Andrew Dixon v Globaldata PLC

An employee share-option power permitting extension after termination must be consciously exercised by the grantor, with the period, basis and conditions determined as required by the plan. Ostensible authority cannot itself establish that the power was exercised.

An assurance that options will continue after employment may support proprietary estoppel. The doctrine can apply to share options and other choses in action. The court assesses the claimant’s reasonable understanding, reliance, detriment and unconscionability in the circumstances. An exclusion clause directed to loss caused by termination does not ordinarily exclude equitable relief enforcing a separate assurance that rights will continue.

The claimant had been granted share options under the defendant’s unapproved employee share option plan. When his employment was terminated, the defendant’s chief executive assured him that his options would be retained and would vest in line with current conditions. That assurance was reflected in a settlement agreement made with another group company.

The claimant later sought to exercise the options. The defendant contended that they had lapsed because the plan’s discretionary power to extend exercise after termination had not been exercised. The claimant relied primarily on an alleged exercise of that power and alternatively on proprietary estoppel. The issues included authority, the effect of the plan’s exclusion clause and the appropriate remedy.

1. Primary claim. The defendant had not exercised the power in rule 7.1 of the Plan. The power belonged to the Board or a duly authorised committee and required a conscious decision permitting exercise during a specified period, on a specified basis and subject to specified conditions. No such decision or determination was proved. The claimant’s options therefore lapsed on termination and his purported exercises were ineffective.
2. Authority. It was possible in principle for a CEO to have ostensible authority to exercise the power. However, ostensible authority presupposed an actual exercise of the power. It could not be used to prove that the power had been exercised. There was no evidence that the Board had delegated the power to the CEO.
3. Proprietary estoppel. The CEO’s words and conduct amounted to an assurance that the claimant’s options would remain exercisable after employment ended on the same footing as if he had remained employed. That was the claimant’s reasonable understanding in context. Proprietary estoppel was capable of applying to share options, which constituted identified property and a chose in action.
4. The claimant relied on the assurance by extending his employment, accepting restrictive covenants and foregoing alternative employment opportunities. The detriment was substantial, and it was unconscionable for the defendant to repudiate the assurance. Any uncertainty concerning the precise relief did not defeat the estoppel and could be addressed at the remedy stage.
5. Rule 14.1.4 did not exclude the claim. It addressed loss flowing from cessation of employment, whereas the claimant sought equitable relief for denial of rights which he had been assured would continue.
6. The claim based on the alleged exercise of rule 7.1 failed. The proprietary-estoppel claim succeeded in principle. The appropriate remedy, including whether specific enforcement or monetary relief was proportionate and the treatment of tranche 3 rights, was reserved for a consequential hearing.