Comberg v Vivopower International Services Ltd & Anor

An intentional failure by an employer to pay agreed remuneration, without contractual justification or prompt correction, will ordinarily amount to a repudiatory breach. Silence in response to a clear demand for payment may amount to renunciation where the surrounding conduct makes the intention not to perform unequivocal.

Summary dismissal for incompetence or mismanagement requires proof of conduct sufficiently serious or persistent to undermine the employment relationship. Poor company performance, investor dissatisfaction or a failure to meet a particular founder’s exceptionally high standards is insufficient without proof of contractual breach.

A contractual bonus payable after dismissal is assessed by determining, on the balance of probabilities, what a rational employer acting in good faith would have awarded. An entire agreement clause may exclude a collateral remuneration agreement forming part of the same employment package.

Dr Philip Comberg was employed as chief executive officer of VivoPower International PLC under a service agreement providing for salary, benefits, bonus arrangements, carried interest and a 12-month notice period. After stepping down as CEO, he remained employed on leave. VivoPower intentionally withheld his October 2017 salary during negotiations concerning his departure.

Dr Comberg treated the non-payment as a repudiatory breach and terminated the agreement. VivoPower subsequently purported to terminate for alleged misconduct, mismanagement and incompetence. He claimed wrongful dismissal damages, deferred remuneration, additional alleged contractual fees, share incentives, medical benefits and accrued holiday pay.

The central issues were whether VivoPower’s non-payment was repudiatory, whether it could have summarily dismissed Dr Comberg for the alleged breaches, and which remuneration and benefit claims were contractually established.

1. Wrongful dismissal. VivoPower’s obligation to pay salary “on or about” the end of each month allowed only a minor payroll delay. By close of business on 3 November 2017, three business days after the normal payment date, non-payment was a breach. Clause 8.3 did not permit set-off of unliquidated damages claims, and the settled Part 36 counterclaim did not establish any liability or entitlement to deduct.
2. The non-payment was deliberate. VivoPower had cancelled the payment instruction, knew of Dr Comberg’s complaints, did not respond or pay, and had no agreement permitting deferral. The breach was therefore repudiatory. Alternatively, if the payment date had not yet expired, the continuing non-payment and silence, viewed with the surrounding conduct, unequivocally communicated an intention not to pay and amounted to anticipatory breach or renunciation. Dr Comberg validly terminated on 3 November 2017.
3. Summary termination for misconduct or mismanagement. Gross negligence can amount to repudiatory misconduct where it is sufficiently grave and weighty to undermine the relationship. Repeated negligence may also satisfy contractual provisions permitting termination for serious or persistent breach or repeated neglect of duties. The contractual power nevertheless required a reasonable decision of the Board, and the relevant conduct had to be sufficiently serious.
4. VivoPower failed to prove the alleged misrepresentation, financial-management failures, investment-committee failures, investor-relations failures, employment-management failures or other misconduct. A CEO’s duty is one of oversight and reasonable performance, not micro-management of specialist functions. Poor performance by the company, unsuccessful recruitment or investor dissatisfaction did not establish breach. The allegations did not justify summary termination.
5. The affirmation issue was academic. Receipt of salary during a reasonable period for investigation and consideration of numerous allegations did not amount to clear affirmation. VivoPower nevertheless had no substantive right to terminate.
6. The Part 36 offer compromised only the counterclaim. Its contractual wording did not compromise VivoPower’s ability to rely on the same allegations defensively.
7. Fee claims. The deferred remuneration agreement was binding, was adopted by VivoPower after incorporation, concerned services from 1 January to 31 August 2016, and was not discharged by the later bonus. The agreement was with VivoPower, not Arowana, and was outside the service agreement’s entire agreement clause. The deferred remuneration claim succeeded in the sum of £360,000, subject to consequential calculation.
8. The alleged $1 million contract-term fee and listing fee were not proved as concluded agreements. The proposed listing remuneration remained dependent on agreement of the associated shareholding arrangements and formal documentation. In any event, the contract-term fee and, on the claimant’s pleaded case, the listing fee were collateral parts of the employment package and were excluded by the entire agreement clause.
9. Damages and benefits. Wrongful dismissal damages were payable for the 12-month notice period, subject to mitigation. No bonus would have been awarded because of VivoPower’s financial crisis and the discretionary nature of the arrangement. Dr Comberg was entitled to medical-insurance payments, a limited award under the equity incentive scheme, and six days’ accrued holiday entitlement.
10. Judgment was entered for Dr Comberg on wrongful dismissal, deferred remuneration, the October salary and specified benefits. The contract-term fee, listing fee and alternative listing-services quantum meruit claim were dismissed. The parties were directed to calculate the monetary consequences and agree a draft order.