Cantor Fitzgerald International v Callaghan

An employer’s undertaking that withholding £40,000 to meet employees’ tax liabilities would create no additional tax liability was held to have been breached repudiatorily. The appeal was allowed and the High Court order set aside. Assessment of the resulting damages and interest was remitted to the High Court. A proposed appeal concerning repayment of £60,000 loan balances could not proceed because the issue had not been decided at first instance. The defendants received all costs of the appeal and 50 per cent of their costs below. Leave to appeal was refused.

The defendants appealed from an order of Mr Justice Popplewell in the Queen’s Bench Division concerning their employment contracts with Cantor Fitzgerald International. The dispute included the withholding of £40,000 for tax liabilities, repayment of £60,000 loan balances, restrictive covenants and related claims.

The Court of Appeal considered whether the withholding arrangement amounted to a repudiatory breach and whether the proposed challenge concerning the loan balances could be dealt with on appeal. The appeal followed the High Court proceedings and resulted in a remittal for assessment of damages.

1. Appeal allowed. The Court of Appeal allowed the appeal on the ground that the plaintiff/respondent was in repudiatory breach of contract by undertaking that there was no additional tax liability on the defendants when £40,000 was withheld to pay their respective tax liabilities. The order of Mr Justice Popplewell was set aside.
2. Damages. The case was remitted to a High Court judge for assessment of the quantum of damages and interest arising from the repudiatory breach.
3. Proposed £60,000 claim. The court declined to grant leave to appeal against the order concerning repayment of the £60,000 loan balances. The issue had not been decided at first instance, and the Court of Appeal could not entertain an appeal against a decision which had not yet been made. Any claim was to be pursued in first-instance proceedings, which could be tried with the damages assessment.
4. Undertakings. The defendants’ undertakings given in the related proceedings were discharged forthwith.
5. Costs and leave. The defendants were awarded all their costs of the appeal but only 50 per cent of their costs below. Leave to appeal was refused.

1. Court of Appeal: In [1999] EWCA Civ 622, the appeal from the Queen’s Bench Division was allowed. The High Court order was set aside and the damages issue remitted.
2. High Court, Queen’s Bench Division: An order was made by Mr Justice Popplewell. The citation of that decision is not stated in the judgment.