TP ICAP Management Services (Australia) Pty Ltd v Bradley Howell; GFI Australia Pty Ltd v Matthew Cotton

TP ICAP Management Services (Australia) Pty Ltd v Bradley Howell; GFI Australia Pty Ltd v Matthew Cotton - [2021] NSWSC 656 - NSWSC 2021 case summary — Zoe

[4]

INTRODUCTION

HIS HONOUR: Sydney is a beautiful city which has a vast array of hotels, pubs, and restaurants, some in exquisitely scenic locations. This judgment does not require the Court to resolve any deep question of legal principle. It is essentially about the facts. But it does contain a travelogue (perhaps even a useful one) of the many Sydney hospitality establishments frequented by the protagonists.
Inter-dealer brokers facilitate (or "broker") financial transactions between financial institutions, often banks. They actively initiate and pursue transaction opportunities. A broker's relationship with her or his clients is critical to their ability to do business. Common types of brokered transactions concern cash and fixed investments, interest rate swaps, foreign exchange, [1] commodities, equities, and derivatives.
Brokers traditionally work on what is called the "desk". Commonly, a group of brokers who operate in a particular area are said to be on a particular desk, such as, for example, the "Treasury Desk" (which covers interest rate swaps), [2] the "Foreign Exchange Desk", or the "Fixed Income Desk". Sometimes desks are divided into products of particular currencies, such as Australian dollars or New Zealand dollars (AUD or NZD). Some brokers conduct their business on the telephone using a loudspeaker, referred to as the "squawk box". This is called voice broking.
In 2017, two of the main inter-dealer brokers operating in Australia in the wholesale market (that is, where clients are institutions not individuals or small businesses) were companies operating respectively under the brand names "TP ICAP" and "GFI". These brand names are globally known.
These two competitors, via their Australian entities, are the true contestants in this matter. I shall refer to them respectively as ICAP and GFI. This is not the first time that they have been in conflict. Individuals have been drawn into the fray.
What happened here is rather simple.
In late-2017, ICAP's then Chief Executive Officer for Australasia, Brad Howell (Howell), and fourteen successful brokers in ICAP's Sydney office - including Divisional Director and Desk Head of the Swaps Desk, John (Jack) Kalaf (Kalaf) - were enticed to leave ICAP and join GFI by being offered large sums of money. Then, six of the brokers (the six), having signed with GFI, reconsidered and went back to ICAP.
There are two sets of proceedings before the Court, being heard together.
In the first set (the ICAP Proceedings), ICAP sues Howell, Kalaf, and GFI for damages. They sue Howell and Kalaf for breach of contract and breaches of equitable and statutory duties, and they sue GFI for interference with contractual relations and knowing participation in the breaches of duty.
In the second set (the GFI Proceedings), GFI sues the six for breach of contract and it sues ICAP for interference with contractual relations. The six cross-claim against GFI for orders that the contracts they entered into with GFI are void or should be rescinded and they cross-claim against Kalaf for damages or an indemnity on the basis that he misled them into entering into contracts with GFI by conveying to them misleading information about counter-offers to stay made to them by ICAP.
On 23 November 2018, Ball J made an order in the ICAP Proceedings, by consent, pursuant to rule 28.2 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), that liability be tried separately from and before all other issues. [3] On 12 April 2019, by consent I made the same order in the GFI Proceedings. For reasons which will appear later, during the hearing those orders emerged as impractical and unworkable. I rescinded them. With the parties' co-operation, I ordered that a series of discrete questions be answered before any other questions in the proceedings. The questions appear later in this judgment.

[5]

ICAP

In December 2016, what was then known as the ICAP group, was acquired by a United Kingdom listed company previously known as Tullett Prebon plc (Tulletts). After the acquisition, TP ICAP plc and its subsidiaries operated under both the ICAP and the Tullett Prebon banners. Although these two brands are ultimately owned by the same entity, operationally, they are managed separately.
ICAP's business is divided, for management purposes, on a regional basis into: Europe, the Middle-East, and Africa; Asia-Pacific (or APA, which includes Australasia); and the Americas. Sydney is the largest office in the Australasia sector. ICAP has offices in Brisbane, Melbourne, and Wellington. ICAP Australasia has its own CEO.
The first plaintiff in the ICAP Proceedings (ICAP Management) is the service entity within the group. It formally employs the staff. The second plaintiff in the ICAP Proceedings (ICAP Brokers) is the entity which actually conducts the broking business in Sydney. ICAP Brokers earns the revenue. There are some respects in which it is necessary to distinguish between the two entities, which are elaborated upon later. Where it is not necessary to distinguish between them, I will refer to them collectively as ICAP.
At all material times, the Sydney office had the following desks: Treasury; Forward FX; Futures; Fixed Income; NZD Rates and Futures; and Energy. References below to the Swaps Desk are, unless the context indicates otherwise, to the AUD Treasury Desk.
Each desk had a designated "Desk Head" who reported exclusively to the CEO of ICAP Australasia. Some (but not all) Desk Heads had the designation "Divisional Director".
The Swaps Desk generated more revenue than any other desk. It dealt in "short-end" (or "short-term") and "long-end" (or "long-term") rates swaps.
The brokers on the Swaps Desk worked in close physical proximity to one another. There were two break-out rooms next to the dealing room, which were available for small group meetings and private discussions.
Brokers use a computer screen to facilitate trading (the screen). On it are published price midpoints of the products in which they trade. These midpoints are used by clients to gauge the market price for products. Obviously, the more accurate the screen is at assessing market prices, the more valuable a tool it is.
ICAP had (and apparently still has) the benchmark screen for Australian swaps. The market perceives it as the "go-to" screen for pricing. Having the benchmark screen is a valuable business driver. Clients of the brokers' own clients sometimes conduct business on the basis of midpoints published on the ICAP screen.
At the time of the events which give rise to this dispute, Mr David "Clumpy" Casterton (Casterton), who resides in England, was the most senior representative of the ICAP branded section of the business. From December 2016, he was Co-Head of TP ICAP Global Broking, a role which he shared with Mr Nicolas "Nicko" or "Nico" Breteau (Breteau).
In 2017, Casterton ceased being Co-Head of Global Broking and Breteau became the Head of Global Broking. Casterton retired on 30 September 2019. At the time of his resignation, his title was ICAP Vice Chairman.
Casterton and Breteau reported to the Chief Executive Officer of the group, at that time, Mr John Phizackerley (Phizackerley).
Casterton gave evidence. He was a credible witness, although it seems that in one material respect he was mistaken.

[7]

HOWELL

Howell has worked in the inter-dealer broking industry his whole professional life. He was employed by companies associated in one way or another with ICAP from 1992 to 2018. In 2003 he was employed by a broking firm, Prebon Yamane, as head of Treasury Desk and AUD Products Desk.
For a few years before 2010, Howell was head of the Swaps Desk. He was appointed CEO of ICAP Australasia in October 2010. He reported to Mr Hugh Gallagher (Gallagher), CEO of ICAP Asia-Pacific. Gallagher resigned in 2017. Howell was then also appointed ICAP Head of Global Broking.
On 29 October 2014, Howell signed a written employment contract with ICAP. I will refer to Howell's contract with ICAP as the Howell Contract. The Contract comprises a letter agreement which incorporates a document entitled "Terms & Conditions".
In March 2017, Howell gave notice of resignation because, he says, he was unhappy about how ICAP was being managed in the wake of the Tulletts takeover. He says that morale in the office was quite low following the takeover.
Howell, however, retracted his resignation after discussions with Gallagher in which it was agreed that he would have a "rolling contract" (being one not for a fixed period but which could be terminated by either party on six months' notice - absent termination, it would roll on). On 20 April 2017, Howell signed a letter changing his employment term from fixed to rolling.
In early April 2017, Phizackerley asked Howell to attend a meeting in London. He informed Howell that Gallagher had resigned and, Howell says, offered him the role as CEO of ICAP Asia-Pacific. This role, however, was given to Barry Dennahy (Dennahy). One fact which seems not to be in dispute is that Dennahy's management style had few fans.
As is recounted below, Howell signed up with GFI and gave notice to ICAP in September 2017. After a period of garden leave, [4] he started his employment with GFI six months later.
In material respects, I did not find Howell to be a credible witness. His evidence was contrived to diminish the role he played in helping GFI recruit the ICAP brokers. His affidavit was constructed to make his role in every contact with ICAP personnel passive and to make his participation in the GFI recruitment drive limited to answering questions directed to him. He significantly downplayed his role in furthering GFI's campaign because of an acute awareness that it was not appropriate to help GFI and in turn prejudice ICAP. An aspect of this is his evidence, which I found less than convincing, that he terminated many of his conversations by saying words such as, "You've got to weigh it all up," and "Mate, you've got to make up your own mind." Kalaf commented that he "wouldn't like to play poker against Mr Howell."

[8]

KALAF

Kalaf was the Desk Head of the Swaps Desk and a Divisional Director at ICAP. He specialised in long-end swaps. He has worked continuously as a broker in the wholesale financial market since 1987.
In October 2005, ICAP acquired his then employer and he became employed by ICAP.
He signed a written employment contract with ICAP on 20 June 2014, under which he was appointed as "Divisional Director - Treasury" (he was not a board member of ICAP). The contract was amended in October 2015 to extend his employment until 31 December 2018. I will refer to Kalaf's contract as the Kalaf Contract.
Kalaf's main clients were the ANZ Bank and the National Australia Bank. He generated annual revenue in the order of $2.1 million from those clients.
In early October 2017, he received an offer of employment from GFI which he accepted on 13 October 2017.
On 15 February 2018, ICAP Australia terminated Kalaf's employment for breach of the Kalaf Contract.
Kalaf commenced working for GFI in August 2018.
Kalaf was not a credible witness. I found his evidence on the extent and importance of his participation in assisting GFI unconvincing. He displays an air of restrained avuncularity, which should not be mistaken for credibility. He played a double game with ICAP, letting Casterton believe he was helping ICAP fend off GFI, when in truth he was consciously assisting GFI in its campaign. Kalaf was offered the position of CEO of ICAP Australasia, which he accepted orally but he did not formally take up the position. He led the brokers on the desk to believe that in either staying with ICAP or going to GFI they should stick together as a team when, in fact, he was negotiating for himself with GFI. He broke ranks without telling them of his intention to do so.
An example of his downplaying his importance was his inaccurate evidence that he was never referred to as a Divisional Director. His own external correspondence referred to him as that. His written contract stated that he was employed in that capacity.
Other respects in which I found his evidence to be unsatisfactory are referred to later.
Kalaf's evidence about his communications with the brokers is at odds with their evidence. Where his evidence conflicts with theirs, I prefer theirs.

[17]

THE HEARING

The trial occupied 17 hearing days and was conducted remotely. Casterton and Prest gave evidence from England. Howell gave evidence from Singapore. Heffron gave evidence from New York.
Some thirty affidavits were read. Fourteen witnesses were cross-examined. A Court Book containing primary documentation running to well over a thousand pages was tendered.
The case covers extensive dealings between late September and late October 2017 between ICAP management and the brokers, GFI's representatives and the brokers, and between the brokers themselves. There are disputes, sometimes material ones, as to what was said.
The exercise of assimilating the facts and recounting them in a substantially chronological fashion has been a significant one.
I have taken all of the evidence into account, but it is not possible (and if it were, it would not be practical) to attempt to re-state all the dealings or to identify every respect in which the versions of the participants diverge. I have endeavoured to identify material disputes of fact and resolve them where factual findings are necessary.
ICAP's final written submissions run to 115 pages. GFI's final written submissions run to 78 pages. Howell and Kalaf also provided comprehensive final written submissions.
I have had regard to all the arguments but will not re-state them.
I have referred earlier to the orders that liability be tried first. It is appropriate at this point to say a little more about that subject.
It became increasingly clear during the hearing that the orders were unworkable for a series of reasons, not least of all because the parties had in mind not dealing with a number of issues which plainly go to liability, such as causation of loss and whether certain contractual provisions are unenforceable penalties.
Correspondingly, it became increasingly unclear what precisely the Court was being called upon to decide. This situation demonstrated, yet again, the unwisdom of, and potential difficulties associated with, splitting off issues in complex proceedings other than in clearly appropriate instances.
In an endeavour to salvage whatever benefit these proceedings may ultimately yield for the parties, I formulated a series of specific separate questions for determination which, after discussions with Counsel, were adopted by the parties. The questions are: Question 1: Did Howell breach any: a. contractual; b. equitable; or c. statutory duty to ICAP in a manner which entitles ICAP to relief? Question 2: Did Kalaf breach any: a. contractual; b. equitable; or c. statutory duty to ICAP? Question 3: Did GFI unlawfully induce: a. Kalaf; or b. Howell to breach any contractual duty in respect of which the answer to question 1 or 2 above is yes? Question 4: Was GFI knowingly involved in, or did it procure, any breach of equitable duty by: a. Kalaf; or b. Howell in respect of which the answer to question 1 or 2 above is yes? Question 5: Was GFI a person involved in any contravention of a statutory duty owed by: a. Kalaf; or b. Howell to ICAP in respect of which the answer to question 1 or 2 above is yes? Question 6: Did ICAP validly terminate Kalaf's employment on 15 February 2018 under the provisions of the employment contract dated 20 June 2014 (as extended or amended)? Question 7: Did GFI engage in conduct which gives rise to an entitlement by any of the six brokers to have his employment contract with GFI set aside? Question 8: Did any of the six brokers breach their contract of employment with GFI? Question 9: Did Kalaf engage in conduct which gives rise to an entitlement by any of the six brokers to a claim for damages or indemnity in respect of any liability he (the broker) may have to GFI as a consequence of the breach by him of his contract of employment with GFI? In these orders: a) ICAP Proceedings means proceedings 2018/148259. b) GFI Proceedings means proceedings 2019/30257. c) ICAP means TP ICAP Management Services (Australia) Pty Ltd or ICAP Brokers Pty Limited or both, the plaintiffs in the ICAP Proceedings and the seventh defendant in the GFI Proceedings. d) Howell means Mr Bradley Howell, the first defendant in the ICAP Proceedings and the second cross-defendant in the GFI Proceedings. e) Kalaf means Mr John Kalaf, the second defendant in the ICAP Proceedings and the third cross-defendant in the GFI Proceedings. f) GFI means GFI Australia Pty Ltd, the third defendant in the ICAP Proceedings and the plaintiff/first cross-defendant in the GFI Proceedings. g) The six brokers means Messrs Matthew Cotton, Angus McGilvray, Mark Pisani, Oliver Gilbert, Oliver Temperton, and Matthew Ferris, the first to sixth defendants/first to sixth cross-claimants in the GFI Proceedings.
To avert two of the dangers often associated with separate questions, I received assurances from the parties that none would appeal until the conclusion of the proceedings at first instance and none would object to me presiding over any subsequent hearing, even if I made findings of credit (which I have).
I turn now to the facts.

[19]

GFI'S RECRUITMENT OF HOWELL

Howell was the first skittle to fall.
In May or June 2017, Tony Warner (Warner), the managing director of BGC UK and Middle-East, called him. Warner had previously worked at ICAP with Howell. They had a number of subsequent conversations.
On about 11 July 2017, whilst on annual leave from ICAP, Howell met with Warner and Lynn in Dubai. Howell paid for this trip, but GFI later reimbursed him.
After Dubai, Howell had phone conversations with Warner and Mr Sean Windeatt (Windeatt), CEO of the BGC Group. It was conveyed to him that he was being offered the opportunity to manage the GFI brand in Asia. He met with Windeatt and Lynn in Hong Kong in early August 2017. Ironically, this trip was paid for by ICAP. Howell says that he was on business in Hong Kong for ICAP and Windeatt and Lynn came to meet him.
They discussed a draft written employment agreement. Howell maintains that they said they did not want him to breach his contract with ICAP. They told him who they were "going after." They told him that they were willing to spend what it took to get a team. They agreed to pay him a sign-on bonus, a guaranteed bonus for two years, an increase in his base salary, further compensation in the form of an incentive/bonus based on the best year's results over a four-year period, and to guarantee his employment for six years.
In late August 2017, Prest met Mark Webster, the Executive Managing Director and General Manager of BGC Partners, Asia-Pacific. Webster told Prest that there were a number of dissatisfied people at ICAP and suggested that they should "shake the tree at ICAP and see what falls out." Gallagher's departure was mentioned.
In September 2017, Lynn contacted Heffron to tell him that Howell had been identified as a candidate for the role of GFI CEO for the Asia-Pacific region. He asked Heffron to meet Howell. Heffron called him.
Heffron says that he told Howell that GFI wanted to do some hiring in Sydney but that Howell needed "to stay out of it." This reflects his awareness of the potential for Howell to be placed in a position where he might breach his obligations to ICAP. Howell, however, did not stay out of it.
By 10 September 2017, Howell had decided to leave ICAP and join GFI. He signed a written contract of employment with GFI on 14 September 2017. Lynn told Prest that Howell had been hired to run GFI's business in the Asia-Pacific region.
On 18 September 2017, Howell resigned from ICAP giving six months' notice (as required by the Howell Contract).
On the same day, he told Kalaf and Cotton that he had resigned and was joining up with a competitor.
When he received Howell's notice of resignation, Casterton called Howell immediately. Although Howell did not tell him that he was going to a competitor, Casterton had no doubt that this was the case. He thought it was most likely that he was going to work for the BGC Group. Casterton was concerned that Howell would try to recruit ICAP employees to a competitor or be used by a competitor to recruit ICAP employees. He thought it was obvious that a competitor would try to get a whole team of employees to leave ICAP. Casterton discussed this with Phizackerley and Breteau, and it was decided that Casterton and Breteau should go to Sydney as soon as practicable.
They discussed a shortlist of potential candidates to replace Howell as CEO. Kalaf was at the top of the list.
On 21 September 2017, ICAP's solicitors, Herbert Smith Freehills, wrote to Howell (the Howell Letter) placing him on garden leave with immediate effect and drawing his attention to cl 9.3 of the Terms & Conditions of the Howell Contract. The letter stated, relevantly: 3 Garden Leave … For the avoidance of doubt, during this period you are directed not to contact any customers, clients, employees, officers or consultants of the TP ICAP Group. To the extent that you are contacted by any such person, you are to immediately refer them to Barry Dennahy on +65 [redacted] and to advise Barry Dennahy on +65 [redacted] of the nature of the contact you have received. To be clear, you remain an employee of ICAP during this period, and continue to owe all of your obligations as an employee.
The Howell Letter reminded him of his continuing obligations under the Howell Contract and his statutory and fiduciary obligations, amongst others, to discharge his duties in good faith, in the best interest of ICAP, and for a proper purpose.

[20]

GFI'S EFFORTS TO RECRUIT THE BROKERS

On about 21 September 2017, Heffron arrived in Hong Kong, en route to Sydney. He told Prest that they would travel to Sydney the following week to approach ICAP brokers. The departure of Howell from ICAP had the potential to increase disquiet there and increase the likelihood of GFI successfully hiring ICAP people in Sydney.
The next day, Heffron, Webster, Windeatt, and Tim Mallott (Mallott), Deputy General Manager of BGC Asia-Pacific, met at the Hong Kong Four Seasons Hotel. Both Webster and Mallott swore affidavits in the proceedings but neither was called.
Prest says they compiled rough estimates of competitor market share based on general perceptions and made estimates of market size and each competitor's market share, using these to estimate the revenue generated by each of the ICAP desks. They discussed, in broad terms, the contracts they would offer the ICAP brokers. They decided to offer five year agreements and sign-on bonuses, and to match whatever total compensation the brokers had received in the year prior at ICAP.
Prest says they discussed prospective sign-on bonuses using the following "rule-of-thumb": 10% of (5 x annual revenue earned by the broker)
They identified the "big earners" as Kalaf, McGilvray, Ferris, and Blades. At this time, they had no specific or actual knowledge of what the ICAP brokers generated in revenue, how they were remunerated, or the quantum of their remuneration or bonuses.
Later, Warner identified Cotton, Gilbert, Pisani, Graham, Gardiner, Wieland, and Temperton as targets.
Heffron arrived in Sydney on 24 September 2017. Prest arrived in Sydney on 25 September 2017. They were both in Sydney until 29 September 2017. Upon their arrival, they went for a stroll around the city to locate possible venues to meet with the ICAP brokers, such as pubs, bars, and hotel lobbies. They decided on a rough order for contacting the brokers.
They started calling brokers on 25 September 2017.
Kalaf was first.
In most cases, both Heffron and Prest were present at meetings with the brokers. Prest says that when they met a broker, their practice was to ask the broker how much business he wrote, what his current salary was, what his total compensation for last year was, and when his current contract ended.
It will be readily apparent that these questions, if answered (which in most if not all cases, they were), would elicit information that was confidential to ICAP, and cause the brokers to breach their confidentiality obligations to ICAP. Heffron and Prest recognised this. However, ICAP makes no case against GFI for this conduct.
On 24 September 2017, Casterton emailed Kalaf with thoughts for a running order the following day, and suggesting one-on-one meetings with all key staff.
Before leaving London, Casterton obtained from Trent Rogers (Rogers), the Finance Director of ICAP, a schedule containing each broker's remuneration and brokerage revenue, as well as details of each broker's employment term.

[23]

ICAP Office Meeting with Casterton, Breteau, and Kalaf

Casterton and Breteau arrived in Sydney that morning.
First, they met with Rogers and Glenn McMurdy (McMurdy), Chief Operating Officer of ICAP, to go through key numbers of the Sydney business. Then they met with brokers in the ICAP office.
They met with Kalaf in an empty office. They had further discussions with him throughout the day. They discussed with him how they could go about making counter-offers to brokers on the Swaps Desk to keep them with ICAP. They asked him who the "main guys" were who they needed to keep the desk, and how much they needed to offer by way of sign-on bonuses. Kalaf identified Cotton, Temperton, and McGilvray.
Using the figures that had been provided and relying on Kalaf's recommendations, they sorted the brokers on the Swaps Desk into three tiers, based on how important it was for ICAP to retain them and how much they were willing to offer them as a one-off bonus. Tier 1 was Cotton, Temperton, and McGilvray. Tier 2 was Gilbert, Ferris, and Blades.
They went through the schedule which had been provided by Rogers.
A sign-on bonus was allocated to each tier. Casterton says that Kalaf words to the effect, "I think that should do it, I think that's about right. With those numbers, I will be able to get the whole desk to stay with ICAP."
Casterton says that he or Breteau said words to the effect, "Those figures are fine. We can make those offers no problem. You can go ahead and talk to the guys and make those offers to them."
Kalaf denies that conversations to this effect took place. He says that he did not have information that would have enabled him to offer an opinion as to what if anything would be needed to persuade the brokers to stay and that it was not his responsibility to get the whole desk to stay with ICAP. He denies that he was asked to communicate offers. I believe Casterton, not least of all because, as Desk Head, Kalaf, who had in previous years negotiated contracts with members of the desk and was their leader, was in a peculiarly good position to do so and the natural person to do what Casterton says they asked of him. I also believe Casterton that he relied on Kalaf for guidance on what should be offered to the brokers, and that Kalaf gave it. I do not accept that Kalaf, given his knowledge and experience, was not in a position to express a meaningful opinion as to what ICAP needed to do to keep the brokers.
Over the next day or two, the tiers and amounts were refined. Casterton says that he or Breteau said to Kalaf words to the effect, "OK Jack, that is fine - we can offer those sign-on bonuses. You go and do what you think is appropriate to go and make those offers and persuade the brokers to stay, and finalise their agreement if they accept." Kalaf denies this. Once again, I believe Casterton.
Casterton says that in a later conversation that day, they raised the possibility that Kalaf might be offered the position of CEO ICAP Australasia.
Not long after Casterton and Breteau arrived, Kalaf told them that Heffron and Prest were in town and were calling and meeting with brokers and handing out contracts to them. Kalaf said that he had not yet met with them but had accepted an invitation to meet. It is possible that Kalaf had already met Heffron and Prest.

[32]

Centennial Hotel Meeting between Cotton, McGilvray, Temperton, and Kalaf

On the evening of 27 September 2017, Kalaf met Cotton, McGilvray, and Temperton at the Centennial Hotel in Woollahra. This was after Kalaf had sent a text message asking the others to meet "somewhere off piste." Kalaf arranged for Cotton and McGilvray to go in Cotton's car. He and Temperton went in his car.
Cotton, McGilvray, and Temperton's versions of this meeting are broadly consistent.
Cotton's understanding was that everyone at the meeting had been offered a $1 million sign-on by GFI and that each of them knew this. He says that a conversation to the following effect took place: Kalaf: ICAP have given us a counter-offer. For the four of us $700k each. What are the views on that? McGilvray: We are the number one team with the best screen. Why would we risk that? Temperton: I do not think ICAP have to pay as much for us to stay. Why would we kill the goose laying the golden egg? Cotton: They will also need to sign up Glenn and the IT guys. There are things going on at ICAP that I'm not happy with but it's a big risk to go. Our clients will not be happy if they hear the numbers being bandied about. If the numbers are somewhat close, it's a bit of a no brainer, we should stay. Kalaf: So its $700k and the rest of the team will be in tiers below that. Are we happy to stay? Temperton: Yes. McGilvray: I agree. We stay, the risks are not worth it. Kalaf: Okay. We all agree to stay as a team.
McGilvray says Kalaf said, "GFI are offering us $1m each as a sign-on bonus. ICAP have come back to me this afternoon. They were originally offering a $500k sign-on bonus to each of us but now they have stretched to offer $700k each. The rest of the desk would receive lower sign-on bonuses in staggered groups. What do you guys think we should do?" He says that they discussed the pros and cons of GFI's offer and he said that a big con for going to GFI was losing the screen. He says either he or Temperton said words to the effect of, "Why would we want to shoot the goose that lays the golden egg? The current business we have is not worth losing for the potential upside of going to GFI, which isn't really that great. GFI are offering more but not so much more that we should leave."
He says that Kalaf said, "So then, do we all agree that we will stay with ICAP if we get a sign-on of $700k?" He says each of the others agreed. He says that Kalaf also said "Brad [Howell] is going to be a trusted manager at GFI." McGilvray says he left the meeting thinking they were all going to stay at ICAP. He expected Kalaf, as the head of the desk, to communicate what they had discussed to the other brokers on the desk and to Casterton and Breteau.
Temperton says that at this meeting, Kalaf said, "ICAP has given us a counter offer. They are giving me the amount of the whole of last year's bonus pool, to divvy up between everyone on the desk as a sign-on bonus to get everyone to stay." Temperton's bonus for the previous year was $700,000. Kalaf had been responsible for dividing up the bonus pool.
Temperton says that during this meeting they discussed the pros and cons of both offers. He says that an exchange to the following effect took place: Kalaf: If we agree that the four of us get a sign-on of $700k and the rest of the team will be in tiers below that, are we happy to stay? Cotton: They will also need to sign up the rest of the room. Temperton: I agree. McGilvray: I agree. Kalaf: Okay. We all agree to stay.
Temperton says that based on this exchange, he believed that Kalaf as the Desk Head would ensure that their position would be communicated to ICAP. He understood that Kalaf was acting as the intermediary.
Kalaf's version of this meeting differs in some respects from that of the others present. He denies that he used the words, "Okay. We all agree to stay as a team." He does not appear to take issue with the agreement to stay which the others assert. He says that he did not say that he would be the go-between between the brokers and ICAP senior management. However, he does not appear to dispute that the others understood that this was the case. I think it is highly probable that Kalaf conveyed that they should stick together as a team. After all, they were in fact a team and he was the head of it. As is recounted later, the others were plainly aggrieved when Kalaf broke ranks without telling them first.
Kalaf says that he told them that Casterton and Breteau had said that ICAP was prepared to pay each of them $700,000 to extend their contracts of employment for another three years and that ICAP was also prepared to pay extension bonuses to the other brokers in various tiers. On a practical level, there is no doubt that Kalaf assumed the role of intermediary between the ICAP brokers and ICAP management.
Kalaf says that Cotton said, "See if you can get us a million."

[33]

Wentworth Sofitel Hotel Bar Meetings between GFI and ICAP Brokers

Heffron and Prest met with Kalaf again on 28 September 2017 at the Wentworth Sofitel Hotel Bar. Prest says he has no specific recollection of the meeting but assumes that proposed financial terms were discussed. He does say that they did not discuss the brokerage of the ICAP brokers, their compensation, or the amounts that GFI should offer them. However, Prest gave the following oral evidence: [HIS HONOUR]: Mr Prest, I just want to ask you one matter of clarification so that I have a clear picture of what you're saying. In paragraph 63 of your affidavit, you talk about your and Mr Heffron's practice of asking a series of questions, which included, "How much business do you write?" [PREST]: Yes. Q. Now, my understanding is - correct me if I'm wrong - that this is something that either you or Mr Heffron asked every broker that you interviewed? A. That's right. Q. Therefore I can take it, can I, that you asked that question of Mr Kalaf? A. You can take it that we asked that question of Mr Kalaf. It wasn't in that first meeting. It was in a subsequent meeting. We didn't go into numbers -- Q. Okay. And Mr Kalaf gave you the answers to the questions you asked? A. He gave us the answers to the questions that we asked as they related to him, yes. Q. So when you talk in paragraph 89 of your affidavit, under the heading "Kalaf", I believe, that at no point did you discuss the brokerage of ICAP brokers' compensation, et cetera, paid or the amount that GFI should offer, there you are saying you didn't discuss other brokers' packages with Mr Kalaf. You are not saying that you didn't discuss Mr Kalaf's package with Mr Kalaf? A. That's correct, your Honour. There's probably a word - other than - or a group of words saying other than Mr Kalaf's own numbers.
It may be the case that Heffron and Prest did not discuss one broker's brokerage compensation or proposed offer with another broker or brokers. But where they met a broker, they did discuss those matters with that broker.
Heffron and Prest also met Blades at the Wentworth Sofitel Bar. Heffron said to Blades that he would guarantee him a $500,000 bonus for two years.
There is in evidence a draft employment contract in letter form between GFI and Kalaf which bears the date 28 September 2017, together with a draft loan agreement under which GFI would lend Kalaf money (being the sign-on bonus). Casterton says that Kalaf gave him and Breteau a copy of this draft contract and told them it had been given to him by Prest and Heffron. To the extent that the discussion between Kalaf and Heffron was confidential, Kalaf breached that confidence.

[40]

Balcon Lunch with Casterton, Breteau, Cotton, Temperton, and Kalaf

Casterton and Breteau met Cotton and Temperton for lunch at the Balcon Restaurant on Bligh St in the Sydney CBD on 4 October 2017. Cotton arranged the lunch. Casterton's version of the lunch is the same, broadly, as that of Cotton and Temperton (although Temperton's affidavit is not as detailed as the others on this occasion).
The substance is that Casterton and Breteau told Cotton and Temperton that they were going back to London so as to give Kalaf some space, in light of his recent bereavement. In addition, McMurdy's wife was ill and he too needed time off.
They told Cotton and Temperton that ICAP was offering Cotton, Temperton, McGilvray, and Kalaf a sign-on bonus and would extend their employment for another two years.
Cotton asked for some other assurances, including that McMurdy and the IT people were locked in for another two years, and that broker compensation be the same as it was at that time, with Kalaf to get a pool of funds to divide between them. They also wanted Kalaf to report directly to Casterton and Breteau, not to Dennahy. Breteau said they could achieve all of this, and Cotton and Temperton said that if they could achieve this, they had their word they would stay.
Kalaf joined the lunch late. Casterton says they filled him in as to what had been said. Kalaf told them that his father's funeral would be on Monday, 9 October 2017 and that he would be away from work until 10 October 2017.
There is some confusion as to whether the discussed sign-on bonus that was being offered by ICAP was $700,000 or $1 million. I think it is more likely that the higher figure was under discussion. Kalaf says that this was his understanding. It is also consistent with Casterton's evidence that ICAP had increased the sign-on bonus to these brokers because Kalaf had told him and Breteau that GFI had increased its offers to them. He says that he asked Kalaf what he thought ICAP needed to "jump up to" and Kalaf said, "Well, $1m is a round number. I think that would do it."
After the Balcon lunch, Kalaf sent the following email to Casterton captioned "The good faith plan - as discussed.": In no particular order: ● Glenn locked in (2yrs). ● Cam and Jase Locked in (2yrs). ● Reporting Line (direct to you two in London). Or if suitable replacement in Asia is appointed then open to negotiation. ● Current broker compensation in its current form is not negotiable. ● The three other desks signed up (Fwds, Bonds, Kiwi). ● 2yr contracts with immediate effect signed upon agreement.
"Glenn" is McMurdy. "Cam" is Cameron Ferguson (Ferguson) and "Jase" is Jason Corlett, both of whom worked in IT Development for ICAP. Kalaf typed the email from a note given to him by Breteau.
According to Casterton and Breteau, before they left Sydney they were given hard copies of draft letters for all of the brokers on the Swaps Desk in a plastic sleeve. They showed the sleeve of draft letters to Kalaf in Howell's former office, and Casterton says he said to Kalaf, "When you are back next week, go ahead and distribute them as you see fit."
Casterton says he gave Kalaf the plastic sleeve. He says Kalaf said words to the effect of, "Wouldn't want to be walking around with these." According to Casterton, Kalaf placed the letters in the sleeve in a drawer in a desk in what been Howell's office for safekeeping.
Kalaf has a different version. Kalaf denies having been given any documents on this occasion. As referred to earlier, he says that on 29 September 2017, Casterton gave him a blue plastic sleeve containing draft letters, which he says was the only occasion any such documents were given to him. There is agreement that on an occasion, Casterton handed a sleeve of contracts to Kalaf and that Kalaf locked them in a drawer.
ICAP did not produce any offers dated later than 27 September 2017 despite being called on to do so. It offered the explanation that letters had been produced, handed to Kalaf, and the soft copies deleted from its computer system. There is no objective support for this proposition.
Additionally, the ones in the blue plastic sleeve tendered by Kalaf, at least in relation to Cotton, McGilvray, and Temperton, were for amounts less than $1 million, which was the figure being talked about by 4 October 2017. This supports Kalaf that the letters were given earlier, and favours the probability that Casterton is mistaken about the time the conversation he recounts took place. Whilst I accept that Casterton genuinely believes that $1 million offers were handed over, the state of the evidence does not sustain a finding that they were.
However, the fact that the letters were given earlier does not provide support for Kalaf's denial that the documents handed over (whenever this happened) were to be distributed, in respect of which I prefer Casterton. There would be no logical reason for Kalaf to take delivery of these letters for safekeeping but never distribute them (and not give them back to Casterton). But I interpolate that whilst ICAP complains about Kalaf's failure to distribute these letters as part of his general course of conduct, it does not allege that this in itself was a breach of any obligation.

[41]

First Harbord Beach Hotel Meeting between Temperton and Howell

Either on Wednesday, 4 October 2017 or Thursday, 5 October 2017, Howell met Temperton at the Harbord Beach Hotel after lunch. Temperton says a conversation to the following effect took place: Howell: You know it's all been going wrong since the merger. I resigned as it is too biased to [Tulletts] and I do not trust the new management. I have done my due diligence on GFI and it all stacks up with them to establish the number one desk. They have top notch IT systems and you know they have extra money to spend with the sale of Tradeport. I will be reporting to Shaun Lynn. He understands what we need here. Temperton: This has to be a one team, one dream decision. If we go, we all go. I have concerns about leaving. I'm worried about losing the screen - we have the benchmark screen at ICAP. I'm also worried about the damage to our reputation if the numbers got out there. If we go to GFI there is a risk that ICAP will make us have time out of the market. And I am concerned about BGC. Howell: Don't worry about BGC. GFI are not BGC. You would not be signing up to work for them. I'll look after you, I always have.
Temperton says that Howell was trying to pitch to him that the pros of accepting the GFI offer outweighed the cons.
Howell says they first talked about family, sport, the property market in the Northern Beaches (where Harbord is), and rugby league, and then Temperton raised Howell's resignation from ICAP.
They are in agreement that the effect of the Tulletts takeover was discussed. Howell says that he said he was able to get comfortable that GFI would remain a separate brand from BGC, that they had high-quality IT systems, and were committed to building a quality business including interest rate swaps in Australian dollars. That is why he joined GFI.
They are in agreement that they discussed losing the screen. Howell says that he said: I don't think it's a really a [sic] matter of who 'owns' the screen these days, I think it's more about liquidity. If you have the best liquidity, your screen will be the most accurate, and clients will want to use it. GFI utilise their technology pretty smartly in a lot of markets, and I've got some thoughts on how that can be used to mitigate the screen issue.
Howell denies attempting to pitch to Temperton that the pros of joining GFI outweighed the cons and he denies having said the words to the effect, "I'll look after you, I always will." (Temperton's version is "…I always have.")
I prefer Temperton. Howell's version covers much the same ground but consists, in effect, of Temperton almost always asking a question and Howell providing answers. This, in my view, is a contrived attempt by Howell to distance himself from any suggestion that he was furthering the interests of GFI. His avowed approach was that he never volunteered anything, but if he was asked a question he would give his honest answer. I am unpersuaded that this is what actually happened.
The reality is that Howell had an interest in persuading Temperton to leave ICAP and to join GFI. Other conduct of Howell reflects him acting consistently with this interest.

[48]

Second Harbord Beach Hotel Meeting between Temperton and Howell

After lunch, Temperton arranged to meet Howell at the Harbord Beach Hotel in Freshwater for a second time.
Temperton says a conversation to the following effect took place: Temperton: I'm going on holidays in the UK for the next three weeks. If this is going to work how are you going to get the screen and everyone on board? Howell: I've got ideas on how we can do things differently and better. Ollie, we've known each other for a long time. You've worked for me and you know how I operate. If the whole team comes across and we work hard, we can overcome the screen problem. If our clients continue to speak to us at the new office, the liquidity in the market goes there, and we can make a case for having the benchmark screen at that point.
Howell says this is neither an accurate reflection nor a complete record of the conversation. Howell says that they spoke about family, sport, and rugby league for about twenty minutes. He says that Temperton led the conversation and was asking most of the questions. Howell's version is: Temperton: Why do you think GFI can be successful when there are already three brokers? Howell: Using their technology, GFI takes a different approach to certain products and markets that in some instances is different and better than its competitors, including ICAP. Temperton: How could GFI overcome not owning the screen? Howell: It's not about who owns the screen, but which team works the hardest and provides the most liquidity. If GFI assembles a quality team that provides liquidity to clients, then the screen is less relevant. … Temperton: Aren't you concerned about working for the BGC Group? Howell: Yeah, I was at first, but a lot of things have changed. If ICAP had remained an independent firm led by Michael Spencer [former founder and majority owner of ICAP], then I probably wouldn't have left, but all firms have life cycles. Many of the original broking houses from the 1980s were gobbled up by ICAP through mergers and acquisitions and don't exist anymore. The BGC Group seem to be on a similar acquisition and growth trajectory now that ICAP was in the 1990s and 2000s, whilst ICAP has been split into two parts and sold off to TP.
Howell says that Temperton asked several other questions which he cannot precisely recall, nor his answers to them.
He says he ended off the conversation by saying, "Mate, you've got to make up your own mind. Good luck."

[52]

Gilbert's Discussions with Kalaf and Meeting with Heffron

Sometime during the week ended 13 October 2017, Gilbert told Kalaf that nobody from GFI had called him, and Kalaf said, "I'm on to it." Kalaf called Heffron and told him.
A couple of hours later, Kalaf whispered to Gilbert, "I know they have missed you. They've confused the two Ollies and made a mistake. [7] Col [Heffron] will be in contact."
Kalaf says he told Heffron words to the effect of: Just letting you know that I was talking to Oliver Gilbert this morning and he told me that he hasn't been contacted by anyone from GFI.
Kalaf gave the following explanation as to why he made the phone call: …I knew that Mr Gilbert had a young family and I had met them at social functions from time to time. I thought it would be unfair if Mr Gilbert did not at least have the opportunity to speak to GFI. I expected that he would then have the opportunity to have a further discussion with Mr Casterton and Mr Breteau about an extension bonus before making a decision.
Heffron says he doesn't recall the phone call from Kalaf about Gilbert but that he did recall a telephone conversation which led him to think that he was "dealing with a lot of egos," and that someone was upset not to have received a call from GFI. Heffron was criticised in respect of this evidence, on the footing that he would have remembered this call. I find it unsurprising that he does not. It was a brief call and one of many calls in the campaign. It would have had no special significance for Heffron.
On 13 October 2017, Gilbert received a call from Heffron and soon after met him at the Angel Bar in the CBD. Heffron asked him the usual questions.
They were joined by Mr Prash Naik, the Chief Operating Officer of GFI. Naik left and returned with a draft employment agreement and loan contract which was handed to Gilbert. Gilbert says Heffron said, "I have to go now as I'm having lunch with Jack", presumably referring to Kalaf.
Gilbert's draft loan contract provided for a sign-on bonus of $750,000 after tax.
Gilbert encountered Kalaf when he got back to the office. According to Gilbert, Kalaf asked him much he was offered and said that he was talking to everyone on the desk to see what was offered. Kalaf told Gilbert that he knew what everyone was being offered. Gilbert told him that he had been offered $750,000.
Kalaf denies saying that he was talking to everyone to see what was being offered, and that he knew what everyone was being offered. I prefer Gilbert.

[61]

Ongoing Communications between Kalaf and Heffron

Between 12 and 16 October 2017, there were not less than 23 telephone calls or attempted telephone calls between Heffron and Kalaf. From the records which are in evidence, many of the calls are of such short duration that it cannot be inferred that any actual conversation took place. The following calls can be assumed to have involved some conversation: 1. 12 October 2017 at 10:12am - Kalaf to Heffron (2 minutes and 2 seconds); 2. 13 October 2017 at 09:02am - Kalaf to Heffron (43 seconds); 3. 13 October 2017 at 02:51pm - Kalaf to Heffron (1 minute and 38 seconds); 4. 13 October 2017 at 03:01pm - Kalaf to Heffron (58 seconds); 5. 13 October 2017 at 03:52pm - Kalaf to Heffron (1 minute and 40 seconds); 6. 14 October 2017 at 09:44am - Kalaf to Heffron (5 minutes and 52 seconds); 7. 14 October 2017 at 10:50am - Kalaf to Heffron (1 minute and 38 seconds); and 8. 16 October 2017 at 4:36pm - Kalaf to Heffron (38 seconds).
The records in evidence include only calls from Kalaf to Heffron and missed calls from Heffron to Kalaf.
ICAP's theory is that this was a course of dealings between Kalaf and Heffron during which Kalaf was reporting to Heffron about what was going on in Sydney with the recruitment of the brokers. Both Kalaf and Heffron's evidence on the subject was (I suspect deliberately) vague about these dealings. Heffron suggested that at least some of them concerned trying to arrange golf, which they never actually did (although a possibility that golf will be discussed at some point should never be totally discounted). Kalaf made no such suggestion, but could not remember the dealings.
There appear to be no contemporaneous records of what was said during these conversations.
There is little doubt that GFI had a strategy of not bringing records of its recruitment attempts into existence.
Whilst not discounting the likelihood that the recruitment campaign was discussed, the evidence does not enable the Court with any degree of confidence to find what about that topic was discussed.

[66]

Coffee Meeting with Howell and Colin Gilbert

Colin received a communication from Howell and met him for coffee in Manly on 20 October 2017.
Colin says that a conversation to the following effect took place: Howell: I have resigned from ICAP. Since the merger I haven't been happy with how things have been run. … Howell: I am going to run the Asian region for GFI. We're looking at people. If you're looking for a role, we've got one for you. Colin: What is the role? Howell: You can have any job you want. Part-time, full-time, any market you want. It may be setting up the systems ahead of the Bond Desk starting up. You can even run the Bond Desk if you want. Colin: I would find it very difficult to compete against the company I worked for 25 years for. Howell: Have a think. I'm off to Bali, I'll send you my email address. If you've got any questions or any ideas, email me.
Howell's version of the conversation is: Howell: How are you finding retirement? Colin: I am enjoying it. I get a bit restless from time to time, but I really like the area and my daughter is starting to settle into school and my wife is working at a nearby hospital as a nurse. Howell: Do you ever miss it? Do you ever see yourself coming back to Sydney, or the market? Colin: The market is like a drug, it is very hard to get out of your system. Howell: If you ever decided to come back to the market you should give me a call once I am back in the game.
Howell describes the conversation as casual. He says he did not think that Colin was interested in returning to Sydney (he had retired to Mudgee) or to full-time employment in the financial markets. He described his comments as being made in passing. I do not believe him. I find that he met Colin to offer him, and did offer him, a job with GFI.
Shortly after Colin met Howell, he met Casterton and told him that his offer to help still stood. In addition, he told Casterton: Well I've just met with Brad. Brad said that he had a role for me at GFI if I wanted it. I told him that it would be very difficult for me to work for the opposition.
Colin re-joined ICAP as Managing Director on 31 October 2017 after Casterton offered him that role, which he accepted on 27 October 2017.

[74]

Third Harbord Beach Hotel Meeting between Temperton and Howell

Temperton met with Howell at the Harbord Beach Hotel on 19 November 2017. Temperton says a conversation to the following effect took place: Howell: You know all businesses have cycles. GFI is going up and ICAP is on the way down. Temperton: Yep. Howell: When they wanted to fire you in the UK, it was me who stood up for you. I know that where you are from you would not let me down on a handshake or a contract. Temperton: I have concerns with leaving. You would have previously told me all the reasons not to join GFI. They are BGC, you get paid in shares and they do not have a screen. Howell: That's why I want you. I have no need for a 'yes' man. Temperton: Do you know what Simon Prest's document is about?
Yet again, Howell disputes a conversation between him and one of the six and yet again, he frames it as an enquiry of, and a response by, him. His version is: Temperton: I can't believe how quickly things have changed at ICAP since the takeover. How do you see it? Howell: It happens mate, it's just part of our industry. In the 1990s and 2000s, it was ICAP who were growing, merging with companies, acquiring many companies. Now it's happening to them, ICAP's been split in two - the electronic businesses NEX, and the voice broking business - and sold to TP. It's the life cycle of firms in our industry. Temperton: Yeah, I get it, but it's a pain in the arse when you're working at a firm that's going through it. Howell: It's a tough one mate. I understand the toll this must be taking on you. Temperton: ICAP are pressuring me to stay. They've offered me an indemnity and a decent sign-on bonus if I re-sign. I am pretty confused about what to do. Howell: Mate, I have always found you to be a stand-up guy, you've certainly never been a 'yes' man - you are a person I have been through a lot with over the years. You've been in tough positions before like when Frits [Frits Vogels, CEO TP ICAP EMEA] wanted to fire you. But you got through it. But the decision you've got now - whether to leave or stay at ICAP - is one for you to make. Temperton: i do have concerns with leaving ICAP - the screen, BGC shares … Howell: I understand mate. You've got to weigh it all up. Temperton: Simon Prest sent me some document, do you know what that's about? Howell: No, I don't.
I prefer Temperton.

[76]

THE CORPORATIONS ACT

Section 181(1) of the Corporations Act 2001 (Cth) (the Act) provides: 181 Good faith - civil obligations Good faith - directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose.
Section 182(1) of the Act provides: 182 Use of position - civil obligations Use of position - directors, other officers and employees (1) A director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation.
Section 183(1) of the Act provides: 183 Use of information - civil obligations Use of information - directors, other officers and employees (1) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation.
Section 9 of the Act defines "officer of a corporation", relevantly, to mean: … (b) a person: (i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
Section 79 of the Act provides: 79 Involvement in contraventions A person is involved in a contravention if, and only if, the person: (a) has aided, abetted, counselled or procured the contravention; or (b) has induced, whether by threats or promises or otherwise, the contravention; or (c) has been in any way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention.
The Act contains provisions empowering the Court to order, amongst others, compensation and to declare the whole or any part of a contract between a person who suffered loss or damage and the person who engaged in conduct in contravention of the Act, or who was involved in it, to have been void ab initio. It is not necessary to set these provisions out for the purposes of this judgment.

[77]

THE COMPETITION AND CONSUMER ACT

Section 139B of the Competition and Consumer Act 2010 (Cth) (the CCA) provides: 139B Conduct of directors, employees or agents of bodies corporate (1) If, in a proceeding under this Part or the Australian Consumer Law in respect of conduct that is engaged in by a body corporate and to which this Part or the Australian Consumer Law applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show: (a) that a director, employee or agent of the body corporate engaged in that conduct within the scope of the actual or apparent authority of the director, employee or agent; and (b) that the director, employee or agent had that state of mind. (2) Any conduct engaged in on behalf of a body corporate: (a) by a director, employee or agent of the body corporate within the scope of the actual or apparent authority of the director, employee or agent; or (b) by any other person: (i) at the direction of a director, employee or agent of the body corporate; or (ii) with the consent or agreement (whether express or implied) of such a director, employee or agent; if the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent; is taken, for the purposes of this Part or the Australian Consumer Law, to have been engaged in also by the body corporate.
The Australian Consumer Law (ACL) is set out in sch 2 of the CCA. Section 18(1) of the ACL provides: 18 Misleading or deceptive conduct (1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. …
Section 31 of the ACL provides: 31 Misleading conduct relating to employment A person must not, in relation to employment that is to be, or may be, offered by the person or by another person, engage in conduct that is liable to mislead persons seeking the employment as to: (a) the availability, nature, terms or conditions of the employment; or (b) any other matter relating to the employment.
Like the Act, the ACL contains provisions empowering the Court to make, amongst others, compensation orders and orders declaring the whole or any part of a contract between a respondent and a person who suffered, or is likely to suffer, loss or damage is void ab initio. It is not necessary to set these provisions out for the purposes of this judgment.

[78]

THE HOWELL CONTRACT

The Howell Contract comprises two components. First, a letter agreement component, and second, a set of standard "Terms & Conditions" which are expressly incorporated into the Howell Contract.
The letter agreement component of the Howell Contract contains, relevantly, the following provisions: 10. Restraints 10.1 You acknowledge that during the course of your employment among other things, you will be privy to Confidential Information (which in this offer letter has the meaning given to it in the accompanying Terms & Conditions) and you will, at the expense of the Company and each Group Company, make, maintain and develop valuable relationships with clients, customers, staff and third parties. You therefore covenant with the Company that you will not directly or indirectly on your own behalf or on behalf of any other person, concern, undertaking, firm or body corporate during your employment and: (a) for the period of six calendar months following the date on which your employment terminates, deal with, be employed or engaged by or engage in business with or be in any way interested in or connected with any business which competes with any business carried on by the Company or any Group Company at the date of termination of your employment in which you have been involved on behalf of the Company or any Group Company at any time within the 12 months immediately preceding the termination of your employment, either by; (i) providing services the same as or similar to those you provided to the Company or any Group Company within the 12 months immediately preceding the termination of your employment; or (ii) for any other purpose, save that you may hold shares of up to 5% in a company listed on a recognised stock exchange; … (c) for the period of nine calendar months following the date your employment terminates, solicit or endeavour to entice away from or encourage to leave the Company or any Group Company any employee, officer or consultant of the Company or any Group Company known personally to you and with whom you have had contact as part of your employment, other than secretarial staff or employees whose total salary and bonus in the 12 months prior to the date your employment terminates was less than the annual equivalent of $50,000 (whether or not such person would commit any breach of their contract of employment or engagement by reason of leaving the service of such company) or knowingly procure or assist in procuring the employment by any other person, concern, undertaking, firm or body corporate of any such person; … 11. Confidentiality 11.1 You shall not, either during your employment or after your employment has terminated for whatever reason, directly or indirectly exploit, use or disclose to any other employee or any third party other than in the proper performance of your duties for the Company or any Group Company or as authorised in writing by the Company, any Confidential Information.
The "Terms & Conditions" component of the Howell Contract, contains, relevantly, the following provisions: 1. Your Duties 1.1 You must: … (b) at all times and in all respects serve the Company and any Group Company faithfully and diligently and to the best of your ability; (c) use all reasonable efforts to promote, develop and extend the interests of the Company and any Group Company; (d) use all reasonable efforts to further the prosperity and enhance the reputation of the Company and any Group Company; (e) act in the best interests of the Company and any Group Company; … 1.2 Without limiting your duties to the Company, during your employment you must not (during or outside of work hours): (a) act in conflict with the best interests of the Company and any Group Company; (b) work for or perform services for any person other than the Company or any Group Company without the prior written consent of the Company; or … 1.4 The restrictions and duties set out in the Agreement form part of the duty of good faith, trust and confidence owed by you to the Company or any Group Company whether express or implied. … 9. Garden Leave 9.1 During your notice period or any part or parts thereof, or at any other time, the Company may in its absolute discretion require you to perform only such duties or other such other duties commensurate with your status (including without limitation research projects) as it may allocate to you or not to perform any of your duties and may require you not to have any contact with clients of the Company or any Group Company nor any contact with such employees of the Company and any Group Company as the Company shall determine and/or may exclude you from any premises of the Company or of any Group Company (without providing any reason therefor) provided always that throughout the period of any such action referred to in this clause ('Garden Leave') your salary and contractual benefits shall continue to accrue or be paid or provided subject to the other provisions of this Agreement. 9.2 Any action taken on the part of the Company under clause 9.1 shall not constitute a breach of this Agreement of any kind whatsoever nor shall you have any claim against the Company or any Group Company in respect of any such action. 9.3 During any period of Garden Leave you shall remain readily contactable and available for work and, should you fail to make yourself available for work having been requested by the Company to attend, you shall, notwithstanding any other provision of this Agreement and without prejudice to the Company's other rights and remedies, forfeit your right to salary, eligibility for bonus (if any) or any other remuneration in respect of such period of nonavailability.

[79]

BREACH OF CONTRACT CLAIM

First, with respect to Howell, ICAP argues that in saying what he said to: 1. Temperton on 4 October 2017 or 5 October 2017 at the First Harbord Beach Hotel Meeting; 2. McGilvray on 7 October 2017 in the driveway conversation outside McGilvray's house; 3. Temperton on 11 October 2017 at the Second Harbord Beach Hotel Meeting; 4. Cotton on 9 November 2017 at the Alpha Restaurant Meeting and 14 November 2017 at the Paradiso Café; 5. those present on 17 November 2017 at the St James Building Meeting; 6. Temperton on 19 November 2017 at the Third Harbord Beach Hotel Meeting; and 7. Colin on 21 October 2017 at coffee in Manly, which amounted to offering him a job with GFI, Howell breached his obligations under: 1. cl 10.1(a) not to be engaged in business or be in any way interested in or connected with any business which competes with any business carried on by ICAP or any Group Company; [8] 2. cl 10.1(c) not to solicit or endeavour to entice away from or encourage any employee to leave ICAP, or not to knowingly procure or assist in procuring the employment by GFI by any of those persons; 3. cl 1.1(b) of the Terms & Conditions to serve ICAP or any Group Company faithfully and diligently to the best of his ability; 4. cl 1.1(c) of the Terms & Conditions to use all reasonable efforts to promote, develop, and extend the interests of ICAP or any Group Company; 5. cl 1.1(d) of the Terms & Conditions to use all reasonable efforts to further the prosperity and enhance the reputation of ICAP or any Group Company; 6. cl 1.1(e) of the Terms & Conditions to act in the best interests of ICAP or any Group Company; 7. cl 1.2(a) of the Terms & Conditions not to act in conflict with the best interests of ICAP or any Group Company; 8. cl 1.2(b) of the Terms & Conditions not to work or perform services for any person other than ICAP without prior written consent; and 9. cl 9.1 of the Terms & Conditions not to have any contact with employees of ICAP or any Group Company as ICAP determines, contrary to the direction in the Howell Letter.
ICAP does not suggest that any of these alleged breaches led to any economic consequences and it claims no relief with respect to them other than declarations. ICAP did not submit that it should have an award of nominal damages.
Second, ICAP argues that Howell, contrary to various of the obligations under the Howell contract, conveyed confidential information to GFI concerning the individual brokers' earnings, the revenue generated by them on the Desk, and information about how much was needed to offer the brokers to entice them to leave ICAP and join GFI.
This is the only breach of contract by Howell alleged by ICAP to have had adverse economic consequences for it.

[82]

Contract

I find that by doing what he did in furtherance of GFI's recruitment campaign, Howell breached his contractual obligations under cl 10.1(c) of the letter agreement and cls 1.1(b), (d), (e), and 1.2(a) of the Terms & Conditions. In acting to assist GFI to recruit the brokers he knew that what he was doing was not in the best interests of ICAP but in conflict with them, and he acted contrary to his duty of good faith to ICAP in doing so. I include in this Howell's provision of advice about a contract with GFI at his house on 15 October 2017 and his offer of a job with GFI to Colin Gilbert on 21 October 2017.
I find that by contacting the brokers, he breached cl 9.1 by acting contrary to the direction given to him in the Howell Letter.
But these breaches led to no economic consequences and they occurred more than two years ago, although these proceedings were instituted much closer to the time of the conduct complained of.
Leaving aside deficiencies in their formulation (with which it is not necessary to deal), the declarations which ICAP seeks lack utility. They would not serve any legitimate purpose which is not already served by these findings themselves.
This is hardly a case of one party being justified in complaining about another party's commercial behaviour or lack of commercial morality, so as to justify the making of declarations at its instance. Commercial morality is a commodity which is in short supply on both sides of this divide.
Howell argued that his obligations under the Howell Contract did not operate or were "attenuated" during his period of garden leave. He also argued that cl 9.1, at least insofar as it permitted ICAP to restrict his contact with employees, including his family, is unreasonable and an invalid restraint.
I would not uphold these contentions. There is nothing in the Howell Contract which restricts his general obligations under it during the garden leave period.
This case demonstrates that the provisions relied on by ICAP were reasonably necessary to protect ICAP's legitimate business interests. Howell was a senior officer and employee with a significant degree of influence over the ICAP employees with an ability to damage ICAP's interests profoundly.
There is no direct evidence of Howell having conveyed confidential information to GFI, and the evidence does not give rise to any inference (let along a strong one) that he did. Moreover, both Heffron and Prest deny it and I believe them. Added to this, Heffron and Prest asked the individual brokers for this information and they gave it. Their evidence is consistent with Howell's evidence that he never gave this information. In this respect, I believe him.
Accordingly, ICAP has failed to establish that Howell breached any contractual duty in a manner which entitles ICAP to relief.

[85]

THE KALAF CONTRACT

The Kalaf Contract is similarly made up of a letter agreement component and a "Terms & Conditions" component. The letter agreement component of the Kalaf Contract contains, relevantly, the following provisions: 10. Restraints 10.1 You acknowledge that during the course of your employment, among other things, you will be privy to Confidential Information (which in this offer letter has the meaning given to it in the accompanying Terms & Conditions) and you will, at the expense of the Company and each Group Company, make, maintain and develop valuable relationships with clients, customers, staff and third parties. You therefore covenant with the Company that you will not directly or indirectly on your own behalf or on behalf of any other person, concern, undertaking, firm or body corporate during your employment and: (a) for the period of six calendar months following the date on which your employment terminates, deal with, be employed or engaged by or engage in business with or be in any way interested in or connected with any business which competes with any business carried on by the Company or any Group Company at the date of termination of your employment in which you have been involved on behalf of the Company or any Group Company at any time within the 12 months immediately preceding the termination of your employment, either by: (i) providing services the same as or similar to those you provided to the Company or any Group Company within the 12 months immediately preceding the termination of your employment; or (ii) for any other purpose, save that you may hold shares of up to 5% in a company listed on a recognised stock exchange … (c) for the period of nine calendar months following the date your employment terminates, solicit or endeavour to entice away from or encourage to leave the Company or any Group Company any employee, officer or consultant of the Company or any Group Company known personally to you and with whom you have had contact as part of your employment, other than secretarial staff or employees whose total salary and bonus in the 12 months prior to the date your employment terminates was less than the annual equivalent of $50,000 (whether or not such person would commit any breach of their contract of employment or engagement by reason of leaving the service of such company) or knowingly procure or assist in procuring the employment by any other person, concern, undertaking, firm or body corporate of any such person; … 11. Liquidated Damages [9] 11.1 If your contract of employment is terminated for breach or repudiation on your part (including if you resign or otherwise seek to leave the employment of the Company without giving the Company the required notice under clause 4), then you shall immediately pay to the Company, as a debt due and owing, an amount calculated as follows: 50% x Your Average Revenue x No. of Working Days from the date of termination until the date which your employment would have terminated if you had given the notice of termination provided by clause 4 11.2 If you breach clause 10.1(a) then you shall immediately pay to the Company, as a debt due and owing, an amount calculated as follows: 50% x Your Average Revenue x No. of working days for which you are in breach of clause 10.1(a) 11.3 If you breach clause 10.1(b) and this materially contributes to the client or customer providing business to a competitor of the Company or a Group Company then you shall immediately pay to the Company, as a debt due and owing, an amount calculated as follows: 50% x the Client Average Revenue x No. of working days from the date the client or customer starts providing business to a competitor until the expiry of the restrictions in clause 10.1(b) 11.4 If you breach clause 10.1(c) and this materially contributes to employee leaving the Company or a Group Company's employment who is a Revenue Earner, then without prejudice to any additional rights or remedies available to the Company, you shall immediately pay to the Company, as a debt due and owing, an amount calculated as follows: 50% x Their Average Revenue x 6 months 11.5 The rights in this clause 11 are without prejudice to the right of the Company's right to seek injunctive relief or claim, in the alternative, such damage as it may establish that it has suffered through the breach of the relevant provisions. 12. Confidentiality 12.1 You shall not, either during your employment or after your employment has terminated for whatever reason, directly or indirectly exploit, use or disclose to any other employee or any third party other than in the proper performance of your duties for the Company or any Group Company or as authorised in writing by the Company, any Confidential Information. 12.2 You shall use your best endeavours to prevent the publication, disclosure or unauthorised use of any Confidential Information by any other employee or any third party, save where such information is in the public domain or comes into the public domain otherwise than as a result of a breach of your obligations. Any prior authorisation for disclosure or use of such information must be obtained in writing from the management of the Company.
The "Terms & Conditions" component of the Kalaf Contract, contains, relevantly, the following provisions: 1. Your Duties 1.1 You must: … (b) at all times and in all respects serve the Company and any Group Company faithfully and diligently and to the best of your ability; (c) use all reasonable efforts to promote, develop and extend the interests of the Company and any Group Company; (d) use all reasonable efforts to further the prosperity and enhance the reputation of the Company and any Group Company; (e) act in the best interests of the Company and any Group Company; … 1.2 Without limiting your duties to the Company, during your employment you must not (during or outside of work hours): (a) act in conflict with the best interests of the Company and any Group Company; (b) work for or perform services for any person other than the Company or any Group Company without the prior written consent of the Company; or … 1.4 The restrictions and duties set out in the Agreement form part of the duty of good faith, trust and confidence owed by you to the Company or any Group Company whether express or implied. … 11.1 Your employment may be terminated by the Company at any time without notice or any payment in lieu of notice if you: … (b) engage in serious misconduct, including, without limitation: (i) wilful, or deliberate, behaviour by you that is inconsistent with the continuation of the contract of employment; (ii) conduct that causes imminent, or serious, risk to: … (B) the reputation, viability or profitability of the business of the Company or the Group Company; … (c) wilfully fail or neglect to carry out your duties under this Agreement; … (f) breach any serious provision of this Agreement or, after warning, repeated or continued any material breach of your express and implied obligations under this Agreement or any act of gross misconduct provided that in all the circumstances summary dismissal is justified; … 21. Group Company and assignment of benefit 21.1 The Company has entered into this Agreement on its behalf and on behalf of each Group Company. If you breach any of the provisions of this Agreement, the Company may seek equitable relief and/or damages on its own behalf and on behalf of any relevant Group Company. For the avoidance of doubt, you are employed by the Company and not by any Group Company. … 27. Definitions … 27.6 'Group Company' means the Company or any Related Body Corporate of the Company as Related Body Corporate is defined in the Corporations Act 2001;

[86]

BREACH OF CONTRACT CLAIM

ICAP argues that: 1. in telling Gilbert that he was "on to it" (after Gilbert told Kalaf he had not been contacted by GFI) and in calling Heffron on 13 October 2017 to tell him that Gilbert had not been contacted; 2. in saying what he said to brokers about expecting to get a call, that is to Cotton on 25 September 2017, Gilbert on 25 September 2017, McGilvray on 25 September 2017, Temperton on 26 September 2017, and Ferris on 27 September 2017; 3. in saying what he said to Cotton, Temperton, and Blades on 13 October 2017 at the Neptune Palace Lunch, Ferris on 14 October 2017 on the telephone, Cotton and Temperton on 15 October 2017 at the meeting at Howell's house, and Gilbert on 16 October 2017 at the Spice Temple Meeting; and 4. between 27 September and 17 October 2017, in failing to report accurately to Casterton and Breteau that Temperton, Cotton, and McGilvray were happy with $700,000 as an extension bonus to stay at ICAP, in failing to provide to brokers letters of offer handed to him on 4 October 2017, in failing to tell Gilbert, Ferris, and Pisani about what ICAP was offering to stay but telling them that the amounts on offer were so low as to not be worth discussing, and in failing to tell any of the other brokers what extension bonus ICAP was prepared to offer them, Kalaf breached: 1. cl 10.1(a) by being connected with GFI's business which competed with the business carried on by ICAP Brokers; 2. cl 10.1(c) by soliciting or endeavouring to entice away from or encouraging members of the Desk to leave ICAP, and by knowingly procuring or assisting in procuring their employment by GFI; 3. cl 1.1(b) of the Terms & Conditions by failing to serve ICAP faithfully and diligently to the best of his ability; 4. cl 1.1(c) of the Terms & Conditions by not using all reasonable efforts to promote and extend the interests of ICAP; 5. cl 1.1(d) of the Terms & Conditions by not using all reasonable efforts to further the prosperity and enhance the reputation of ICAP; 6. cl 1.1(e) of the Terms & Conditions by not acting in the best interests of ICAP; 7. cl 1.2(a) of the Terms & Conditions by acting in conflict with the best interests of ICAP; 8. cl 1.2(b) of the Terms & Conditions by performing services for any person other than ICAP without prior written consent; and 9. cl 1.4 of the Terms & Conditions by not acting in accordance with the duty of good faith, trust and confidence owed to ICAP.
On 15 February 2018, by letter, ICAP Australia dismissed Kalaf from its employment, relying on the following of Kalaf's conduct as justifying summary termination: 1. soliciting, or taking steps towards soliciting, employees of ICAP to take up roles with a business in competition with ICAP; 2. holding discussions with employees to encourage them to join a business in competition with ICAP during the course of his employment and during his normal hours of work with ICAP; and 3. using his position of seniority and influence to persuade and/or pressure employees who reported to him to leave ICAP.
If the Kalaf Contract was validly terminated for breach, cl 11 of the letter component of the Kalaf Contract providing for liquidated damages (if not invalid) will apply.
I find that ICAP Australia's summary termination of Kalaf's employment was valid and effective.

[89]

DISPOSITION

It is important to keep in mind that Kalaf was formally employed only by ICAP Australia and not ICAP Brokers, although, under the Kalaf Contract, ICAP Australia can sue for relief on behalf of "Group Companies" and, in fact, he was an ICAP Brokers operative.
Kalaf takes the point that ICAP Brokers has no standing to sue under the Kalaf Contract. This is strictly correct, but ICAP Australia can sue on its behalf, so far as the Kalaf Contract permits this. One respect in which the distinction makes a difference is that only ICAP Australia can claim liquidated damages under cl 11.2 of the letter agreement of the Kalaf Contract (assuming the provision to be enforceable). Another respect is that Kalaf is an employee of ICAP Australia for the purposes of s 182(1) of the Act, but not of ICAP Brokers. These distinctions may have a significant role to play if the stage of considering relief is ever reached.
Kalaf was not an officer of ICAP Australia but I find that he was an officer of ICAP Brokers for the purposes of ss 181(1) and 182(1) of the Act because he made or participated in making decisions that affected the Swaps Desk, which was a substantial part of the business of ICAP Brokers within sub-paragraph (c)(i) of the definition of 'officer' in s 9 of the Act.
Kalaf's responsibilities as Desk Head included: determining strategy for the Swaps Desk; disciplining members of the desk; negotiating (subject to sign-off) employment terms, including broker remuneration; determining the manner in which the bonus pool was allocated to brokers on the Swaps Desk; approving leave for brokers; approving travel expenditure for himself and brokers on the Swaps Desk; and approving technology and project expenditure requests. No doubt, until he signed up with GFI without telling them, he commanded the respect and loyalty of the brokers on the Swaps Desk. He was on a base salary of $300,000 per annum plus bonuses. This was the equal highest salary of all brokers on the Swaps Desk.
In addition, and albeit informally, he accepted the position of CEO of ICAP Australasia.
The Swaps Desk was the largest revenue earner of the Desks. Whilst he was not a director (in the sense of being a member of its board) of ICAP Brokers, his designation was "Divisional Director". This reflects his seniority and the fact that he was responsible for a division of the business. He made, or participated in making, decisions that affected that part of the business of ICAP Brokers, not least of all distribution of bonuses. Indeed, even though he had already accepted a position with GFI, on 29 November 2017 he wrote to Rogers claiming that he was entitled, without any interference, to direct how a retained bonus accrual fund should be distributed. Amongst others, he said, "As the Divisional Director of the Desk, it is wholly within my authority to direct the Company to release the accrual to the desk for allocation by me at my discretion."
With respect to the claims against Kalaf for breach of equitable duty, I find that he owed fiduciary duties to both ICAP Australia and ICAP Brokers. As to ICAP Australia, these duties are reflected in the express articulation of the obligations imposed on him in cl 1 of the Terms & Conditions of the Kalaf Contract. As to ICAP Brokers, his senior position brought with it the ability to make decisions and exercise discretions which could affect, significantly and adversely, ICAP Brokers' interests. As this case shows, ICAP Brokers was vulnerable to things Kalaf was able to do because of the position he occupied.
From the time Kalaf was contacted by Heffron and Prest on 24 September 2017, whom he learned were trying to recruit the whole Swaps Desk, he was in a position where his duties to ICAP and his own personal interests were in conflict.
This conflict became acute when he decided, on the morning of 13 October 2017, to sign with GFI. The conflict intensified when he formally accepted GFI's offer that afternoon. He had a personal interest, not only in receiving the significant amounts of money which GFI were promising, but in the movement of the whole Swaps Desk to GFI. Having regard to his prospective bonus incentives, Kalaf had a financial interest in GFI's Swaps Desk generating as much revenue as possible in the future. He was aware that GFI's interests were adverse to those of ICAP and he acted to favour GFI's interests over those of ICAP. This included not communicating to the brokers how far ICAP was prepared to go to keep them and delaying telling Casterton about his decision to go to GFI until after the weekend, so that he would have the opportunity, as I have found, to do what he could, to get brokers to go with him over to GFI. For the same reason, he minimised what ICAP was prepared to offer.
From 24 September 2017, he embarked upon a course of conduct which undermined ICAP's interests and furthered those of GFI. Some of his conduct was active, some of it was passive. He: 1. smoothed the way for GFI's calls to the brokers, including by acquiescing to the brokers taking time away from the Swaps Desk to speak with or meet Heffron and Prest; 2. responded to Gilbert's communication that he had not been made an offer from GFI and called Heffron about Gilbert during work hours from the workplace; 3. made negative statements about staying with ICAP and about the Desk's long-term prospects there without the management in place on 13 October 2017 at the Neptune Palace Lunch; 4. told Ferris over the phone on 14 October 2017 that ICAP's offer was only a "band-aid solution" and that he did not think that "money [was] going to fix the issues" the brokers on the Desk felt like they had been having; 5. conveyed to Gilbert, Ferris, and Pisani that the amounts on offer from ICAP were so low as to not be worth discussing. I find that this was directed to discouraging them from staying at ICAP; 6. suggested to Temperton and Cotton that they go to Howell's home on 15 October 2017. I find that this was directed to persuading them to go to GFI (to which Kalaf was already committed); 7. conveyed to Gilbert on 16 October 2017 at the Spice Temple Meeting that there had been problems stemming from the merger, that it was not looking good for them, and that Howell was going to be looking after them at GFI. I find that this was directed to persuading Gilbert to go to GFI; 8. delayed telling Casterton and Breteau that he had signed with GFI for the reasons I have earlier articulated; 9. arranged for the Swaps Desk to have drinks at the Rockpool Bar & Grill on 24 October 2017, and for his friend Scaffidi to attend to make a team-building speech in support of their decision to go to GFI. This is also the case with respect to his discussions with Cotton on 12 and 13 November 2017. I observe that the Rockpool Meeting was a substitute for the usual Monday Swaps Desk team meeting which Kalaf used for a non-ICAP purpose; and 10. did not convey to the brokers what ICAP was prepared to offer and did not making any real or reasonable efforts to get them to stay.

[93]

THE CASE AGAINST GFI

ICAP argues that GFI (via Heffron) knowingly procured and participated in Kalaf's breaches of fiduciary duty, or was a person involved in Kalaf's contraventions of ss 181(1) and 182(1) of the Act, by: 1. encouraging Kalaf to say what he said to the brokers about expecting to get a call, that is to Cotton on 25 September 2017, Gilbert on 25 September 2017, McGilvray on 25 September 2017, Temperton on 26 September 2017, and Ferris on 27 September 2017; 2. following up Kalaf's intimation, in the week ended 13 October 2017, that Gilbert had been left out; and 3. encouraging Kalaf to speak to and assist in the recruitment of the eight brokers who signed during the period 13 to 17 October 2017.
ICAP argues (in a one-line submission) that by the same conduct, GFI knowingly interfered with ICAP's contractual relations with Kalaf.
ICAP has fallen well short of proving these claims.
It has not established that GFI played any part, let alone a knowing one, in Kalaf's smoothing the way with the brokers on 25, 26, and 27 September 2017.
GFI seeks to portray Kalaf's communication to Heffron about Gilbert as trivial and isolated, and not lacking in probity. I disagree. It was part of a lengthy course of conduct on the part of Kalaf and was a conscious step taken to benefit another person or persons (Gilbert and GFI) to the potential detriment of ICAP.
However, the difficulty for ICAP with respect to the Gilbert incident is that GFI played no part in Kalaf's decision to call Heffron about Gilbert. Indeed, GFI had apparently confused him with Temperton. GFI merely received the communication. It had intended to offer Gilbert (as one of the brokers) a job anyway; his name was on Prest's list of brokers who had been identified by Warner. This breach of fiduciary duty was on Kalaf's own initiative and it cannot fairly be said that GFI knowingly participated in it.
The evidence does not establish that GFI encouraged Kalaf to speak to and assist in the recruitment drive during the period 13 to 17 October 2017. There is simply an absence of evidence to establish this.
Moreover, leaving aside the absence of direct evidence and ICAP's need to rely on supposition, speculation, inexact proofs, and indirect inference, ICAP's case is inconsistent with the evidence of Heffron and Prest, both of whom I believe with respect to the following matters: 1. that they told Kalaf that they did not want his assistance in their recruitment efforts (which of course does not mean that Kalaf did not do what he could - or thought he could - to assist their recruitment efforts); 2. that Prest told Kalaf to "Keep your nose clean" (which of course does not mean that Kalaf did keep his nose clean); 3. that they considered that they did not need Kalaf's help to recruit the other brokers (which of course does not mean that Kalaf did not do what he could - or thought he could - to recruit the other brokers); 4. that Kalaf was not encouraged by them to facilitate the meetings with other brokers (which of course does not mean that Kalaf did not do so); and 5. that they did not ask Kalaf for, and he did not give them, confidential information about the brokers' compensation, revenue, or sign-on amounts that needed to be offered.
As Heffron pointed out, he was the global CEO of one of the major broking businesses in the world and had significant experience in conducting recruitment campaigns.
GFI had significant amounts of money to offer the brokers, and the money talked.
Kalaf no doubt took up the task of helping GFI with a degree of enthusiasm. He had his own interests in doing so, as was shown later by his betrayal of his friends and colleagues.
For the same reasons, ICAP's claim that GFI was a person involved in Kalaf's statutory contraventions, and that it interfered with ICAP's contractual relations with Kalaf, fails.
As earlier mentioned, it is worthy of observation that on its own version of events, GFI induced the brokers to provide confidential information about their own remuneration and revenue earning on the Desk, upon which GFI plainly relied, but ICAP brings no claim based on this. [11]

[94]

GFI'S CASE AGAINST THE SIX AND THE SIX'S CASE AGAINST GFI

GFI sues the six for breach of their employment contracts with it, and it sues ICAP for interfering with its contractual relations with the six.
ICAP correctly abandoned a manifestly untenable contention that it was justified in interfering with these contractual relations.
Subject to the claims which the six make against GFI and Kalaf that they were misled and deceived into entering into contracts with GFI and that those contracts should be set aside, which claims are dealt with below, it is not in issue that the six have breached their contracts with GFI and that ICAP interfered in their contractual relations by inducing them to do so.
The six bring claims against GFI and Kalaf on the basis that Kalaf engaged in conduct that was misleading and deceptive or likely to mislead and deceive by: 1. not telling the six that he was acting on behalf of GFI, but rather representing to them that he was acting on behalf of them in negotiations with ICAP; 2. failing to tell them of the "nature, extent, and details" of the offers ICAP was prepared to make them; and 3. making positively misleading statements about the offers ICAP was prepared to make.
They say that as a result of this conduct they signed with GFI, which they would not otherwise have done.
As against GFI, the success of these claims depends in the first instance on them establishing that in engaging in the conduct complained of, Kalaf did so on behalf of GFI within the meaning of s 139B(2) of the CCA, or at general law as its agent.
For reasons articulated earlier, Kalaf did not act with the consent or agreement of Heffron, express or implied, of Heffron or Prest, but contrary to their instructions.
It follows that the agreements between the six and GFI are not to be set aside.
It also follows that insofar as Kalaf may be responsible, by virtue of his conduct, for the six entering into their contracts with GFI, GFI was not a person involved in that conduct. There is a cross-claim by the six against Howell, but nothing about it was said in the proceedings. I assume it is to be dismissed.

[95]

KALAF'S LIABILITY TO THE SIX

The six contend that Kalaf acted in breach of ss 18 and 31 of the ACL by: 1. misleading them by not telling them that he was acting on behalf of GFI; 2. representing to them, contrary to the facts, that he was acting on their behalf in negotiations with ICAP; and 3. not accurately conveying to them what ICAP was prepared to offer.
They say that but for this conduct, they would not initially have signed with GFI. They claim that Kalaf should be held liable to indemnify them in respect of, or to pay them compensation equivalent to, any liability they may have to GFI for breaching their contracts to GFI.
Kalaf argues that s 18 of the ACL does not apply because his conduct was not in trade or commerce. He argues that s 31 of the ACL does not apply because the six were not persons seeking employment and the conduct complained of was not as to any matter relating to that employment.
This claim against Kalaf is unsustainable.
I am not persuaded that Kalaf's conduct was either in trade or commerce or that it related to persons seeking employment as to a matter relating to that employment, as contemplated by s 31 of the ACL. His conduct was as an employee or officer of ICAP. He personally was not engaged in conduct in trade or commerce. The six were already employed by ICAP and they were not "seeking" employment from GFI. I do not consider that Kalaf's conduct was "as to…a matter relating to the employment" which the six were seeking so as to bring it within s 31 of the ACL.
As I have found earlier, Kalaf was not acting on behalf of GFI.
Whilst Kalaf did convey to the six, and they did believe, that he was negotiating on their behalf with ICAP, as did Casterton believe he was negotiating with the brokers for ICAP, an additional difficulty for the six is that Kalaf was in fact negotiating with ICAP on their behalf, even if he was not doing it genuinely in their interests but only perfunctorily. But their complaint is not one about the quality of his negotiation.
I think there is substance in the complaint that Kalaf did not convey to them in an open and accurate way what ICAP was prepared to offer and instead minimised it. I believe the six that had they been aware of ICAP's true position, they would not have gone to GFI. Their subsequent conduct in leaving GFI for less money sufficiently proves this.
The insuperable difficulty facing the six in this claim is, however, that once they had signed with GFI, it was a matter entirely for them whether they stayed there (for more money) or whether they succumbed to ICAP's later blandishments to come back. The exposure of the six to GFI because they decided to go back to ICAP was not caused, looked at in a common sense and practical way, by Kalaf, but by themselves.
It follows that Kalaf did not engage in conduct which gives rise to an entitlement by any of the six to damages or indemnity in respect of their liability to GFI as a consequence of the breach of their employment contracts with GFI.
The exhibits may be returned.

At a glance

Court

Decision date

Before

Source

Judgment (99 paragraphs)

Legislation Cited (3)

Cited By (2)