The Royal Court of Jersey has awarded £3.5m in compensation and damages against Channel Islands Coop (CI Coop) after ruling that it breached its duty of care to its former CEO, Colin MacLeod.
MacLeod said a group of board directors “bullied and undermined” him in an attempt to force him out of his post, leaving him with a psychiatric injury. He said this left him suffering insomnia, shaking and numbness in his arm before being signed off sick in May 2019 and eventually dismissed in 2020.
The court awarded him £40,000 in general damages plus loss of earnings after it ruled CI Coop had breached its duty of care and the harm was foreseeable.
In a message to members, current CI Coop CEO Mark Cox said: “Whilst we acknowledge the judgment, with respect, we do not agree with the findings and, after liaising closely with our insurers and legal advisers, consider there are substantial grounds for appeal. We therefore intend to challenge the decision through the appeal process.”
But CI Co-op’s conduct was described by MacLeod’s lawyer as “a catastrophic failure in corporate governance”.
In its 185-page judgment, the court ruled that Jennifer Carnegie, Paula Williams and Carol Champion, non-executive directors on the society’s Remuneration Committee (RemCo), had acted in bad faith over an extended period from early 2019 until MacLeod’s eventual dismissal in mid-2020.
It said their conduct was “improper, commercially unacceptable and unconscionable”.
The court heard details of their secret WhatsApp and email messages, targeted expense audits and an orchestrated, pre-determined and “robust [performance] appraisal” of MacLeod.
In its judgment the court said it was “troubling” that RemCo was acting in secret, and it described as “appalling” a WhatsApp remark from Champion who told colleagues: “When the noose starts tightening you get more stressed and end up off from work.”
MacLeod said the situation had “made ongoing strategic management of the business exceptionally difficult”, with board meetings becoming “hostile”.
He said he was “repeatedly being set up to fail”, telling the court: “Results, no matter how good, were judged as not good enough.”
The jurats also found there had been a covert attempt by Williams to replace MacLeod as CEO while he was still in the role.
They added that the society’s then-president, Ben Shenton, failed in his responsibilities by encouraging Macleod to complain about his treatment, leading to Carnegie offering her resignation. Shenton then performed a “volte-face” by neither accepting Carnegie’s resignation nor requiring Williams to step down after she had inappropriately applied for his role.
The judgment also critcised CI Co-op’s handling of a formal complaint by Macleod about his treatment and an independent investigation by external lawyers. It noted undisclosed conflicts of interest and the failure to give the then-CEO access to key materials.
The jurats described as “astonishing” the role of Chris Lintell, then chief governance officer and secretary at the co-op, in failing to take steps to preserve disclosable documents. They said he had encouraged private email communications and advised the board to use the term “the subject” when referring to MacLeod.
The Court rejected CI Co-op’s claim that its overall approach to MacLeod’s welfare was “exemplary”, concluding that limited HR contact with him after he filed his complaint was outweighed by the board’s efforts to remove him.
The court concluded that there had been a deliberate campaign to force out MacLeod, who had worked for the co-op since joining as a trainee in 1990, becoming CEO in 2010 at the age of 40.
The judge rejected CI Coop’s defence that his forced removal followed a good-faith effort to deal with concerns about performance.
Speaking after the verdict, MacLeod said he still believed in the values of the co-op movement, adding: “It is profoundly disappointing that, in the end, it took the Royal Court to enforce the values of the Channel Islands Co-op. The board of directors had countless opportunities to fix this mess quietly and with dignity, but on each of those occasions it chose not to. Members now must surely have a right to know why.”
MacLeod’s lawyer, advocate Michael O’Connell, added: “This was a catastrophic failure in corporate governance, perpetrated by a group of bad actors. It is extremely rare for the Royal Court to describe the behaviour of directors as ‘improper, commercially unacceptable and unconscionable.’ But it has done so today.”
The court accepted MacLeod’s claim for substantial past and future loss of earnings, awarding him £3,515,407 in compensation, on the grounds that he would have remained in post untill aged 60, and that his illness and subsequent litigation had effectively excluded him from comparable employment until at least 2027.
He was also awarded general damages of a further £40,000 for psychiatric injury, including £10,000 for loss of “congenial employment”, recognising the exceptional pride and status he derived from his role.
MacLeod said he wanted to thank his partner, his family and his legal team for supporting him throughout his six year ordeal.
“It has been a long and difficult struggle to fight this legal case. But I have always been confident that the truth would eventually emerge,” he said.
“My belief in the co-operative movement and its principles endures, for the judgment exposes not a flaw in co-operative ideals but in the bad actors who abandoned them in favour of their own personal agendas.”
