Besso alleges that Bennett Gould and Partners owed £450,000 over failed venture
Besso is accusing rival Lloyd’s broker Bennett Gould and Partners (BGP) of withholding £450,000 it is owed in a dispute over allegedly breaking a restricted covenants agreement.
When Charles O’Sullivan, a managing director in Besso, and his team quit the broker for BGP at the end of 2010, a £720,000 deal was struck to release them from restrictions.
Besso alleges that £450,000 remains outstanding but BGP denies it owes a penny.
O’Sullivan worked for Besso until the end of 2010, but lawyers for the broker claimed from January 2009 there had been “contact” between O’Sullivan and BGP.
A new venture called Bennett Gould & Partners (International) (BGPI), was set up in October 2009 as a vehicle for O’Sullivan and his colleagues, Besso alleges.
The employment contracts of O’Sullivan and his team contained restrictive covenants which stopped them from starting business with BGP straight away and from taking Besso clients with them.
Following negotiations, a £720,000 deal was struck in order to release O’Sullivan and his team from those restrictions and pave the way for their move, the High Court heard yesterday.
Three quarterly payments of £90,000 were made, but lawyers for Besso told the court yesterday, that £450,000 remained outstanding.
Barrister James Brocklebank, acting for Besso, claimed that after BGPI was set up “it became apparent to BGP that the business was not performing as expected” with revenue significantly impaired by a loss of clients.
Brocklebank alleges that BGP chief executive Paul Vincent took the view that BGPI was ”no longer viable” and the company ”was put into run-off”, with its staff transferred to a new corporate vehicle.
He told the court yesterday that BGPI is “currently inactive” and there was “no prospect” of it paying Besso the sum outstanding.
He argued further that BGP was still jointly liable with BGPI to pay the £450,000, plus interest.
According to Brocklebank, BGP owned 49% of BGPI, O’Sullivan 41% and his “second in command”, Karen Shelley, 10%.
He added: “BGP, having induced Mr O’Sullivan to leave Besso and take his business with him, is now - that business having gone sour - determined that Besso should not receive the compensation it bargained for.”
However, Paul Nicholls QC, for BGP, insisted that it owed Besso nothing.
In written submissions, he told the court the compensation deal had been struck by Besso either with BGPI, or O’Sullivan personally, and that BGP was never a party to the contract.
“BGP’s case is that Mr O’Sullivan was not acting as its agent and that he had neither actual nor apparent authority to commit BGP to a contract with Besso, requiring BGP to make payment.
“Mr O’Sullivan entered the contract with Besso either on behalf of BGPI…or in his own capacity, on his own behalf.”
Nicholls added: “If Mr O’Sullivan purported to enter that contract as agent for BGP, because he had no authority to do so, he could not cause BGP to be bound by a contract with Besso.
“On this basis, BGP denies that it is liable and submits that the only potentially liable party is BGPI”.
BGP, said the barrister, had never agreed to cover BGPI’s debts and, even had there been such an agreement, “it was not intended to confer any benefit on Besso”.
The High Court hearing continues.