High Court of Ireland Decisions

Orr v. Zomax Ltd. [2004] IEHC 47 (25 March 2004)

 
THE HIGH COURT

NO. 2004/1356P

BETWEEN

ROBERT ORR

PLAINTIFF

AND ZOMAX LIMITED

DEFENDANT

JUDGMENT of Carroll J. delivered the 25th day of March, 2004.

The plaintiff is an engineer by profession. He originally joined KAO Information Systems (KAO) in 1995. There was a transfer of undertaking by KAO to the defendant in 1999 and the plaintiff's employment continued pursuant to the EU Acquired Rights Directive. With KAO he was Programme Manager assigned to the new Microsoft account. In 2000 he was appointed Client Services Manager-Microsoft Business, by the defendant pursuant to contract dated 16^th May, 2000.

The contract provided his employment commenced 1^st June 2000.

Clause 12 deals with termination of employment and provides:-

"Notice periods

After the successful competition of the probationary period this contract may be terminated by either party giving written notice of not less than the following:

- Less than four years service 1 month

- Four years but less than nine years service 2 months

- Nine years service and over 3 months

The company may terminate the contract without notice if you are in serious breach of contract, are guilty of gross misconduct or any conduct likely to bring yourself or the company into disrepute, including any conduct which renders you unsuitable to perform the duties required of your position."

The contract also provides

"This contract supersedes any other contract or arrangement which may have been entered into by the parties."

The plaintiff's grounding affidavit contains an enormous amount of unnecessary detail. He refers to negative feedback from Microsoft which he says was not due to deficiencies on his part.

At a meeting on 6^th November, 2003 the defendant announced a re-organisation whereby a new Business Relationship Manager role was to be created amalgamating the plaintiff's role as Client Services Manager and the position of Contract Centre Manager. The plaintiff applied for the job and was interviewed and short listed.

On 18^th November, 2003 he was informed that he had not got the job. At a meeting on 19^th November, 2003 the plaintiff was given a letter from Mr. Dignam, Director of the defendant company, referring to the meeting on 6^th November, 2003 and the company restructuring and also referring to the job selection process.

He continued

"Your contract of employment provides for two months notice on the termination of your employment. In addition you are entitled to statutory redundancy and I am attaching a schedule to this letter outlining your entitlements. As we appreciate that this is not an easy thing for you to deal with we are anxious that you should be treated with consideration. Accordingly if you would prefer to receive pay in lieu of notice we can agree to that and in addition we will make an ex gratia payment equivalent to another month's salary.

In addition I enclose for your attention your RP1 form which gives formal notice of your redundancy. If you decide to take pay in lieu of notice then the termination of your employment will take effect on 3^rd December, 2003".

Mr. Dignam again wrote on 25^th November outlining the options available in the light of the recent restructuring and included a list of current open positions although at a lower level.

On 8^th December, 2003 Mr. Dignam wrote referring to a meeting at which the plaintiff confirmed he would be returning to work on 9^th December to work out his notice. This would bring him to 3^rd March, 2004. He said he (the plaintiff) would take up a project management role reporting to him for the duration of his notice.

On 12^th December, 2003 the plaintiff replied disagreeing with Mr. Dignam in several matters and concluded by saying "The purported redundancy is not accepted by me and I continue to reserve my position pending the outcome of further negotiations."

Having had a meeting, Mr. Dignam replied on 19^th December, 2003 to clarify the situation and outline the options. He said that with immediate effect he (the plaintiff) was "on garden leave" and would be paid through the pay roll until 3^rd March unless they heard otherwise. He would then be paid statutory redundancy. If he decided on pay in lieu of the remaining part of his notice, he would be paid the remainder tax free. He referred to the plaintiff's statement at the meeting that he had not decided whether to accept redundancy or not and he said this was not an option. He asked him to take time to consider and if he would like to return to work out his notice to contact him to discuss this option further but this would require clear ground rules.

The plaintiff did not return to work and a plenary summons was issued on 3^rd February, 2004 claiming the following relief

1. A declaration that the purported termination of the plaintiff's tenure by the defendant for reasons of redundancy is invalid and without efficacy in that it "(a) constitutes an unlawful repudiation of the plaintiff's appointment which is not being accepted by the plaintiff

(b) is predicated on an invalid invocation of the concept of redundancy alternatively the plaintiff's purported redundancy is bogus and contrived

(c) is ultra vires

(d) is discriminatory

2. An order that the defendant pay to the plaintiff all his salary as accruing from the month of March 2004 to the trial of the action or until further Order of this Honourable Court.

3. An order requiring the defendant to fund and maintain the plaintiff's pension and life assurance benefits by paying all instalments of premium together with such further or order restraining the defendant its servants and agents from reducing the plaintiff's pension benefits in any mode whatsoever.

4. An order preserving all the plaintiff's perquisites and entitlements including share options and allowances.

5. An injunction restraining the purported termination of the plaintiff's employment and if necessary an order permitting the performance of his functions and duties by the plaintiff.

6. An injunction restraining the performance of the plaintiff's functions and duties by any person other than the plaintiff.

7. Damages for breach of the plaintiff's constitutional right to work.

8. Damages for the reckless infliction of nervous shock and emotional suffering.

9. Damages for misrepresentation and negligent mis-statement.

On the 4^th February the plaintiff issued a notice of motion claiming

1. An order that the defendant pay to the plaintiff all salary as accruing from the month of March 2004 to the trial of the action or until further order of this Honourable Court.

2. An order requiring the defendant to fund and maintain the plaintiff's pension and life assurance benefits by paying all instalments of premium together with such further or other order restraining the defendant its servants or agents from reducing the plaintiff's pension benefits in any mode whatsoever.

3. An order preserving all the plaintiff's perquisites and entitlements including share options and allowances.

4. An injunction restraining the purported termination of the plaintiff's employment and if necessary an order permitting the performance of his functions and duties by the plaintiff.

5. An injunction restraining the performance of the plaintiff's functions and duties by any person other than the plaintiff.

The plaintiff submits in his grounding affidavit that there is no valid reason why he should not remain in employment with the defendant and seeks the relief sought. He claims this is not a redundancy.

Mr. Shanahan, the Managing Director of the defendant, avers that there is no role for the plaintiff to occupy with the defendant and any order directing his reemployment with the defendant would significantly disrupt the defendant's management and cause irreparable harm. He claims the plaintiff can be adequately compensated in damages and what is required in an early trial.

Mr. Dignam avers that no job exists for the plaintiff. There is no alternative role for him and the defendant should not be required to accept his return for work.

In a replying affidavit the plaintiff says that the criticisms made of him are the real reason for the defendant's purported decision to remove him from his post under the guise of redundancy. He said there is no reason why his return to employment would impact adversely on the defendant's business.

The plaintiff in a second replying affidavit says there is no basis for Mr. Shanahan's alarmist and offensive contention about irreparable harm if he returned to work. He says he is at a loss to understand how the loss of his career and the resultant suffering and financial hardship which his family and he would suffer can adequately be compensated by an award of damages. He said his undertaking as to damages has been given in good faith and he is joint beneficial owner with his wife of a family home subject to a mortgage.

In deciding whether to grant interlocutory injunctive relief the guiding principles are set out in Campus Oil v. Minister for Industry (No. 2) [1983] I.R. 102. There must be a fair issue to be tried, damages must not be an adequate remedy and the balance of convenience must favour the granting of the injunction.

The plaintiff claims that the issue to be tried is that he was unfairly dismissed because there was no valid redundancy and he was really dismissed because of criticisms made about him. It is claimed that there must be an implied term in the contract that the employer must act reasonably and fairly.

The defendants submit that this is not a fair issue to be tried as unfair dismissal is governed by the Unfair Dismissals Acts, which provide a statutory remedy which is mutually exclusive to the common law remedy for damages. In the case of Parsons v. Iarnród Éireann [1997] E.L.R. 203 where a plaintiff pursued a claim for wrongful dismissal under the Unfair Dismissals Act, 1977, and it had been unsuccessful, he then initiated proceedings in the High Court but did not seek damages. The defendant made a preliminary objection that the claim contravened s. 15 (2) of the Unfair Dismissals Act, 1977, which was successful. The plaintiff appealed but the Supreme Court dismissed the appeal.

Barrington J. said at p. 207 " What the Unfair Dismissals Act, 1977 does is to give to the worker who feels that he has been unfairly dismissed an additional remedy which may carry with it the very far reaching relief of re-instatement in his previous employment. It does not limit the worker's rights, it extends them. At the same time s. 15 of the Unfair Dismissals Act, provides that the worker must choose between suing for damages at common law and claiming relief under the new Act. Subsection 2 accordingly, provides that if he claims relief under the Act, he is not entitled to recover damages at common law; while subs. 3 provides that where proceedings for damages at common law for wrongful dismissal are initiated by or on behalf of an employee, the employee should not be entitled to redress under the Unfair Dismissals Act in respect of the same dismissal."

In Johnson v. Unisys Limited [2001] 2 A.E.R. 801, the House of Lords dealing

with the statutory regime of unfair dismissal introduced in its original form by the Industrial Relations Act, 1971 and subsequently in force under the Employment Rights Act, 1996, held that an employee had no right of action at common law to recover financial loss arising from the unfair manner of his dismissal. A conclusion to the contrary would be inconsistent with the statutory system for dealing with unfair dismissals established by Parliament in 1971 to remedy deficiencies in the laws that then stood. The remedy adopted by Parliament was not to build on the common law by creating a statutory implied term that the power of dismissal should be exercised fairly or in good faith leaving the courts to give a remedy on general principles of contractual damage. Instead it set up an entirely new system outside the ordinary courts at which tribunals applied new statutory concepts and offered statutory remedies. For the judiciary to construct a general common law remedy for unfair circumstances attending dismissal would be contrary to the evident intention of Parliament that there should be such a remedy but that it should be limited in application and extent.

Lord Nichols put it succinctly when he said at p. 803 "I am persuaded that a common law right embracing the manner in which an employee is dismissed can satisfactorily co-exist with the statutory right not to be unfairly dismissed. A newly developed common law right of this nature covering the same ground as the statutory right would fly in the face of the limits Parliament has prescribed on matters such as the classes of employees who have the benefit of a statutory right, the amount of compensation payable and the short lived time limits for making claims. It would also defeat the intention of Parliament that claims of this nature should be decided by specialist tribunals and not the ordinary courts of law".

Lord Millet said at p. 825 "If this right (i.e. the statutory right not to be unfairly dismissed) had not existed, however, it is possible that the courts would have fashioned a similar remedy at common law though they would have proceeded by implying appropriate terms into the contact of employment. It would have been a major step to subject the employer's right to terminate the relationship on proper notice to an obligation not to exercise the right in bad faith and a still greater step to subject it to an obligation not to exercise it without reasonable cause (a difficult distinction, but one drawn by McLachlin J. in Wallace's case (at 44)). Even so, these are steps which in the absence of the statutory right the courts might have been prepared to take though there would have been a powerful argument for leaving the reform to Parliament".

Later at p. 826 he says "But the creation of the statutory right has made any such development of the common law both unnecessary and undesirable. In the great majority of cases a new common law right would merely replicate the statutory right; and it is obviously unnecessary to imply a term into a contract to give one of the contracting parties a remedy which he already has without it. In other cases where the common law would be giving a remedy in excess of the statutory limits or to excluded categories of employees, it would be inconsistent with the declared policy of Parliament. In all cases it would allow claims to be entertained by the ordinary courts when it was the policy of Parliament that they should be heard by specialist tribunals with members drawn from both sides of industry. And even more importantly the co-existence of two systems, overlapping but varying in matters of detail and heard by different tribunals would be a recipe for chaos. All coherence in our employment laws would be lost".

It has therefore been held by the Supreme Court that the common law claim for damages for wrongful dismissal and the statutory claim for unfair dismissal are mutually exclusive. The House of Lords decision in Johnson v. Unisys Limited underlines this. What the plaintiff is seeking to do is to introduce a new obligation under the common law on the employer to act reasonably and fairly in the case of dismissal. As the law stands, at common law an employer can terminate employment for any reason or no reason provided adequate notice is given. In cases involving dismissal for misconduct the principles of natural justice also apply, but that does not arise here.

In this case the defendant gave notice in accordance with the plaintiff's contract plus an additional month. There is no allegation that notice was inadequate in this case.

Therefore, in my opinion in light of the Supreme Court decision in Parsons v. Iarnrod Eireann and underlined by the House of Lords in Johnson v. Unisys Limited, it is not open to the plaintiff to argue that the principles applicable under the statutory scheme should be imported into the common law.

In the event that I am wrong to hold that this issue is not a fair issue, despite the decision of the Supreme Court, I will go on to consider whether damages are an adequate remedy. In my opinion they are. The plaintiff cannot seriously hope that he will be re-instated in employment where the defendants are unwilling to take him back and have no place for him. Therefore his remedy, if he is successful, is in damages.

Again on the assumption that I may be wrong in this, I will consider whether a mandatory injunction requiring the defendant to pay him his salary over and above the period of notice should be made. It is argued on behalf of the plaintiff that the application for interlocutory relief for payment of salary and benefits was common place and a number of authorities were provided to that effect. However, as far as I could ascertain the vast majority of these settled.

Having recently heard the case of Sheehy v. Ryan (unreported 3^rd February, 2004) where an interlocutory order for the payment of salary was made on 29^th August, 2002, the plaintiff who had been made redundant and dismissed with effect from 19^th September, 2002, did not succeed in a claim to be entitled to be employed for life or until 65. The plaintiff, Mary Sheehy had sued at common law where the employee's right to damages depends on whether reasonable notice was given. Since reasonable notice was given in that case, there was no entitlement to damages.

In this case the plaintiff was given one month's extra notice (and pay) over and above the two months provided in his contract. I do no see how any issue can arise that notice was not reasonable. If the plaintiff does not succeed there will be a real injustice to the defendant if it is obliged to pay him salary until the date of the trial.

The first case in which a mandatory order for the payment of salary pending trial was made by Costello J. in Fennelly v. Assicurazioni Generali SPA (12^th March, 1985). Here the evidence established that the plaintiff left a permanent and pensionable post and obtained a letter that the contract was for the fixed term of 12 years. Costello J. said he was entitled to conclude that there was a fair question to be tried that the contract was determined invalidly. He approached the case on general principles that the courts would not give specific performance of an employment contract (subject to the exception as in Hill v. Parsons). Costello J. said the court might conclude at trial that damages were an adequate remedy but at that stage he still had to consider the balance of convenience until the trial. He said in the meantime the plaintiff would be left without a salary and nothing to live on. The situation in which he found himself would be little short of disastrous. He said that he should not be left in the situation in which he would be virtually destitute with the prospect of damages at the action. That seemed an unjust situation. He said "In view of the very special circumstances in this case I will require the plaintiff to be paid his salary and I order that until the trial of the action the defendant should continue to pay the plaintiff's salary and bonus under his present contract. I accept that the court should not require an employer to take on an employee where serious difficulties have arisen between them or where there is no work for the employee but in this case the parties have obviously the highest regard for one another. I will take an undertaking that the plaintiff will be prepared to carry out such duties that the defendants will ask of him until the trial. If they would make use of him until the trial of the action the plaintiff should attend and carry out such duties he has been given. They might prefer not to give him any duties and put him on leave of absence. That is for the defendant but they must continue to pay his salary until the trial."

I am told that on appeal to the Supreme Court payment of salary was limited to six months.

In the English case of Hill v. CA Parsons & Co Limited [1972] 1 Chancery 305 (which predated the Fennelly case) the plaintiff was given one month's notice to join a trade union and did not do so. He was then given one months notice of termination. He claimed an injunction restraining the defendants from implementing their notice of termination. It was held by the Court of Appeal that he was entitled to at least six months notice and in the exceptional circumstances of the parties' relationship and the plaintiff's likely protection by the coming into operation of Part II of the Industrial Relations Act, 1971 before a fresh notice could take effect, his contract of employment was still subsisting and, damages not being at all an adequate remedy, he was entitled to the interim injunction sought.

In both these cases it was emphasised that there were either "special" or "exceptional" circumstances and also there was no loss of trust in the employee.

In Harte v. Kelly [1997] E.L.R. Laffoy J. went further and held that the entitlement to the type of order granted in the Fennelly case was not limited to situations where the plaintiff could establish that he would face penury if such an order was made. She said "The rationale of the decision is that it is unjust to leave a person who alleges his dismissal has been wrongful, without his salary pending the trial of the action and mainly with his prospect of an award of damages at the trial of the action."

In GEE v. Irish Times (Unreported 27^th June, 2000) McCracken J. referred to the "well established practice" to continued payment of salary pending trial.

So the position apparently has moved from being appropriate in either special or exceptional circumstances to being a "well established practice".

In my view the cases where there is no suggestion of any breakdown of trust or confidence have no relevance to this case; likewise where there is alleged breach of a fixed term contract. Here the defendants claim they would suffer irreparable harm if forced to re-employ the plaintiff. The plaintiff in his grounding affidavit seeks re-instatement only. It is only in his second replying affidavit that he mentions money and then only in oblique terms. He refers to the claim by Mr. Shanahan that the loss of his career and the resultant suffering and financial hardship which he and his family would suffer, would adequately be compensated by damages. He does not allege irreparable loss and damage if deprived of his salary. In my view the plaintiff has not made out a case on the balance of convenience that he should be paid his salary after the period of notice has expired. It would constitute a serious injustice for the defendant if it was obliged to pay the plaintiff's salary until trial of the action. The same applies to the application to maintain his pension and life assurance benefits or preserving his perquisites and entitlements. It follows that there is no justification for permitting the performance of functions and duties by the plaintiff or restraining the performance of those functions and duties by any person other than the plaintiff.

In my view the most appropriate course is to have an early trial. Provided the pleadings are complete and the case is ready for trial it can be given priority in the list to fix dates at the end of next term. This should give a trial to the plaintiff during the coming summer term.