispute. In this connection, I recall that it is a contention put forward by Mr. Leonard's counsel (in the post-hearing written submissions) that if there is overwhelming evidence of an employee trying to contrive a claim for constructive dismissal, this might prompt the Court to apply greater scrutiny to the events relied on as constituting a repudiatory breach by the employer. Subject to the qualification that, in my view, the Court should simply take care to scrutinise claims of constructive dismissal carefully in circumstances where the employee has a significant financial incentive to advance such a claim in order to avoid notice periods and irksome restrictive covenants (cf. Jack J.'s approval of a similar statement made in Bloch and Brearley on Employment Covenants & Confidential Information (3rd edition), at [86] in Tullett Prebon at first instance), I agree.
Square
fail, on each basis on which they are advanced.
Square
was entitled to, and did, affirm the contract of employment in the light of Mr. Leonard's summary resignation. Under its terms,
Square
is entitled at a minimum to require Mr. Leonard not to work for a third party until the expiry of his six-months' notice period (11 May 2020).
Breach of the job notification clause
Square
alleges that Mr. Leonard breached the job notification clause (clause 17.4) in his contract of employment. This provides:
"If the Employee receives an offer to be involved in a business concern in any Capacity during the Appointment, or prior to the expiry of the last of the covenants in this clause 17, the Employee shall give the person making the offer a copy of this clause 17 and shall tell the Employer the identity of that person as soon as possible after accepting the offer."
Square,
a copy of the clause; secondly, it requires Mr. Leonard to tell
Square
the identity of that person promptly after accepting the offer.
Square's
concern. In any case, although it is plain that successive offers were made by Market Securities to Mr. Leonard with each iteration of the draft employment contract, there has been no investigation at trial of the question whether Mr. Leonard provided Market Securities with a copy of clause 17, either at the time of the first draft contract in March 2019, or subsequently. It is not possible to make a finding that there was a breach by Mr. Leonard of this requirement, even if it served some useful function to do so.
Square.
Square
contends that the Court should find that Mr. Leonard accepted the offer contained in the first draft of the contract sent in March 2019, and that all that remained was to tie up the formalities and negotiate the finer details.
Square
argues that the fact that an agreement had already been reached between the parties, at least in relation to all the essential elements of the contract, was intended to be obscured by the drawn-out process of negotiations over trivial details after March 2019.
Square.
It is true that the evidence shows that, in the main, there were relatively small changes made between the successive draft contracts after the first draft was sent in March 2019. But there is, in particular, no indication that Mr. Leonard made clear to his counterparty in March 2019 that they should regard all the major terms as settled, and that these would not be subject to any further reconsideration by him prior to readiness for signature. Certainly, there were some non-trivial amendments over the course of the following year, such as: the inclusion in November 2019 of the provision that Mr. Leonard's broking company would be granted a "sole and exclusive"
global
mandate for equity exotic derivatives; and a materially new clause regarding garden leave which was inserted following a request made by Mr. Leonard on 14 February 2020.
Square
contends, "designed to obscure the fact that an agreement had already been reached between the parties, certainly in relation to the essential elements of the contract."
The PTRs
Introduction
Square
for a further 6 months after the expiry of the notice period under the contract of employment, i.e. it would have effect until 11 November 2020.
Square's
own case, the period it considered necessary to protect its interests by keeping a former employee out of the market was only six months, but in the present case Mr. Leonard would already have been kept out of the market for six months as the result of not working between the date of his resignation on 11 November 2019 and 11 May 2020.
PTRs: the relevant law
Analysis
Square,
on the Non-Compete clause.
Square
has legitimate protectable interests in this case. The evidence at trial established in particular that the nature of Mr. Leonard's job at
Square
involved building up and exploiting customer connections. Mr. Uzan gave evidence, for example, that:
"…it was specifically agreed with Julien as part of his recruitment that he would be able to spend 3% of Net Production on client entertainment in order to build relationships. Pursuant to that agreement, over the last three years for example,Square
has invested very substantial sums specifically to enable Julien to develop his relationships with
Square's
clients: £43,498 in 2017; £44,862 in 2018; and £44,133 as at 11 November 2019. Julien is the only Producing Broker at
Square
who has expenses funded by
Square
in this way. This is a clear indication of just how much we expected him to build client relationships."
"… knowledge of which traders at which banks are interested in which products at what price at any given time is incredibly valuable information and confidential toSquare
- it is the lifeblood of our business and the value we bring to the table as a broker.
In exotics, that information remains confidential and of significant commercial value toSquare
for a long time. Exotics do not trade frequently due to their complexity. Clients therefore can and do keep open trading positions and trading interests for a long time, sometimes 12 months or more. In my experience, I would say that, from first receiving a client interest, it could take between a few days and a few months to structure the product, find a counterparty interested in that product, find the required volume, find a price agreeable to both parties, and ultimately execute the trade.
As I describe in this witness statement, Julien primarily worked on single stocks exotics, but also worked with certain clients on index exotics. Each desk keeps a written log (usually in spreadsheet format) of this sort of market information. For example, Julien had a log for single stocks exotics (and also included within that log market information in relation to index exotics).
The spreadsheet log that Julien created (and retained after 11 November 2019) contained relevant information about trades and trade interests that various clients had been involved with over a four-year period, together with details of the brokerage earned bySquare.
Our market information has huge commercial value. This is particularly true of (single stock) exotics, due to our prominence in the industry, and the opacity and illiquidity of the market. I have been approached on a number of occasions by third parties wanting to purchaseSquare's
market information relating to exotics, most recently in the last month or so."
Square's
confidential information. If Mr. Leonard were to start work at a rival "shop", and to undertake the same line of work that he had been engaged in at
Square,
it would be almost impossible to find out that he was using
Square's
confidential information illegitimately.
Square
had a legitimate interest in protecting its valuable confidential information from commercial use against itself; to vindicate this interest is the stuff of normal healthy competitive activity in a well-functioning market economy, and is not anti-competitive.
Square's
legitimate business interests. In this regard, I take into account that Mr. Leonard's previous employment contract with ICAP contained a six-month non-compete covenant, and that the evidence shows that he actively negotiated his contract with
Square
too. Similarly, his employment contract with Market Securities contains a six-month non-compete covenant.
Square
has conceded that the maximum protection it needs by way of a non-compete clause is six months from the date that Mr. Leonard leaves the market; (iii) in the circumstances of the present case, Mr. Leonard has in fact been off the market already for over four months.
Square
and Mr. Leonard are sufficiently harmonious to permit him to work out his notice period, following which time a six-month PTR suffices. As
Square's
counsel pointed out, the garden leave clause which is included in the contract exists to cater, among other matters, for a situation where
Square
has concerns about an employee's conduct (e.g. harvesting client information, or engaging in deceptive behaviour), and so chooses to restrict the employee's duties during the notice period. On the assumption that such concerns have a reasonable foundation, it would not then be unreasonable to enforce the full period of the PTRs. In the present case, Mr. Leonard is not placed on garden leave having given notice to resign, but he is nonetheless in a comparable position for present purposes. I do not regard the fact that since his summary resignation on 11 November 2019 he has been "off the market" as a reason to set off this period against the six-month term envisaged by the Non-Compete clause.
Square
submitted that this case is in reality only about the Non-Compete clause within the group of PTRs, and deliberately addressed only that PTR in its skeleton argument and in its other submissions for the trial. Although I find that the Non-Deal term (together, in clause 17(1)(a) and (d)) of the contract of employment) are also enforceable, in view of the analysis set out above, I do not need to address this further or in the context of the grant of relief.
Conclusion
i) Mr. Leonard continues to be an employee under his contract of employment with
Square,
and he will remain so until the end of his notice period on 11 May 2020.
Square
is entitled to declaratory relief to this effect.
ii) Mr. Leonard was not entitled to resign summarily on 11 November 2019. In taking this action, and in failing to give six months' written notice of termination, he was in breach of his contract of employment. I dismiss his counterclaim for wrongful dismissal.
iii) It is not proven that Mr. Leonard was in breach of clause 17.4 of the contract of employment (the job notification clause).
iv)
Square
is entitled to an order prohibiting Mr. Leonard from engaging in employment with a third party while he remains an employee of
Square.
v)
Square
is entitled to an order enforcing the Non-Compete clause, by prohibiting Mr. Leonard from involvement in a business concern in competition against
Square
until 11 November 2020.
Square's
counsel in post-hearing submissions, that if successful
Square
may seek a further determination and order from the Court relating to a forensic examination of Mr. Leonard's electronic devices and his private email account in order to confirm that no confidential information of
Square's
is retained, together with an order for delivery up of any such information. I also invite submissions on the appropriate directions to be given in relation to the outstanding issues of the claim for damages and interest by
Square.
Postscript
Square
complained strongly that Mr. Leonard had been remiss in complying diligently with his disclosure duties. In particular,
Square
complained that Mr. Leonard initially disclosed only three emails passing between himself and Market Securities at the end of January 2020 (the first occasion that Market Securities' identity was made known).
Square
complained that Mr. Leonard also only gave disclosure of the cover emails at that point, and not the important attachments (including the detailed draft contract and side letter sent to Mr. Leonard in March 2019). This prevented
Square's
advisers from being able to see, for example, whether there were offers made by Market Securities which were capable of acceptance. When this was challenged, Mr. Leonard responded that there were no other written communications exchanged, beyond what had been disclosed. It was only on 27 February 2020 that Mr. Leonard disclosed the attachments to the emails, together with further communications he had had with Market Securities. Mr. Leonard explained that the omitted documents had been inadvertently overlooked by his advisers.
Square's
counsel clarified that they were not suggesting that there was a breach of any professional obligation by Mr. Leonard's solicitors, as opposed to underscoring what they submitted was evidence of lack of candour on the part of Mr. Leonard himself. They stated that the solicitors "are under an obligation only to advise their clients properly on their disclosure obligations", pointing to CPR PD 31A, at para 4.4. That paragraph states:
"If the disclosing party has a legal representative acting for him, the legal representative must endeavour to ensure that the person making the disclosure statement (whether the disclosing party or, in a case to which rule 31.10(7) applies, some other person) understands the duty of disclosure under Part 31."
"it is not correct to suggest that the Defendant's solicitors were not involved in the document review, [and] there is nothing untoward in the Defendant undertaking searches for potentially relevant documents, particularly in circumstances where the party is a private individual who holds a limited number of documents and is well aware of where relevant documents are located."
It was also pointed out that Mr. Leonard had raised numerous serious issues with the adequacy of
Square's
disclosure exercise too, including, they said, a complete failure to search for documents relating to Mr. Diallo.
Square's counsel drew attention, does not (and is not intended to) set out the extent of a solicitor's relevant disclosure duties in civil litigation. It is fundamental that the client must not make the selection of which documents are relevant (cf. the allegation in this regard made on the Claimant side). The position is well summarised in Matthews and Malek, Disclosure (5th edn. 2017), at paragraphs 18-02 and 18-09:
"A solicitor's duty is to investigate the position carefully and to ensure so far as is possible that full and proper disclosure of all relevant documents is made. This duty owed to the court, is:
"one on which the administration of justice very greatly [depends], and there [is] no question on which solicitors, in the exercise of their duty to assist the court, ought to search their consciences more."
"The solicitor has an overall responsibility of careful investigation and supervision in the disclosure process and he cannot simply leave this task to his client. The best way for the solicitor to fulfil his own duty and to ensure that his client's duty is fulfilled too is to take possession of all the original documents as early as possible. The client should not be allowed to decide relevance—or even potential relevance—for himself, so either the client must send all the files to the solicitor, or the solicitor must visit the client to review the files and take the relevant documents into his possession. It is then for the solicitor to decide which documents are relevant and disclosable."