Teleport UK Ltd v Milman

Permission to appeal requires a real prospect of success. The court must also consider proportionality, including the amount at stake, the age and complexity of the dispute, likely further costs and the appropriate use of court resources.

A contractual power to dismiss without notice for serious default, misconduct or serious breach requires conduct sufficiently serious to amount to a repudiatory or similarly severe breach. A proposed management buy-out is not misconduct merely because it involves incorporating a company. Careless use of the employer’s solicitors, without intent to burden the employer with the cost, may be a breach but is not necessarily serious. The appellate court will not interfere with findings of fact plainly open to the trial judge.

Mr John Milman, chief executive of Teleport UK Ltd, was given three months’ notice and placed on garden leave. The company later dismissed him summarily and withheld his salary and benefits for the notice period, alleging serious misconduct and breach of his employment agreement.

HHJ Rich found that the company formed by Mr Milman and colleagues was intended as a possible management buy-out vehicle, not a competing business. He also found that the use of the company’s solicitors and the resulting invoice reflected carelessness and did not justify summary dismissal. Judgment was entered for Mr Milman in the Central London County Court. Teleport UK Ltd applied for permission to appeal.

1. Application dismissed. The Court of Appeal refused permission to appeal and ordered Teleport UK Ltd to pay the costs.
2. The proposed appeal had no substantial prospect of success. The trial judge’s finding that the new company was intended for a possible management buy-out, rather than competition, was plainly open to him and could not properly be challenged on an appeal limited to review.
3. Clause 6(c)(v) permitted termination without notice for serious default or misconduct affecting the company’s business, or serious breach of the employee’s obligations. Lord Justice Mance considered that the clause required either breach of a condition or a repudiatory or severe breach. The alternative formulation of gross misconduct did not materially differ on the facts.
4. The matters relied on did not meet that threshold. The incorporation of a company to make a possible offer for the business was not itself a serious breach. The use of the company’s solicitors was, at most, a minor and understandable error of judgment. The evidence showed no intention that Teleport UK Ltd should bear the cost, and Mr Milman would have paid the bill personally. The matters, considered cumulatively, did not justify summary dismissal.
5. The court also declined to remit the case. The damages were modest, the events were several years old, substantial costs had already been incurred, and the outcome depended substantially on the trial judge’s assessment of the witnesses. Further litigation would be disproportionate under Civil Procedure Rules 1.1.

• Court of Appeal (Civil Division): Refused permission to appeal from the decision of HHJ Rich in the Central London County Court, delivered on 14 May 2001 with the formal order dated 16 May 2001. Application dismissed with costs.