CANTOR FITZGERALD EUROPE AND ANOTHER v. JASON JON BOYER AND OTHERS

HCA 1160/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1160 OF 2011

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BETWEEN

(Consolidated by Order of The Honourable Mr. Justice Reyes
dated the 18^th day of January 2012)

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J U D G M E N T

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I. INTRODUCTION

1.  These proceedings concern alleged breaches of employment contracts and fiduciary duties.

2.  The Plaintiff employers say that the Defendant employees breached their duties of fidelity and their fiduciary duties by all resigning from the Plaintiffs (and signing contracts to work with a competitor) on the same day.

3.  The Cantor Fitzgerald group of companies is essentially a capital markets investment bank.  The group has offices and trading desks in major financial centres throughout the world.

4.  Cantor Fitzgerald Europe (CFE), the 1st Plaintiff, is a private UK company which provides a range of financial services (including operating facilities for trading and advising on and dealing in investments).

5.  Cantor HK, the 2nd Plaintiff, is a Hong Kong company which deals in and advises on securities and futures.  At the time of the events in these proceedings, its largest single business was its Cash Equities Desk.

6.  Cantor Fitzgerald has an office in Singapore. Canto Singapore’s business is managed from Cantor HK.

7.  Cantor Fitzgerald & Co. (CF & Co) is a partnership established in New York.

8.  CFE, Cantor HK, Cantor Singapore and CF & Co. are controlled by Cantor Fitzgerald LP (CFLP).  CFLP is a limited partnership under Delaware law.  Howard Lutnick is the Chairman and Chief Executive Officer of CFLP.

9.  Boyer, the 1st Defendant, was seconded from CFE to Cantor HK.  He was a director of Cantor HK.  He had responsibility for building up Cantor HK’s equities business.  At the time of his resignation, he and Didier Bensadoun were the leading resident executives of Cantor Fitzgerald in Asia.

10.  Ainslie and McGonegal, the 2nd and 3rd Defendants, were top revenue generators of Cantor HK’s Cash Equities Desk. They were co‑heads, each holding the title of Managing Directors of the Cash Equities Desk.

11.  Von Parpart, the 4th Defendant, was Managing Director, Chief Economist and Strategist (Asia), in the Asian Equities Division of Cantor HK.  He had responsibility for providing research support to Cantor HK’s brokers.  He featured regularly in media programmes as the “public face” of Cantor Fitzgerald in Asia.

12.  In 2010 Asia Telemedia Limited (ATL), then under liquidation, was in the second stage of de-listing from the Hong Kong Stock Exchange.  ATL owned a Hong Kong brokerage firm known as Mansion House Securities.  ATL (through its liquidators) was looking for a white knight to restructure the company.

13.  Johnson Ko, a Hong Kong businessman, had expressed an interest in acting as that white knight by investing a substantial sum in ATL.  Ko was keen to build up the securities side of ATL’s business to create a strong local Hong Kong broker with international and Chinese links. In May 2010 Ko sought to enter into an alliance with the Cantor Fitzgerald group to further that object.

14.  Discussions ensued between Ko and Cantor Fitzgerald.  Boyer, McGonegal and von Parpart (among others) participated in those discussions on behalf of Cantor Fitzgerald.  Boyer, in particular, tried to sell the deal to Lutnick.  But Ko and Cantor Fitzgerald could not reach agreement.  Negotiations between them broke down in August 2010.

15.  Ko instead proceeded on his own.  In due course, he obtained approval for the re-structuring of ATL’s Mansion House business. In around April 2011 ATL obtained Stock Exchange approval for re-listing.

16.  On 30 May 2011 Boyer, Ainslie, McGonegal and von Parpart resigned from their respective employments in the Cantor Fitzgerald group.  On that day, all four signed employment contracts with Mansion House Financial Holdings Ltd. (a company within the ATL group as re‑structured by Ko).  All four have since been seconded to (and now work for) Reorient Financial Markets Limited (formerly Mansion House Securities (FE) Limited).

17.  For convenience, I shall use the expression “Mansion House” to refer to any company within the restructured ATL or Mansion House group.

18.  On 5 July 2011 a second batch of 4 Cantor HK employees (Daniel La Rocca, Patrick Mitchell, Mila Wu and Carl Burton) resigned to join Mansion House. La Rocca had worked on the same Desk as McGonegal and Ainslie.  Mitchell had been a junior broker for Asian Equities.  Wu had been the Human Resources and Office Manager.  Burton had been Cantor HK’s IT Developer and Office Manager.

19.  Boyer started to work for Mansion House on 14 September 2011, Ainslie on 4 October 2011, McGonegal on 27 September 2011, and von Parpart on 15 September 2011.

20.  On 8 September 2011 I granted limited interlocutory injunctions against the Defendants based on restrictive covenants found in their respective employment contracts with the Plaintiffs.  The covenants in effect prevented one or other of them from enticing away certain classes of Cantor Fitzgerald employees, from enticing away certain classes of Cantor Fitzgerald clients, and from working in a competing business together with certain classes of persons.  The interim injunctions which I imposed had all expired before trial started.

21.  There were proceedings in the Labour Tribunal among the parties.  Such proceedings were transferred to the High Court shortly before trial began.  I consolidated those proceedings with the pre-existing High Court action on the first day of trial.

II.      DISCUSSION

22.  In this section, I consider the remaining issues in these proceedings identified by Mr. Nicholas Cooney SC (appearing for the Plaintiffs) in his written closing submissions.

23.  Mr. Cooney stated that the Plaintiffs would not be pursuing pleaded complaints which were not among the issues flagged by him in his written closing submissions.  For example, the Plaintiffs have pleaded that the Defendants were responsible for pirating away La Rocca, Mitchell, Wu and Burton to work for Mansion House.  There was no evidence at all during trial that the Defendants enticed La Rocca, Mitchell, Wu or Burton.  So that allegation has been properly dropped from Mr. Cooney’s written closing submissions.

24.  At the start of oral closing submissions, Mr. Cooney on behalf of the Plaintiffs elected to seek damages rather than an account of profits.  The Court put the Plaintiffs to an election as there had been no application for a split trial and relevant documents (especially the Defendants’ actual employment contracts with Mansion House) had been disclosed.  Thus, by the time of closing submissions, there was more than ample information available to the Plaintiffs on which they could make an informed choice whether to elect for damages or an account.

A.      Issue 1

Have any of the Defendants breached their fiduciary duties or duties of fidelity owed to the Plaintiffs by:-

(a)    procuring any of the other Defendants to resign from their employment to join a competitor?

(b)    acting in concert with any of the other Defendants to leave together to join a competitor?

(c)     failing to disclose his intention or that of any other Defendant to join a competitor?

(d)    failing to disclose approaches made to him or any of the other Defendants to join a competitor?

A.1    General

25.  Boyer had an employment contract with CFE. Pursuant to that contract, Boyer was seconded to Cantor HK.  Thus, Boyer owed a contractual duty of fidelity to CFE, but not Cantor HK.  On the other hand, Boyer accepts that, as a managing director of Cantor HK, he owed fiduciary obligations to Cantor HK.

26.  Ainslie and McGonegal had an employment contract with Cantor HK.  They therefore each owed a contractual duty of fidelity to Cantor HK, but not CFE with whom they had no contractual relationship.

27.  Although they both had the title of Managing Directors, I do not think that they could be regarded as actual or substantive directors of Cantor HK.  It is true that they were co-heads of the Cash Equities Desk with responsibility for managing that Desk and the brokers working under them.  But the Cash Equities Desk is only a department, albeit an important one, within Cantor HK.

28.  Neither Ainslie nor McGonegal had any overall responsibility for the corporate governance of Cantor HK.  Thus, despite their title, neither Ainslie nor McGonegal actually sat as members of Cantor HK’s board of directors or took decisions about the general management of Cantor HK as a company.  It follows that they did not owe fiduciary duties in equity to Cantor HK.

29.  Von Parpart had an employment contract with Cantor HK.  He therefore owed a contractual duty of fidelity to Cantor HK.  He had no contract with CFE and so did not owe the latter any contractual duty. The Plaintiffs do not contend that von Parpart owed any fiduciary obligations.

30.  Nonetheless, although there are differences between the two types of duty, for present purposes it is unnecessary to distinguish too finely between a duty of fidelity and a fiduciary obligation. I shall simply proceed on the basis that, where a person owes either duty, that person must not act in a way which is contrary to the interests of an employer or company.

31.  However, my working assumption should not be taken to mean that an employee or a director may not resign from one’s employment to work elsewhere.  The freedom of choice of occupation is a right recognized at common law and guaranteed here by the Basic Law.  The Court will not compel a person to serve as employee or director of a company against one’s will.  For the Court to act otherwise would be tantamount to consigning an employer or director to a form of enslavement.

A.2    Sub-issues (a) and (b): procuring to resign and acting in concert

32.  The evidence is that, prior to their resignations on 30 May 2011, each of the Defendants was fully aware that the others were negotiating to join Mansion House.

33.  The Defendants all attended a lunch in January 2011 with Ko where the possibility of their working for Mansion House was discussed.  After the lunch, Boyer cautioned that, if anyone were considering leaving Cantor HK, such person should best consult a lawyer in light of the restrictive covenants in Cantor Fitzgerald’s contracts. 

34.  Boyer asked von Parpart to recommend a lawyer for this purpose.  Von Parpart recommended Clyde & Co (where his relation was a partner).  Asked by Ainslie to recommend a lawyer, Boyer recommended Tanner de Witt (apparently because the latter (Boyer recalled) had once acted against Cantor HK).  Eventually, when negotiating the precise terms of their employment contracts with Mansion House, all 4 Defendants used Tanner de Witt (which now acts as their solicitors in this litigation).

35.  From January 2011 onwards, the Defendants debated the prospects of working for Mansion House among themselves.

36.  On 17 May 2011 each of the Defendants received draft employment contracts from Mansion House.  It appears from Ainslie’s cross-examination that by this date the Defendants knew how much salary was being offered to them.

37.  The draft contracts were near identical (the only significant difference being residency provisions affecting Ainslie and McGonegal).  On the day when they received their drafts, Boyer and Ainslie sent SMS text messages to McGonegal.  They asked McGonegal whether he had seen his draft.  Ainslie commented that his draft was “worse than Cantor”.  Boyer expressed a similar sentiment by adding the punctuation “!!!!!?????” at the end of his text query “Have you seen the contract”.

38.  Revisions were made to the draft contracts through Tanner de Witt acting for the 4 Defendants individually and Linklaters acting for Mansion House.  Amendments made to Boyer’s draft contract following negotiations with him appear to have been simply incorporated in the other 3 Defendants’ drafts.

39.  All 4 were interviewed in late April 2011 by headhunters (Russell Kopp of Correlate Search) engaged by ATL’s liquidators.  There were also later interviews with ATL’s liquidators.  Boyer was interviewed on 23 May 2011, Ainslie on 25 May 2011 and von Parpart on 23 May 2011. McGonegal was interviewed by conference call to New Jersey (where McGonegal was holidaying) at around the same time.  The Plaintiffs suggest that the interviews were simply a “smoke-screen” or pure formality. But that is fanciful.  There is no evidence that the interviews were other than genuine.

40.  There was a dinner among Ko, Boyer and Ainslie around 23 May 2011. That was arranged to ascertain Ko’s long term plans.  In particular, having heard in April 2011 that McGonegal was likely to be the Chief Executive Officer of Ko’s intended securities business, Boyer and Ainslie wished to discuss what roles they might play in the future company.  This was of importance to Boyer, as McGonegal worked under him at Cantor HK.  Boyer was unlikely to be happy in an organization where he was supposed to report to McGonegal.

41.  At the dinner, Ainslie was told that his role would be “to build up the global sales trading team”.  This was to be done (according to Ainslie in cross-examination) “because we had plans to open up in New York and London, eventually, and to essentially spearhead the deals and private placement type stuff”.  These were “some of the things that I [Ainslie] was doing, and was part of, at Cantor”.

42.  Finally, on 26 May 2011 (Thursday) Boyer told Bensadoun (Boyer’s close friend) at a dinner that he was planning to leave Cantor Fitzgerald.  Boyer explained that he was “sorry to do this” but he “could not say earlier”.  He asked Bensadoun to inform Lutnick.  He also mentioned that “I [Boyer] have a few key people I’m taking with me” and identified McGonegal and Ainslie.

43.  I am unable, however, to go further and infer from the foregoing matters that the Defendants acted in concert and procured each other to leave Cantor Fitzgerald for Mansion House.

44.  Although the Defendants knew prior to 30 May 2011 that each was thinking of leaving Cantor Fitzgerald, it does not seem that they persuaded or encouraged each other to resign.  On the contrary, the evidence is that the Defendants made up their minds separately from each other.  As Ainslie expressed it in cross-examination, the Defendants acted “independently in the sense that we are all making up our own decision whether to leave Cantor Fitzgerald or not”.

45.  The evidence shows, for instance, that Boyer “played his cards pretty close to his chest”.  He kept his intentions to himself.  He cautioned the others that Ko’s plans in respect of Mansion House were “a pipe dream,” so that the others had better consult their lawyers before taking any rash step.  It is true that Boyer had previously been keen about the Mansion House project insofar as Ko embarked upon it in partnership with Cantor Fitzgerald.  It was on that basis that Boyer tried to sell the deal with Ko to Lutnick.  But (as Boyer explained in Court) he was much less sanguine about the prospects of the project if Ko was to go it alone without the backing of Cantor Fitzgerald’s reputation and expertise.

46.  To my mind, McGonegal’s appointment as Mansion House CEO is also indicative that the parties were not acting in concert. Boyer and Ainslie heard that McGonegal would be so appointed in April 2011. That news caused both consternation.  At Cantor HK, Boyer was accustomed to lead, not follow.  What useful role (Boyer asked Ko) would Boyer have in Mansion House if McGonegal was to be CEO?  As for Ainslie, if his co-head at Cantor HK were now to become boss, what would he be doing?

47.  If Boyer, Ainslie and McGonegal were acting in concert, one would have expected them to have approached Mansion House with a package deal, the package being sold to Mansion House on the basis of defined roles for each reflecting their respective seniorities at Cantor Fitzgerald. What seems instead to have been the case is that each negotiated independently with Mansion House in relation to the position which each would have in the new entity.  It was each for himself.  There was no package deal.  There was individual bargaining for a position commensurate with the status which each Defendant believed he was entitled to expect.

48.  Mr. Cooney submits that the events summarised above reveal a “coordinated effort” among all the Defendants.  The fact (Mr. Cooney says) that they all resigned from Cantor Fitzgerald and signed nearly identical contracts on the same day is indicative of their having acted together and having actively encouraged each other.  It is especially telling (Mr. Cooney says) that they all instructed Tanner de Witt and that amendments made to Boyer’s draft contract were automatically mirrored in the draft contracts of the others, but not the other way around.  From this, Mr. Cooney infers that Boyer was the leader and the others followed his lead.

49.  I initially found Mr. Cooney’s submission attractive.  But, upon further reflection, I do not think that I can deduce from the contracts and the process by which the same were finalised that the Defendants were encouraging each other to resign.

50.  That the Defendants all used the same firm of solicitors seems to have been merely a matter of common sense convenience. Given that they each knew that the other was intending to leave Cantor Fitzgerald for Mansion House, there would be economies of scale.  More prosaically stated, there would be an obvious saving on the cost of engaging solicitors if each used the same firm.  There would be no unnecessary duplication of work by different firms.

51.  In fact, as already noted, von Parpart initially instructed Clyde & Co.  His draft contract was in consequence originally sent by Linklaters to Clyde & Co.  But von Parpart then switched to Tanner de Witt for the drafting.

52.  That the Defendants’ Mansion House contracts are identical (save as to salary and residence provisions) is in all likelihood the result of the Defendants dealing with the same counterparty, Mansion House.  As a matter of practicality, an employer such as Mansion House (much like Cantor HK) would prefer a standard form contract with near identical terms and covenants applying to all employees and with the only differences being in relation to specific salary packages and residence or visa requirements.

53.  As for the process by which amendments to Boyer’s draft contract were copied into the drafts of the other Defendants, Boyer stated in cross-examination that Kim Boreham of Tanner de Witt had asked whether any wordings used in his case could be used for the contracts of the others.  This would seem to be natural and sensible.  It would obviously save on solicitors’ time and cost.  But, more crucially, if I am right that Mansion House would be aiming for a standard form contract, there would be pressure from Mansion House to adopt the same wording as much as possible in all of the Defendants’ contracts.

54.  Mr. Cooney sought support from the fact that the Defendants’ resignation letters were in near identical terms.  But that apparent coincidence has been clarified in the evidence.  In drafting the letters, Boyer and von Parpart used Clyde & Co, while Ainslie and McGonegal used Tanner de Witt.  Boyer sent a draft of his resignation letter to Boreham. She suggested some amendments.  She then drafted similar  letters for Ainslie and McGonegal closely following Boyer’s letter as amended by her.

55.  In so concluding, I am conscious of a dilemma faced by the Defendants.  Their instructions and dealings with Tanner de Witt are covered by legal professional privilege.  As Mr. Adrian Huggins SC (acting for Boyer) stressed in his closing written submissions, the Defendants could not be expected to call Boreham to explain the mechanics of her negotiations with Linklaters.  The Defendants, whether individually or as a group, cannot be compelled by the Court to waive their legal professional privilege.

56.  Accordingly, the Court should not draw adverse inferences from the mere fact that Boreham was not called to give evidence of her instructions from the Defendants and of the course of contractual negotiations with Mansion House and Linklaters.

57.  In short, I would answer sub-issues (a) and (b) in the negative.  The Defendants may have known that each was thinking of resigning, but one cannot infer from that alone that they acted in concert or procured each other to resign.

A.3    Sub-issues (c) and (d): failing to disclose intention to resign or approach by competitor

58.  Boyer’s employment contract with CFE provided in cl.9.7 that if Boyer was at any time invited or approached to take up employment, or enter into a business relationship, with a “competitor,” Boyer was to disclose that fact immediately in writing.

59.  Clause 8.1 of Ainslie’s employment contract with Cantor HK was in similar terms to Boyer’s cl.9.7.

60.  Clause 8.3 of Ainslie’s employment contract with Cantor HK required him to inform Cantor HK “as soon as reasonably practicable,” if at any time he became aware that another employee had been invited or approached to take up employment, or enter into a business relationship, with a “competitor”.

61.  Mr. Cooney submits that, in consequence of cl.9.7, Boyer ought to have informed CFE by mid-April 2011 (that is, when the Defendants were first contacted by Correlate Search) that Boyer had been approached to join Mansion House.  In not doing so, Boyer (Mr. Cooney suggests) breached his duty of fidelity to CFE and his fiduciary obligation to Cantor HK.

62.  Mr. Cooney makes a similar submission in relation to Ainslie and cl.8.1.  Further, Mr. Cooney contends that, in consequence of cl.8.3, Ainslie ought to have informed Cantor HK of the approaches to Boyer, McGonegal and von Parpart  by mid-April 2011 at the latest.

63.  In my view, neither Boyer nor Ainslie breached the clauses relied upon by Mr. Cooney.

64.  The expression “competitor” in the relevant clauses is a vague expression.  For this reason, I think that Mr. Ashley Burns SC (appearing for Ainslie, McGonegal and von Parpart) rightly submits that it must be construed contra proferentem.  This means that an ambiguity in the extent of the expression (who is a competitor?) must be decided against CFE or Cantor HK, which drafted the clauses.

65.  It is difficult to see, by any stretch of the imagination, how at its inception Mansion House could be regarded as a “competitor” of a leading and long-established global enterprise such as the Cantor Fitzgerald group.  At the time of the Defendants joining Mansion House, the latter was only emerging from the insolvency and near de-listing of its parent ATL.  Mansion House was starting from scratch.  It would be wrong to read the expression “competitor” in the relevant clauses as encompassing a business which was little more than a start-up.

66.  In relation to cl.8.3, Mr. Burn also points out (and I accept) the breach of such provision by Mr. Ainslie has not even been pleaded.

67.  It might be suggested that, regardless of the ambit of clauses just discussed, the Defendants’ duty of fidelity or fiduciary obligation required them to disclose the fact that they were leaving or that they had been approached.  Mr. Cooney goes so far as to suggest that they ought, in keeping with their respective duties, to have persuaded each other not to leave.

68.  But I do not think that would be right.

69.  The starting point must be that an employee is free to work (or not work) for a given employer.

70.  In light of that principle, it is unclear what purpose is to be achieved by imposing a general duty in law of informing an employer that one has been approached to leave or that one is thinking of resigning.  Upon receiving the information, the employer would not be entitled to force the employee to work for it.  The employer might want to have an opportunity to persuade an employee to remain.  But it would be odd to impose a general legal duty on an employee to inform an employer that one is about to resign or that one has been approached to leave, if only so that the employee can be persuaded to stay.

71.  It seems to me that a duty to inform an employer of one’s intended resignation or of one’s having been approached to resign can only arise from (and must be strictly delimited by) the express terms in an employment contract.  Even where there is an express term to such effect, given that an employee cannot be forced to work where one is unwilling, it will be difficult to establish damage consequent upon the breach of the term.

72.  An employee is free to make up one’s mind whether to stay or leave.  In that light, I doubt that there is a duty on other employees at law or in equity to try to persuade an employee not to leave where the former learn that the latter is thinking of resigning.

73.  Accordingly, I would answer sub-issues (c) and (d) in the negative.

A.4    Summary on Issue 1

74.  I find that Cantor Fitzgerald has failed to make out its alleged breaches of a duty of fidelity or of fiduciary obligation on the parts of the Defendants.

B.      Issue 2

Whether the Defendants have conspired together to injure Cantor HK by unlawful means?

75.  I have already found that the Defendants were not acting in concert.  There is not a shred of evidence suggesting that, whether individually or collectively, they had any intention to injure Cantor HK.

C.      Issue 3

Specific complaints in relation to Boyer

(a)    Did Boyer’s employment with CFE continue until 30 September 2011?

(b)    Is cl.15 of Boyer’s employment agreement enforceable and (if so) has Boyer breached the same?

(c)     Whether Boyer breached cl.9.7 of his employment agreement?

(d)    Was there an express or implied term that the Cash AD was not repayable or was a sham?

C.1    Sub-issue (a): Date of termination of Boyer’s employment

76.  The starting point is the principle that an employee will not be forced to work for a particular employer.

77.  Nonetheless, the law may enforce a restrictive covenant which prevents an employee from engaging in certain acts once that employee leaves an employer.  The law will enforce a restrictive covenant where the covenant is no wider than is reasonably necessary to protect the legitimate business interests of an employer.  What is reasonably necessary is a question of fact to be assessed in light of all circumstances, including the work which the employee undertook while working for the employer.

78.  The termination date of Boyer’s employment with CFE is relevant, because it may determine the extent to which he is bound by any reasonable restrictive covenant in his employment contract.

79.  Thus, for example, under cl.15.1.1 of Boyer’s employment contract with CFE, Boyer is restrained for 12 months after the termination of his employment from enticing away a defined class of employees from the Cantor Fitzgerald group.  To the extent that the restriction in cl.15.1.1 is reasonable, the question is whether Boyer is still bound by it as of the date of this Judgment.  He would be if (as CFE contends) his employment did not terminate until 30 September 2011.

80.  Read in isolation, the express terms of Boyer’s contract with CFE only entitled Boyer to terminate his employment by giving 4 month’s notice prior to 30 September 2011.  In that case, Boyer’s letter of resignation dated 30 May 2011 would at best constitute 4 months notice.  His employment would only expire on 30 September 2011.  That would be the result under English law (which Boyer’s contract expressly identified as its governing law).

81.  But when Boyer was seconded by CFE to work within Cantor HK, Boyer’s employment contract with CFE was varied by a letter of secondment.  As a result, Boyer’s employment would be governed by English law “save for any mandatory employment laws of Hong Kong”.  I shall refer to this modification below as “the variation”.

82.  There is a dispute between CFE and Boyer as to the consequences of the variation.

83.  Employment Ordinance (Cap.57) (EO) s.6 provides that either party to an employment contract may “at any time” terminate the same by giving to the other party notice of an intention to terminate.  The requisite length of notice is the “agreed period” in the employment contract. The “agreed period” for giving notice in Boyer’s case would be the 4 months stipulated in his employment contract with CFE.

84.  EO s.7 further provides that either party to an employment contract may “at any time” terminate the contract without notice by agreeing to pay the other party a certain sum.  That sum is to be calculated by reference to the length of notice required under EO s.6 (in Boyer’s case, 4 months) multiplied by the monthly average of the wages earned by the employee during the 12 months before the date of notification.  In Boyer’s case, the requisite sum would be US$400,000.

85.  When he resigned on 30 May 2011, Boyer indicated that he wished to make a payment in lieu of notice.  Subsequently, having asked CFE to calculate the appropriate sum, he tendered US$400,000 to CFE pursuant to EO ss.6 and 7.  In so doing, he contended that EO ss.6 and 7 were mandatory provisions of Hong Kong employment law which (by reason of the variation) overrode the original express terms of his contract with CFE.

86.  In support of Boyer’s argument on the effect of ss.6 and 7, Mr. Huggins has drawn attention to EO s.70.  That nullifies any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred on an employee by the EO.  Mr. Huggins submits that, in light of EO s.70, then ss.6 and 7 must be regarded as mandatory Hong Kong laws.  Any attempt to curtail the employee’s right to resign at any time upon making payment in lieu of notice as stipulated in EO ss. 6 and 7 will be struck down (Mr. Huggins stresses) by EO s.70.

87.  Mr. Cooney counters that the proper law of Boyer’s employment is English law (as expressly stated in Boyer’s contract).  Boyer was bona fide employed under that law since he originally worked in London and was only seconded to Hong Kong.  Given that choice of English law in good faith, there was no reason (Mr. Cooney suggested) to apply Hong Kong law (including the EO) to override the express terms relating to the termination of Boyer’s employment.

88.  In support, Mr. Cooney cites HSBC Bank plc v. Wallace [2008] 1 HKLRD 613.  There Deputy Judge Gill held that the EO did not override a foreign proper law of an employment contract.  Judge Gill believed that EO ss. 7 and 70 did not affect the bona fide express choice of English law as the governing law of the contract at issue before him.

89.  I am unable to agree with Judge Gill’s reasoning (which is not binding on me).  This is no doubt because, unlike me, Judge Gill did not hear full argument on the question.  He was only drawing a preliminary conclusion in the course of an application for an interlocutory injunction.

90.  I think here that Mr. Huggins is right.  Given EO s.70, then EO ss.6 and 7 must be treated as over-riding provisions.  EO ss. 6 and 7 form part of the “"mandatory employment laws of Hong Kong” binding on CFE.  One cannot attempt to get around the protection afforded by the EO to employees working here through the expedient of choosing a foreign law.  Such attempt will be struck down by EO s.70. 

91.  Support for my conclusion is to be found (as Mr. Huggins notes) from EO s.4. EO s.4(1) provides for the application of the EO to every employee engaged here under a contract of employment, to an employer of such employee, and to a contract of employment between such employer and employee. EO s.4(2) then carves out an exception to the wide ambit of s.4(1). Under that exception, the EO is not to apply to “a person who is serving … on board a ship which is not registered in Hong Kong”.  Crew on board a ship which is not registered in Hong Kong are unlikely to be employed under contracts governed by Hong Kong law. The deliberate carving out of their contracts as an exception to s.4(1) suggests that EO was intended to apply to all employments in Hong Kong, including employments governed by some law other than Hong Kong law.

92.  It follows that Boyer’s employment terminated on 30 May 2011.

93.  CFE refused to accept Boyer’s tender of US$400,000.  But Boyer is prepared to re-tender that amount as directed by this Court.

C.2    Sub-issue (b): Enforceability of restrictive covenants in cl.15

94.  Clause 15.1.1 of Boyer’s contract restricts him from poaching certain Cantor Fitzgerald group employees for a period of 12 months after termination.  That covenant (if reasonable) would expire at the close of 29 May 2012.

95.  I am prepared to assume that it is reasonable for the protection of the Plaintiffs’ legitimate interests that Boyer be restrained from poaching certain employees.  But I am unable to hold that the period of 12 months stipulated by the covenant is reasonable.

96.  There is simply no cogent evidence justifying a period of 12 months.

97.  Mr. Cooney says that a period of 12 months is reasonable because “it takes time to locate a suitable replacement broker and a broker takes time to nurture”.  But no hard evidence (for example, statistics analysing the length of time actually taken by Cantor Fitzgerald to hire brokers over the years) has been adduced to back up that assertion.  Even supposing the assertion to be true, it is unclear how the premise logically justifies the imposition of a 12 month restriction on enticing brokers.

98.  Mr. Huggins observes that, in Associated Foreign Exchange Ltd. v. IFE (UK) Ltd. [2010] EWHC (Ch) 1178, the Court held that a 12 month non-solicitation covenant in the context of foreign exchange trading was prima facie too long.  In Tullett Prebon v. BGC [2010] IRLR 648, on the other hand, a 6 month non-solicitation clause in the context of inter-dealing broking was upheld as no more than reasonably necessary.  Case law itself thus supports the view that, typically, the Courts treat a 12‑month duration for a non-solicitation covenant as prima facie too long.

99.  Mr. Huggins has fairly drawn my attention to Cantor Fitzgerald International v. Bird [2002] IRLR 867 where counsel did not take the point that a provision similar to cl.15.1.1 here was unreasonable in duration.  But I am unable to deduce anything from the fact that the 12 month duration in that case was not challenged by counsel.

100.  Consequently, in my view, the covenant in cl.15.1.1 is unenforceable.  I note that I am not entitled to re-write cl.15.1.1 by substituting a shorter duration of (say) 6 months for the 12 months stipulated in the clause.

101.  Clause 15.1.2 of Boyer’s contract enjoins him from commencing employment with certain classes of persons (including Ainslie, McGonegal and von Parpart) in “a business … in competition” with the Cantor Fitzgerald group for 12 months after termination.

102.  For reasons already canvassed, there are difficulties with cl.15.1.2.

103.  For instance, the clause is too wide, as there is again no evidence to justify a restriction of 12 months.

104.  In any event, as discussed in connection with cl.9.7, there is ambiguity as to precisely what constitutes “a business … in competition”.  As a start-up at the relevant time, it is hard to see how Mansion House could in fact be regarded as being in serious competition with the well‑established Cantor Fitzgerald group at the time when Boyer joined.

105.  Further, insofar as CFE seeks damages in relation to the breach of cl.15.1.2, such claim has not been specifically pleaded.  CFE has confirmed in the course of trial that it is not seeking damages against Boyer.  Only Cantor HK is seeking damages against Boyer.  But Cantor HK has no contractual relationship with Boyer and so would not be entitled to damages, even if cl.15.1.2. had been enforceable and there had been a breach of the same.

106.  Clause 15.2.1 of Boyer’s contract restrains him, for a period of 20 weeks after termination, from enticing away or transacting business with certain classes of clients of the Cantor Fitzgerald group.  Given a termination date of 30 May 2011, the 20 weeks would have elapsed in October 2011, long before trial.  The validity of the covenant is now academic.  In any event, there is no evidence that Boyer breached the same in the 20 weeks following 30 May 2011.

107.  Clause 15.2.2 of Boyer’s contract restrains him, for a period of 20 weeks after termination, from rendering services to a business activity that is in competition with any business of the Cantor Fitzgerald group with which Boyer was involved during a relevant period. 

108.  The 20 week having expired, the covenant has been rendered academic.  There is, in any event, no evidence that Boyer breached the covenant by engaging in the 20 week period in a business activity in “competition” (whatever that might mean) with any Cantor Fitzgerald business with which Boyer was involved.

109.  By cl.15.4 of Boyer’s contract, the duration of cl.15.2.2 “may be extended by up to 6 months from … termination of … employment” But that extension is possible “if and only if [CFE] pays [Boyer] during such extended period remuneration at the rate of 50% of [Boyer’s] fixed draw applicable at the date [his] employment is terminated”.

110.  On 22 September 2011 CFE unilaterally claimed to exercise the option in cl.15.4.  It notified Boyer’s solicitors (then Clyde & Co) that it was extending the restriction in cl.15.2.2 by 6 months from 1 October 2011 to 31 March 2012.

111.  Assume (without accepting) that the option in cl.15.4 is valid at law.  In my view, as a matter of construction, the option could only be exercised by CFE by giving notice to that effect before or at the time when Boyer terminated his employment, namely, on 30 May 2011.

112.  Further, the option must be properly exercised by stipulating the correct termination date and the extent to which cl.15.2.2 is being extended from that date.  The notice here did not do that.  It specified an extension from an alleged termination date of 30 September 2011, rather than 30 May 2011.

113.  It follows that, even if cl.15.2.2 is assumed to be enforceable, it was not validly extended.

C.3    Sub-issue (c): Enforceability of cl.9.7

114.  I have already dealt with this in Issue 1.

C.4    Cash Advance Distribution Agreement (Cash AD)

115.  CFE says that it advanced an interest bearing loan to Boyer in the principal amount of US$415,000.  By cl.2 of the Cash AD, the outstanding balance of the loan became immediately due and re-payable by Boyer when he left CFLP on 30 May 2011.

116.  CFE says that the outstanding balance due under the Cash AD on 30 May 2011 was US$425,793.23.  CFE claims to be entitled to deduct against that outstanding balance the following sums: US$30,128.21 per month from June to August 2011 and $35,769.23 for September 2011 (collectively, Deduction A) and US$50,000 per month from October onwards (Deduction B).

117.  Deduction A represents Boyer’s fixed draw salary from 1 June to 30 September 2011 (that is, the period during which (according to CFE) Boyer remained a CFE employee despite his 30 May 2011 letter).

118.  Deduction B represents 50% of the amount stipulated in cl.15.4 as payable to Boyer by reason of the extension of cl.15.2.2.  The remaining 50% appears to have been paid by CFE directly to Boyer’s bank account, despite Boyer’s protests.

119.  Boyer claims that the Cash AD is not enforceable against him because it was never agreed.  The Cash AD was signed by Boyer, but not by CFE.  According to Boyer, the acceptance of the Cash AD by CFE was never communicated to him by CFE.  Consequently, the Cash AD never became an effective contract.

120.  Boyer also contends that, in any event, no consideration moved from CFE to him in relation to the Cash AD.

121.  Boyer says that, by his employment contract, he was entitled to a discretionary cash bonus at the end of 2009.  According to Boyer, at a meeting in early April 2010 (Boyer is vague as to precisely when), Lutnick orally confirmed that Boyer would be receiving a bonus of US$500,000 in cash and US$300,000 in grant units.

122.  Boyer continues:  He did not sign the Cash AD until 29 April 2010.  The Cash AD then converted the existing cash entitlement of US$500,000 into a loan to Boyer for a similar amount.  But there was no quid pro quo moving from CFE in return for Boyer agreeing to his already crystallised cash entitlement being transmuted into a loan.

123.  Finally, according to Boyer, he only signed the Cash AD on the strength of a representation by CFE that he need not repay the amount being loaned under the Cash AD.

124.  In my view, Boyer’s arguments are untenable on the evidence.

125.  The Cash AD is part of a bonus incentive scheme.  Under the scheme, a discretionary bonus may be paid by way of a loan. Provided certain conditions are met, the loan will not be repayable.  On the other hand, where one terminates one’s employment with the Cantor Fitzgerald group, the loan or part of it may become repayable pursuant to the terms of the Cash AD.

126.  The evidence is that by 1 April 2010 at the latest Lutnick had decided to pay a discretionary bonus of US$500,000 to Boyer under a Cash AD and US$300,000 in grant units.  This is apparent from Lutnick’s initials and annotation on a document with a fax imprint of “04/01/2010”.  I read that date as being in American (rather than English) style with the month first, the day next and the year last.  In light of this document, it is difficult to accept Boyer’s evidence that in early April 2010 Lutnick promised that Boyer would unconditionally be paid a cash bonus of US$500,000 for the end of 2009.

127.  The terms of the Cash AD were explained to Boyer by James Ficarro (Cantor Fitzgerald’s Principal Financial Officer).  Boyer was fully aware of the terms of the Cash AD before he signed the same.  He actually sought clarification of the terms from Ficarro (among others) before signing. He consulted lawyers about the document.  He was especially concerned about the implications of the Cash AD on any divorce settlement with his former wife.  He was also in a hurry to get the money payable under the Cash AD as soon as possible.

128.  Whatever Boyer’s discussion with Lutnick may have been in early April 2010, by 29 April 2010 he was fully aware that he would not be receiving his bonus unless and until he signed the Cash AD.  The evidence thus suggests that he entered into the Cash AD, eyes wide open as to its terms and conditions, in order to receive cash as soon as possible.

129.  This is not a case of a lack of consideration. In return for Boyer having signed the Cash AD, the loan monies were promptly paid to him.  That there was offer and acceptance is apparent from the fact that, before he signed, the terms of the Cash AD were explained to him and it was made clear that payment of any amount depended on his execution of the Cash AD.  CFE offered a bonus subject to the terms of the Cash AD and Boyer accepted the same by signing the Cash AD.

130.  In light of Ficarro’s evidence, I am unable to able to accept Boyer’s suggestion that it was represented to him that the Cash AD loan would never have to be repaid in any circumstance.  Boyer’s suggestion is unlikely to have been the case.

131.  Consequently, Boyer is bound by the Cash AD and must repay the outstanding balance of US$425,793.23.  The latter amount was reduced by Deductions A and B.  But, as I have held that Boyer’s employment terminated on 30 May 2011 (not 30 September 2011) and no valid notice was given in relation to the exercise of the option in cl.15.4, Deductions A and B must be reversed.

132.  For completeness, it appears that certain cash amounts were paid to Boyer directly by CFE on the bases that Boyer was employed by CFE until September 2011 and that the restriction in cl.15.2.2 was extended by the exercise of the cl.15.4 option.  I shall refer to the total amount so paid as Sum X.  It is unclear precisely what Sum X is.  Nevertheless, it follows from my conclusions that Boyer must account back to CFE for Sum X.

D.      Issue 4

Specific complaints in relation to Ainslie

(a)   What is the length of notice (and payment in lieu thereof) that Ainslie must give (3 months or 10 months) on termination of his employment contract with Cantor HK?

(b)   Is Ainslie liable for liquidated damages under cl.12 of his employment contract?

(c)   Is Ainslie liable to pay Cantor HK damages for wrongful termination of his contract?

(d)   Is cl.15 of Ainslie’s contract enforceable and (if so) has Ainslie breached the same?

(e)   Did Ainslie breach cl.8.1 of his contract?

(f)   Did Ainslie breach cl.8.3 of his contract?

D.1    Sub-issue (a): Date of termination of Ainslie’s contract

133.  Ainslie’s contract is governed by Hong Kong law.  Therefore, EO ss.6 and 7 apply to Ainslie’s contract.  They over-ride anything to the contrary in Ainslie’s contract.

134.  Ainslie’s contract began on 18 January 2002.  It expressly provided for a narrow window for giving notice of termination.  After an initial period of 2 years, the contract is automatically renewable for successive periods of 1 year.  Notice to terminate must be given “on any date within the last two (2) weeks of the final month of … a Renewal Period”.  Such notice will then terminate the employment “on the expiry of three (3) months (which period of notice the parties agree is reasonable) from the latest date notice could have been given”.

135.  In my view,applying EO ss.6 and 7, the appropriate period of notice must be 3 months (the reasonable period of notice acknowledged in Ainslie's contract).  Under those statutory provisions, Ainslie was at any time entitled either to give 3 months’ notice to terminate or 3 months’ payment in lieu of notice.  Ainslie chose the latter option of payment in lieu.

136.  Thus, Ainslie’s employment terminated immediately on 30 May 2011.

137.  Given Ainslie’s monthly average wage of $390,000, the requisite termination payment was $1,170,000 ($390,000 x 3 months).  Ainslie tendered that amount on 30 June 2011.  But Cantor HK rejected the same.

D.2    Sub-issue (b): Enforceability of claim for liquidated damages in cl.12

138.  Clause 12 imposes liquidated damages where Ainslie leaves Cantor HK without the latter’s consent “prior to the expiry of the term of [his] employment contract”.  Cantor HK claims liquidated damages of US$1,430,340.

139.  I do not think that a claim can arise under cl.12 as Ainslie did not leave his employment in breach of his employment contract.

140.  Ainslie legitimately terminated his employment with Cantor HK in accordance with the EO.  By EO s.70, the terms of Ainslie’s contract (including cl.12) must be read as subject to EO ss.6 and 7. Otherwise, cl.12 would operate as an impermissible fetter or restraint on an employee’s freedom to exercise the rights given by EO ss.6 and 7.

141.  In broad terms, Ainslie’s remuneration was that he would be paid 40% of the revenues attributable to him by Cantor HK and the latter would keep the remaining 60%.  The liquidated damages sought represent  30% of recent average gross revenues attributable to Ainslie multiplied by the months of notice to run under his contract.

142.  Even if cl.12 were enforceable in principle, it must still be shown that the liquidated damages stipulated constitute a genuine pre‑estimate of the damage to be suffered by Cantor HK as a result of Ainslie’s premature departure.  I am far from satisfied on the evidence that the formula for liquidated damages is a genuine pre-estimate of Cantor HK’s likely damages.  For instance, it might be asked why is the percentage sought 30% instead of some other percentage?

D.3    Sub-issue (c): Damages for wrongful termination by Ainslie

143.  It follows from the discussion on sub-issue (c) that Ainslie was entitled to terminate his contract as he did.  No further damages (that is, apart from the payment in lieu of notice) are payable.

D.4    Sub-issue (d): Enforceability of cl.15 covenants

144.  It is sought to enforce restrictive covenants in cls.15.1, 15.2.1, 15.2.2 and 15.2.3 of Ainslie’s contract.

145.  Clause 15.1 restricts Ainslie from enticing away certain classes of Cantor Fitzgerald group employees for 12 months after termination.  As noted in relation to Boyer’s covenants, there is no evidence justifying the duration of 12 months.  The 12 months’ duration is prima facie too long.

146.  Clauses 15.2.1 and 15.2.2 restrict Ainslie from enticing away certain classes of clients of the Cantor Fitzgerald group for 12 months after termination.  The duration of 12 months is again too long in light of a lack of evidence justifying the same.

147.  Clause 15.2.3 restricts Ainslie for 6 months from engaging the services of, rendering services to, or becoming interested in (as owner, stockholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) any business activity that is in competition with any Cantor Fitzgerald group business with which Ainslie was materially concerned during the 12 months prior to his termination.

148.  The 6 months stipulated in cl.15.2.3 have expired.  The provision is now academic.

149.  In any event, the clause seems unreasonably wide.  Why should Ainslie, for instance, be restricted from engaging the services of a business activity in “competition” (whatever that may mean) with certain businesses of the Cantor Fitzgerald group?  Why should he be prevented from becoming “interested in as … stockholder” of a company such as (say) HSBC which may be in “competition” with relevant business of the Cantor Fitzgerald group?  Given the extraordinary width of the clause, how is 6 months justifiable as no more than necessary to protect Cantor Fitzgerald’s interests?

150.  Mr. Cooney has drawn my attention to cl.15.4 where Ainslie expressly acknowledged that the restrictive covenants in his contract were reasonable.  Such contractual acknowledgments are a factor to be taken into account by the Court in assessing the reasonableness of a covenant But they are far from conclusive on the question of reasonableness.  The Court must still be satisfied (as I am not) on the totality of the evidence that the covenants are no more than what is reasonably required to protect the legitimate interests of an employer.

151.  Therefore, none of the clauses invoked by Cantor HK are enforceable.

D.6    Sub-issue (e): Enforceability of cl.8.1

152.  I have dealt with this in Issue 1.

D.7    Sub-issue (f): Enforceability of cl.8.3

153.  I have dealt with this in Issue 1.

E.      Issue 5

Specific complaints in relation to McGonegal

(a)    What is the length of notice and payment in lieu of notice that McGonegal must give (3 months or 8.63 months) on termination of his employment contract with Cantor HK?

(b)    Is McGonegal liable to pay Cantor HK damages for wrongful termination of his contract?

(c)     Is cl.13 of McGonegal’s contract enforceable?

(d)    Did McGonegal agree to the payment by Cantor HK of 10% of his commission by way of grant units?

E.1    Sub-issue (a): Date of termination of McGonegal's contract

154.  McGonegal’s contract commenced on 20 November 2006.  It was for an initial period of 1 year and then renewable automatically for 1 year at a time.  McGonegal could terminate the contract upon giving notice within the last 2 weeks of the final month of a Renewal Period.  The notice would then terminate the employment on the expiry of 3 months (acknowledged in the contract to be a reasonable period of notice) from the latest date on which notice could have been given.

155.  The EO applies to McGonegal’s contract which is subject to Hong Kong law.

156.  By the same reasoning applied to Ainslie’s contract, McGonegal must have been entitled to give 3 months’ notice to terminate his employment with Cantor HK.  Alternatively, McGonegal was entitled to tender 3 months’ payment in lieu of notice.

E.2:   Sub-issue (b): Damages for wrongful termination by McGonegal

157.  McGonegal opted to make payment in lieu of 3 months’ notice, albeit his payment was not accepted by Cantor HK.

158.  McGonegal tendered $2,614,373.40 as payment in lieu of 3 months’ on 30 June 2011.  But this now seems to have been wrongly calculated and the correct amount (following the analysis of Mr. Burns) should have been $2,447,921.70.

159.  For similar reasons as in Ainslie’s case, there was no wrongful termination by McGonegal.  No further damages (apart from the payment in lieu of notice) can be claimed.

E.3    Sub-issue (c): Enforceability of cl.13

160.  Cantor HK seeks to enforce restrictive covenants in cls. 13.1, 13.2.1, 13.2.2 and 13.2.3.  The clauses are analogous to those in Ainslie’s contract.  By cl.13.4, McGonegal similarly acknowledged that the restrictive covenants were reasonable.

161.  For the reasons already given in relation to Ainslie, the equivalent covenants in McGonegal’s contract are unenforceable.

162.  For completeness, I note that similar covenants exist in relation to von Parpart.  But, in von Parpart’s case, the equivalents to cls.15.2.1, 15.2.2 and 15.2.3 in Ainslie’s contract and cls.13.2.1, 13.2.2 and 13.2.3 in McGonegal’s contract enjoin von Parpart for 3 months.

163.  Nonetheless, the 3 month restriction must still be regarded as too wide in the absence of evidence showing how the duration is reasonably necessary for the protection of Cantor HK’s interest.  I observe that reasonableness is inevitably hard to establish in light of von Parpart’s limited functions (essentially confined to research and public relations) within Cantor HK.

E.4    Sub-issue (d): Grant units

164.  McGonegal was remunerated by commission from Cantor HK.  Some 10% of the commission payable to McGonegal from time to time was paid to him by way of grant units.  McGonegal says that he never agreed to the payment of some of his commission by way of grant units.

165.  But there is evidence that on 2 occasions (namely 2 October 2008 and 26 August 2009) McGonegal signed Incentive Unit Bonus Plan Award Agreements whereby he agreed to receive some of his commission payable at those times by way of grant units.  Those Award Agreements relate to commission payable for the year 2008.

166.  McGonegal must be bound his signature on the 2 Award Agreements.  He agreed to the receipt of some of his 2008 commission in the form of grant units by those Award Agreements.

167.  But Cantor HK continued to pay some commission by way of grant units subsequently to the 2 Award Agreements.  This was done even though there is no evidence that McGonegal agreed to receive any subsequent commission in the form of grant units.  The 2 Award Agreements apart, Mr. Cooney was unable to show me any document whereby McGonegal expressly agreed to receive commission by way of grant units.

168.  Consequently, apart from the grant units corresponding to the 2 Award Agreements, Cantor HK was not entitled to pay some commission to McGonegal in the form of grant units.

169.  In Mr. Burns’ written closing submissions, McGonegal and Ainslie assert a right to set-off the unpaid balance of a 1% management fee (described as an “override”).  But this allegation has not been specifically pleaded.  The set-off is therefore not allowed.

F.      Miscellaneous

170.  The Plaintiffs sought to establish the lost profit or damage suffered by them as a result of the alleged breaches of the Defendants by reference to a table prepared by Thomas Chan (Cantor HK’s Chief Financial Officer).  The table purported to show that Cantor HK’s monthly average revenue in the 5 months following the Defendants’ resignations fell by 29% as compared to monthly average revenue in the first 5 months of 2011.

171.  As a result of my conclusions, it is unnecessary to deal with the table at any length.  It is sufficient if I note that, as evidence of the Plaintiffs’ loss of profit consequent upon the Defendants’ departure, I did not find the table to be reliable or compelling.

172.  The table incorporated “adjustments”.  The adjustments so incorporated seemed arbitrary.  For example, in October 2011 Cantor HK earned the second highest amount of monthly revenue in the period selected for comparison.  But the revenue obtained in that month appears to have been deflated on account of an arbitrary “transfer pricing”.

173.  Nor was it clear why the table only considered the 5 months before and after the Defendants’ departure.  It is perfectly possible that the revenues in the months following the Defendants’ departure were not as high as in previous months merely because of market vicissitudes.  The table did not seem to factor out the effects of a bear market.

174.  Comparison with similar tables for other years also suggests that little can be deduced from the Thomas Chan’s 2011 table. Cantor HK’s share of the Hong Kong market appears to have been steadily declining over the years since 2005, even when the Defendants were working for Cantor Fitzgerald.

175.  I am therefore unable to conclude that the Plaintiffs suffered anywhere near the alleged 29% loss of revenue due to the Defendants’ departures.  Had I found that the Defendants were in breach of any obligation to Cantor Fitzgerald, I would have been hard-pressed to quantify damages at other than a nominal figure.

III.    CONCLUSION

176.  There will be an Order that Boyer pay CFE the following sums:-

(a)   US$400,000 representing payment in lieu of notice;

(b)   US$425,793.23 representing the outstanding balance due under the Cash AD as at 30 May 2011;

(c)   Sum X;

(d)   Interest on the amounts in sub-paras. (a) and (c) from the date of this Judgment until payment at the judgment rate;

(e)   Interest on the amount in sub-para. (b) at 1% over US$ prime from 30 May 2011 to the date of this Judgment and thereafter at the judgment rate until payment; and,

(f)   Such interest (if any) which has actually accrued to Boyer, as a result of the transfer of Sum X to him by CFE, up to the date of this Judgment.

177.  Boyer having previously tendered the amount of US$400,000 and the same having been refused by CFE, I do not think that it would be appropriate to award judgment on that sum from 30 May 2011 to the date of this Judgment.

178.  There will be liberty to apply in the event Sum X and the interest accrued thereon cannot be worked out or agreed among the parties.

179.  The Plaintiffs’ other claims against Boyer are dismissed.

180.  There will be an Order that Ainslie pay the amount of $1,170,000 to Cantor HK as payment in lieu of notice.  Interest will run on that amount from the date of this Judgment until payment.  Ainslie having previously tendered that amount and the tender having been refused by Cantor HK, I do not think that it would be appropriate to award interest on the sum from 30 May 2011 to the date of this Judgment.

181.  The Plaintiffs’ other claims against Ainslie are dismissed.

182.  There will be an Order that McGonegal pay the amount of $2,447,921.70 to Cantor HK as payment in lieu of notice.  Interest will run on that amount from the date of this Judgment until payment. McGonegal having previously tendered that amount and the tender having been refused, I do not think that it would be appropriate to award interest on the sum from 30 May 2011 to the date of this Judgment.

183.  The Plaintiffs’ other claims against McGonegal are dismissed.

184.  Only the 2008 commission corresponding to the 2 Award Agreements signed by McGonegal were properly paid to him by way of grant units.  There will be an Order that Cantor HK pay McGonegal the amounts wrongly deducted from his commission and paid as grant units.  Interest is to run on the wrongly deducted sums in accordance with EO s.25A and District Court Ordinance (Cap.336) s.50 from the date when the relevant commission was wrongly deducted until the date of this Judgment.  I will refer to the totality of such interest as the interest component.

185.  From the date of this Judgment, interest will run on the total outstanding principal component of the wrongly deducted commission at the judgment rate until payment.  Interest payable under EO s.25A being already high, I do not think that it would be appropriate to impose further interest on the interest component of the commission wrongly deducted.

186.  There will be liberty to apply in the event that the parties are unable to work out or agree on the precise amount payable as wrongly deducted commission.

187.  The Plaintiffs’ claims against von Parpart are dismissed.

188.  There will be an Order Nisi in relation to costs as follows:-

(a)   Boyer having essentially prevailed (save on the effect of the Cash AD), the Plaintiffs are to pay 70% of Boyer’s costs.

(b)   The Plaintiffs are to pay Ainslie’s costs.

(c)   McGonegal having essentially prevailed (save on the effect of the signing of the 2 Award Agreements), the Plaintiffs are to pay 90% of McGonegal’s costs (including the costs of his Counterclaim).

(d)   The Plaintiffs are to pay von Parpart’s costs.

(e)   All costs are to be taxed if not agreed, with certificate for 2 counsel.

189.  There will be a general liberty to apply.

190.  Finally, McGonegal transferred some confidential information belonging to Cantor Fitzgerald to his Blackberry for easier reading.  He was unable to delete those files as a result of an injunction granted by this Court.  With the publication of this Judgment, as agreed among the parties, he is released from the injunction restraining deletion of the relevant files in his Blackberry.