CG with Counsel, Daniel Northall, (now KC) successfully represent C-Suite director in repudiatory breach of contract case in High Court against European veterinary group - damages awarded in full in the case of Ciara McCormack and Medivet Group Limited [2024] EWHC 1000 (Comm)

Medivet’s premeditated decision to change Dr McCormack’s role and to take core responsibilities away from her and transfer them to others amounted to a repudiatory breach of her employment contract despite a flexibility clause in the contract. Her decision to resign was justified entitling her to damages in lieu of loss of salary, accrued holiday pay, the loss of her company car, nursery fees and other benefits.

CG’s cross-departmental team was delighted with the outcome for their client, with the High Court litigation being spear-headed by Michelle Connor, Partner and Head of Litigation and Paul Hayhurst, Senior Associate following and on the basis of meticulous and robust employment law advice provided to their client fronted by Louise Myers, Managing Partner and Alexandra McGlade, Solicitor in CG’s employment team.

Background:

• Dr McCormack joined Medivet in October 2016. Her role grew and as Medivet expanded and as at the date of her resignation she held the title of “Director of Clinical Operations”. In her role she reported directly to the CEO with responsibility for day-to-day operations and several of Medivet's central functions.

• Medivet was then bought by CVC, a private equity firm with plans to expand Medivet. In February 2022, a new CEO, Mr Christiaan Cools was hired by Medivet. 

• Two months later, Dr McCormack was informed of a group restructure by Mr Cools. Dr McCormack, without consultation, was told she would be placed in the role of Chief Clinical Officer.  Despite Dr McCormack’s protestations, she was not considered for the new COO role which was akin to the role she was performing at that time. Dr McCormack was to be divested, with immediate effect, of the majority of her responsibilities which would be transferred to other employees (what the Judge called the "Immediate Decision") and, with effect from a date as yet unidentified in the future, allocate a new role to Dr McCormack as Chief Clinical Officer (what the judge called the "Inchoate Decision"). 

• Dr McCormack subsequently resigned.

Issues

Dr McCormack’s contract stated that “the Board shall be entitled from time to time to appoint any other person or persons to act jointly with [Dr McCormack] in the office which she then holds under this agreement or to change the Executive's executive office or its responsibilities and powers as it shall think fit”.

HHJ Halliwell found that “…the parties cannot have intended Medivet's reserved rights to be exercisable without limit. Since the reserved rights conferred discretionary powers on Medivet which were exercisable unilaterally to Dr McCormack's disadvantage, it was implicit Medivet would exercise such powers honestly, rationally and for the purpose for which they were conferred”. The decisions were, therefore, void as a lawful exercise of the company's powers.

He also found that, “Until Mr Cools' arrival, Dr McCormack had performed her established role without substantial criticism and, by the time he made the Immediate Decision, Mr Cools can have had no more than a limited opportunity to evaluate her working contribution to the operation of the company.  Mr Cools' assessment of Dr McCormack was primarily based on his assessment of her during personal discussions with her”

HHJ Halliwell restated the case of Hilton v Shiner Ltd [2001] IRLR 727 and stated that the nature or Dr McCormack's responsibilities and the level of her seniority are significant. By taking away and transferring, to other employees, her core responsibilities, Medivet committed breaches of Dr McCormack's contract of employment which formed an essential part of her role as employee. This amounted to a repudiatory breach of contract.

Conversely, whilst Medivet did not deliver a new contract of employment to Dr McCormack nor do anything else to specifically implement the Inchoate Decision or designate a date for final implementation prior to Dr McCormack's termination letter, Medivet had by then decided to allocate her a new job with new responsibilities. There was no room for her to re-assimilate the responsibilities of which she had already been divested.

Decision

Medivet’s conduct, viewed cumulatively, commencing with its premeditated decision, without consultation, to change Dr McCormack's role as employee and resulting in its failure to engage properly with her formal grievance letter amounted to a repudiatory breach of the implied term of mutual trust and confidence in Dr McCormack's contract of employment by the time she sent her resignation letter. Damages were awarded in full.

“If the company's conduct was not calculated to undermine the relationship of trust and confidence with Dr McCormack, it ought to have been in little doubt that this was likely to be the consequence as, indeed, it was.”

The full decision can be found here: McCormack v Medivet Group Ltd [2024] EWHC 1000 (Comm) (30 April 2024) (bailii.org)