Mr Imam-Sadeque ('Mr I-S') was a senior investment manager at BlueBay. He decided to leave and join a start-up asset management company ('Goodridge'), so resigned and began working his six months' notice. The resignation was significant; as Mr I-S had chosen to leave he would normally be classed as a 'Bad Leaver' and would not be entitled to the value of his shares - a healthy £1.7m.
He was put on garden leave and a compromise agreement was negotiated. It provided that, as long as Mr I-S complied with the terms of the compromise agreement and his employment contract, he would be classed as a 'Good Leaver' and could benefit from £1.7m.
BlueBay then discovered that Mr I-S (while still a BlueBay employee) had been helping to set up Goodridge as a competitor, had disclosed information, and had poached a BlueBay employee. BlueBay withheld the £1.7m, relying on a repudiatory breach of contract. Mr I-S brought a High Court claim for breach of contract by BlueBay in refusing to pay out.
The Court found for BlueBay. Mr I-S had broken his side of the deal and had breached his duty of fidelity. He had therefore forfeited his chance of achieving 'Good Leaver' status. The Court rejected the argument that the condition in the compromise agreement relating to the forfeiture of rights was a penalty clause. Rather, it offered Mr I-S access to rights to which he would not otherwise be entitled. The Court also noted that the agreement had been struck between parties with similar bargaining positions who had had the benefit of legal advice.
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