England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
APPLICATION FOR PERMISSION TO APPEAL

		Royal Courts of Justice Strand London WC2
		Thursday, 1st February 2001

1. LORD JUSTICE SEDLEY: This is a renewed application made by Mr Dovar - and if I may say so excellently made - for permission to appeal against a decision of the Employment Appeal Tribunal given by His Honour Judge Wilkie QC under the Employment Appeal Tribunal's summary procedure, upholding the decision of the Employment Tribunal.
2. The applicant both before us and below was the sales director of the respondent, a small video conferencing company. He had been promoted into that post. It was said, and no doubt rightly said, that the managing director Mr Cross was the person who to all intents and purposes ran the company. Mr Cross had 90 per cent of the shares; Mr Jarvis, the applicant, had 5 per cent.
3. In mid-1999 the company's technical director told Mr Cross that the applicant, in the course of representing the company, had been testing out the possibility of seducing a major US customer into a relationship with a new company of the applicant's own. Once Mr Cross had confirmed this the applicant was more or less summarily dismissed. Later, a draft business plan was found on his company computer.
4. Mr Jarvis claimed unfair dismissal. The Employment Tribunal concluded that his approach to the American customer had been inconsistent with his duty of fidelity to the company. It held therefore that an admissible reason for dismissal existed but that the manner of dismissal, albeit contributed to 60 per cent by the applicant, was unfair. There was an award, but a much reduced one, upon the computation of which nothing now arises.
5. It is against the basic finding which robbed him of a compensatory award that Mr Jarvis wants to appeal. The Employment Appeal Tribunal held that the Employment Tribunal had been incontrovertibly right. Both had based themselves upon the decision of the Employment Appeal Tribunal sitting in Edinburgh in Marshall v Industrial Systems [1992] IRLR 294. Marshall decided, clearly rightly, that a director - in that case a managing director - who sets up in competition with his own company or plans to do so breaches the implied term of trust which directorship carries.
6. Mr Dovar before us submits, as he did before the Employment Appeal Tribunal, that an employee, on the other hand, is in principle free, subject to any reasonable restrictive covenants, to plan to set up in competition. So far, he is undoubtedly right. He submits that that is the principle applicable in this case because his client was, in practice, no more than an employee of Mr Cross's company. The Employment Tribunal held otherwise; so did the Employment Appeal Tribunal although they also relied, as arguably they should not have done, on subsequently discovered misconduct.
7. Setting the latter aside, I would conclude without hesitation, as the Employment Appeal Tribunal and Employment Tribunal did, that this is not a case in which the evidence carries Mr Jarvis to the `employee' side of the line which Mr Dovar has described. Acceptance of a directorship, prima facie, carries with it duties different from and higher than those of an employee. Mr Dovar has helpfully shown us the most interesting judgment of Mr Justice Elias in Nottingham University v Fishel [2000] IRLR 471. There, in paragraphs 89 to 91 (which I will not read out), Mr Justice Elias describes in general terms the differences in duties of fidelity between a bare employee and a director of a company. I entirely accept that in any one case there may be a viable question of fact as to whether a particular employee's directorship is so nominal that the only true relationship is the employment relationship. That was in one sense the real issue here and it was determined against the applicant. I say "in one sense" because it does not appear that more was said or able to be said about it before the Employment Tribunal than I have already described in my summary of the facts. It is of course a matter of fact for the first instance tribunal. But it seems to me that, treating it as such, it would take evidence sufficient to persuade the tribunal of its probative weight that the so-called director was, in truth, only an employee if the tribunal were to overset the prima facie inference that a director is subject to the duties which his position ordinarily carries.
8. It is clear that no such evidence existed here. To make the assertion may in rare cases be sufficient where the underlying facts are eloquent of the shadowy or spurious character of the directorship; but this is not such a case. For all the world this was, albeit in a minor role to that of the managing director, a genuine directorship carrying with it the genuine responsibilities that a director, unlike an employee, has towards his company.
9. In these circumstances - notwithstanding the extremely helpful and well directed submissions of Mr Dovar - it does not seem to me that there is any issue of law which has a respectable prospect of success. Were we to give permission to appeal we would only be sending Mr Jarvis down an expensive highway to nowhere. His interests are best served by a refusal of permission.
10. LORD JUSTICE JONATHAN PARKER: I agree.
Order: Application refused