Summary

The claimant's breaches of his obligations under a radio presenter's agreement entitled a radio station to treat that agreement as discharged and also caused termination of an associated partnership agreement. The defendants were entitled to an inquiry as to consequential damages.

Facts

Trial of liability in an action by the claimant ('E') for damages arising out of a series of agreements, which E alleged the defendants had breached and/or wrongfully terminated. Virgin Radio ('VR') was one of only three national commercial radio stations broadcasting in the UK and the only station with a mainstream popular format. VR relied on its presenters to operate within the format and music parameters set by the station. In 1997 E was engaged by VR to present the morning show ('the show'), through his company, Ginger Radio. Subsequently E, through Ginger Radio's parent company, Ginger Media Group Ltd, acquired Virgin Radio Holdings Ltd, the parent company of VR. Under a shareholder's agreement, E agreed to be tied into the Ginger Group of companies by several long-term contracts. The crucial agreements were: (i) a partnership agreement between Kentfarm and E, by which E agreed to perform the obligations of the partnership under a presenter's agreement; and (ii) a presenter's agreement by which Ginger Radio as producer of the show engaged the Kentfarm partnership to provide or procure E's services as presenter for five years. In 1998 Ginger Radio ceased to trade and became dormant. In 2000 the shareholders in Ginger Media Group Ltd sold that company to Scottish Media Group ('SMG Jersey') and SMG Television in part consideration of cash and in part consideration of ordinary and deferred shares in SMG Jersey. A third of E's consideration was to be paid to him under an option deed. The option deed defined the circumstances in which E could unlock the value of the ordinary and deferred shares, including the conversion of tranche C shares into shares in SMG. The SMG group therefore included each of the defendants. During 2000 and early 2001 the relationship between VR's management and E deteriorated. The defendants attributed the deterioration to a series of "primary" and "secondary" breaches by E of the presenter's agreement and in June 2001 VR and Ginger Radio terminated the presenter's agreement and Kentfarm expelled E from the partnership. E attempted to exercise his option but was refused. E sought damages for breach of contract and the defendants counterclaimed. The issues at trial were: (a) whether VR had the necessary standing to sue by establishing a novation under which it was substituted as a party to the presenter's agreement in place of Ginger Radio; (b) whether the breaches of contract alleged by the defendants were established; (c) whether E's conduct constituted a repudiatory breach by the partnership of the presenter's agreement; (d) whether E's conduct constituted a breach of the partnership entitling Kentfarm to expel him from the partnership; and (e) whether E was entitled to convert the tranche C shares into shares in SMG.

Held

(1) There had been a novation, whereby VR was a party to the presenter's agreement in place of Ginger Radio. (2) In addition to E's express obligations under the presenter's agreement, he had implied obligations of co-operation; trust and confidence; and reasonable notice as to when holidays were to be taken. (3) All the alleged "secondary" breaches of the presenter's agreement and the consequential damage had been made out by the defendants. E had played the wrong music; he had refused to allow any studio tours after October 2000; he had given false information to VR about the time and place of his wedding; he had frequently and without notice changed the format and execution of promotions; he would not co-operate with interviews and photo shoots to promote VR; and he had abused management on air. (4) The alleged "primary" breaches of the presenter's agreement and the consequential damage had also been made out. E had on several occasions falsely claimed illness and failed to appear to present the show; he had dismissed the show team and changed the format of the show without management approval; he had refused to talk to management; and he had generated and courted adverse publicity over the period until his dismissal. (5) The breaches by E of his obligations under the presenter's agreement entitled VR to treat the presenter's agreement as discharged and entitled VR to an inquiry as to damages arising from the discharge of the presenters agreement. (6) E's key duty under the partnership agreement had been to perform the partnership's obligations under the presenter's agreement. When he breached this duty, VR had no option but to terminate and accordingly that breach caused termination of the partnership agreement. (7) E had failed to show that the breaches leading to his expulsion from the partnership viewed individually and cumulatively were not, at the relevant date, materially adverse to the business or financial position of SMG Jersey, treating that company and its subsidiaries, including VR, as one company. Under the option deed, E was not entitled to any rights to convert the tranche C shares.

Claim dismissed. Counterclaim allowed.