Jersey Unreported Judgments

Employment - reasons for granting summary judgment in favour of the plaintiff.

[2019]JRC017A

Royal Court

(Samedi)

7 February 2019

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

Advocate M. T. Jowitt for the Plaintiff.

Mr B. Strange, Director appeared in person.

.

CONTENTS

		Paras
1.	Introduction	1
2.	Pleadings and evidence	2-15
3.	Submissions	16-20
4.	Decision	21-30
5.	Conclusion	31-32

judgment

the master:

Introduction

1.        This judgment contains my written reasons for granting summary judgment in favour of the plaintiff.  The plaintiff's claim relates to unpaid wages for the period from January to August 2017.  However, the summary judgment application only related to unpaid wages following termination of the plaintiff's employment by the defendant in May 2017. 

Pleadings and evidence

2.        The plaintiff's claim was commenced by a simple summons served on 9^th August, 2018.  The particulars of claim served on the same day at paragraphs 4, 5, 6 and 8 provide as follows:-

"4        On 24 May 2017, the Plaintiff was served with a letter of dismissal by the Defendant (the "Letter"), whereby the Defendant gave notice to the Plaintiff that his employment with it was being terminated and the Plaintiff was being placed immediately on garden leave.

5         The Defendant further averred in the Letter that the Plaintiff was entitled to three months' written notice and that his final day of employment was 24 August 2017.

6         On the same day (that is to say 24 May 2017) the Plaintiff and the Defendant signed a schedule "2017 payroll and gardening leave calculation" (the "Schedule"), provided for a breakdown of the Plaintiff's overall remuneration, the amount already paid by the Defendant, the arrears owed to the Plaintiff and monthly salary remaining to be paid.

8         The Defendant owed to the Plaintiff a contractual duty to pay the agreed salary monthly pursuant to the terms of the Contract and, further, as agreed by the parties in the said Schedule."

3.        The letter of 24^th May, 2016, at paragraph 3 states as follows:-

"You shall continue to receive your normal salary or part thereof with the balance accrued as well as contractual benefits as agreed up to your final day of employment provided."

4.        The Schedule states as follows:-

Paul Gothard - 2017 payroll and gardening leave calculation

Salary: £200,000 pa from 1 December 2016

 

	Amount due   £	Payments made (before tax)   £	Arrears and monthly salary payable £
January	16,666.66	12,813.50 Pd 17 Jan	3,853.16	Arrears
February	16,666.67	12,813.50 Pd 21 Jan	3,853.17	Arrears
March	16,666.67	6,563.50  Pd  5 Apr	10,103.17	Arrears
April	16,666.66	6,563.50  Pd  2 May	10,103.16	Arrears
May	16,666.67	-	16,666.67	To pay May
June	16,666.67	-	16,666.67	To pay Jun
July	16,666.67	-	16,666.67	To pay July
August to 24thonly	13,846.15	-	13,846.15	To pay Aug
	130,512.82	38,754.00	91,758.82

Payments made were subject to IT IS and social security deductions - see payslips on next sheet.

Amounts agreed by Strada Energy International Limited.

The schedule was signed by the plaintiff and by Mr Warren Strange for the defendant.

5.        The summary judgment application was brought in respect of the payments for May, June, July and August 2017. 

6.        The defendant's answer was filed with the Royal Court on 7^th September, 2018.

7.        The defendants' answer admits paragraphs 4 and 5 of the particulars of claim.  In relation to paragraph 6 the answer states in the first sentence "Accepted in so far as the schedule "Paul Gothard - 2017 payroll and gardening leave calculation" is prima facie evidence of the Ancillary Agreement".

8.        Paragraphs 6 and 7 then raised why the plaintiff's calculations were not correct.  The first of these issues later fell away by agreement.  The second issue concerned whether the plaintiff was entitled to claim gross payments inclusive of tax, ITIS and any social security.  This issue was resolved during the course of the hearing by the plaintiff undertaking to the court and to the defendant that, if I found in the plaintiff's favour, the plaintiff undertook to discharge any obligations in respect of income tax, ITIS and social security, whether due from employer or employee.

9.        At paragraph 9 and 10 of the particulars of claim the plaintiff pleaded as follows:-

"9        Further or alternatively, the Defendant owed to the Plaintiff a statutory duty enshrined in Article 50 of the Employment (Jersey) Law 2003 to pay the salary of the Plaintiff in his employment on normal working days and at regular intervals of not more than one month.

10       By reason of the matters aforesaid, the Defendant is indebted to the Plaintiff and is thereby in breach of its contractual and statutory duties to the Plaintiff as follows: -

(a)       the Plaintiff's salary in the total amount of £50,000.01 for the period that the Plaintiff had been placed on a garden leave, that is to say for the period between 24 May 2017 to 24 August 2017; and

(b)       the Plaintiff's arrears of salary of £41,758 .81for the period between 1 January 2017 and 24 May 2017;

(c)       the employer's contribution under the Social Security (Jersey) Law 1974 (the "1974 Law") for the Plaintiff's benefit until 24 August 2017 and amounting to £1,858.64.

The Defendant has failed and/or refused to make the said payments despite several requests since 24 August 2017, including pre-action letters dated 18 September 2017 and 18 June 2018."

10.      In relation to the defendant's answer the plaintiff accepted that there was an issue for trial in relation to whether the defendant was obliged to pay the plaintiff's salary or could accrue the same until it could afford to make payment up to the date that the defendant's terminated the plaintiff's employment.  The issue for the summary judgment application therefore only concerned the position once notice of termination had been given by the defendant. 

11.      It is right to record at this point that the plaintiff also brought a claim for unfair dismissal against the defendant which led to a decision of the Employment and Discrimination Tribunal (the "Tribunal") on 5^th June, 2018.  The Tribunal found that the plaintiff was unfairly dismissed "due to procedural errors by the respondent" (see paragraphs 53 to 58 of the Tribunal decision).

12.      One of the issues before the Tribunal was whether or not the plaintiff agreed to accrue its salary.  This led to the Tribunal to state at paragraph 47. b) of its decision as follows:-

"It was clear that the Claimant agreed to accrue salary.  ...The Claimant and Mr Strange gave different accounts of the terms of that oral agreement and neither party provided any evidence in support of their assertions.  I was therefore unable to make a finding on what the terms were.  ...I do not consider this discreet issue to be of significant importance, save that it demonstrates (if further evidence were needed) that the Claimant knew that the Respondent could not afford to pay him his full salary."

13.      In support of his application for summary judgment, the plaintiff filed an affidavit sworn on 6^th November, 2018.  The pertinent paragraphs are 15 to 23 as follows:-

"15.     On or around late afternoon of 23 May 2017, Mr Strange had a five-minute conversation with me whereby he briefly touched on the deteriorating financial situation of the Defendant. As a consequence, he vaguely offered me a verbal alternative to my employment contract whereby I would be informed on a weekly basis how many days of my work would be required, if any. No minimum number of hours or a rate per hour had been offered. Given that lack of certainty regarding the terms, I did not view this any meaningful offer or alternative employment.

16.      In the morning of 25 May 2017, I had another very brief meeting with Mr Strange, who again made an offer without any real substance. He informed me that the directors of the Defendant would take a pay cut. At this point it should be noted that Mr Strange was the sole remunerated director. He vaguely volunteered that he "might" take a salary reduction, but when I asked him to what extent he changed the subject.

17.      I do not recall either Mr Strange or any other directors of the Defendant agreeing to accrue their salaries until the funding was secured.

18.      Trying to be accommodating, I suggested to pro-rata my employment contract to three days per week, effectively taking a 40% cut on salary but this proposal was instantly rejected by Mr Strange.

19.      Instead, out of the blue, I received a sealed letter of dismissal signed and dated 24 May 2017 (the "Letter") by virtue of which I had been placed on garden leave and reminded of my restrictive covenants. I did not expect such a decision to be made, let alone to be made so swiftly and unexpectedly. I was further surprised to note that the letter was dated 24 May 2017 after my meeting on 25 May 2017.

20.      The Letter clearly stated that I should have continued to receive my "normal salary or part thereof with the balance accrued as well as contractual benefits as agreed up to my final day of employment". The Letter did not mention anything about a deferral of any payment. It was my clear understanding that by my final day of employment I would be paid in full. The Letter provided for no ambiguity in this respect.

21.      Since 2 May 2017 until now, I have received no remuneration or any form of payment whatsoever. This is despite the Defendant continuing to trade.

22.      I confirm the Letter at the time gave me to a huge degree a comfort that any outstanding payments and any payments to be due throughout my gardening leave would be paid on time.

23.      Nevertheless, to obtain an additional layer of security, I requested the Defendant to provide me with a written confirmation of due salary and outstanding arrears. As a result, Mr Strange and I agreed a schedule that itemised the arrears of salary and the amounts to be paid throughout my notice period (the "Schedule")."

14.      On 14^th January, 2019, Mr Warren Strange filed an affidavit exhibiting his witness statement filed with the Tribunal and correspondence between the plaintiff's advocate and the defendant's in-house lawyer. 

15.      The witness statement of Mr Warren Strange at paragraphs 12 and 13 stated as follows:-

"12.     There was never any dispute over the amount and the payment terms remained the same, as they always had been: in the Claimant's own words, payment was always to be "Dependant on the level and timing of funding" i.e. as and when the Company could afford it.

13.      A compromise agreement/settlement was reached between us, Exhibit WS3 which was produced by the Claimant, that included accrued salary owed to him and salary payments for each of the next 3 months, by way of a compromise agreement or payoff, as well as an agreement that we would not end his employment acrimoniously so that his business reputation was not tainted or possibly irreparably damaged here in Jersey."

The plaintiff in reply to the defendant's affidavit filed a second affidavit on 16^th January, 2019, setting out the gross figures due to him on a monthly basis.  He therefore quantified the amount sought under the summary judgment application in the sum of £65,704.80 representing gross salary payments due for May to August plus the defendant's social security contributions as employer. 

Submissions

16.      Advocate Jowitt for the plaintiff made the following submissions:-

(a)       The plaintiff's application was based on a schedule which Advocate Jowitt contended required a short point of construction only which I had jurisdiction to deal with on a summary judgment application (see De La Haye v De La Haye [2018] JRC 233) at paragraphs 42 to 43) and that the terms of the schedule only had one meaning.

(b)       While the plaintiff accepted that there was an arguable case at trial in respect of arrears of salary prior to the plaintiff's employment being terminated, any such agreement (the extent of which was disputed in the event) did not apply to salary payable during the notice period by reference to the terms of the Schedule signed by the plaintiff and Mr Warren Strange. 

(c)       The plaintiff's position was that the Schedule was intended to address any possible ambiguity in the letter of 24^th May, 2017, terminating the plaintiff's employment.  While it was the plaintiff's position that the letter of 24^th May, 2017, itself was unambiguous because it stated that the plaintiff was to receive his normal salary as agreed up to the final date of his employment, the Schedule signed by both parties put matters beyond doubt. 

17.      Advocate Jowitt argued that his argument was confirmed by Mr Warren Strange's own witness statement.  Mr Strange at paragraph 13 described the Schedule as a "compromise agreement/settlement".  It was also described as "a payoff".  Mr Strange's witness statement therefore supported the plaintiff's case.  It was also inconsistent with the defendant's answer at paragraph 8.  While Mr Strange also had the opportunity to file further evidence in response to the plaintiff's affidavit to respond to paragraphs 15 to 23, his affidavit filed on 14^th January, 2019, did not do so. 

18.      The words "to pay" next to each month from May to August in the Schedule was only capable of one meaning.  If Mr Strange had wanted to defer payment he could have marked the Schedule accordingly.  He did not do so and the contract as signed does not therefore allow for deferral.

19.      The fact that the company might have financial difficulties or indeed might be insolvent was not a defence to the point of construction advanced. 

20.      Mr Ben Strange in response for the company, having undertaken to file a notice in compliance with Rule 4/2(A) of the Royal Court Rules 2004, as amended (the"Rules"), made the following submissions:-

(a)       "To pay" as quoted in the Schedule meant that when the company was able to pay not that it would pay;

(b)       The dispute was a factual dispute and therefore the defendant should have the benefit of a trial to argue all matters in dispute;

(c)       He reminded me that I should not conduct a mini trial;

(d)       Nothing had changed since the agreement reached earlier in the year to defer salary;

(e)       The defendant wanted to put the plaintiff to proof; and

(f)        The defendant should be allowed to file further evidence.

Decision

21.      In respect of the applicable legal principles on a summary judgment application, there was no dispute on the general test found at MacFirbhisigh and Ching v CI Trustees and Executors Limited [2017] JRC 130A at paragraph 13 to 19.  These are the principles I have applied. 

22.      At paragraph 19 of Ching Commissioner Hunt also referred to my decision in Holmes v Lingard & Anor [2017] JRC 113 in particular requiring judges not to abandon their "critical faculties" in evaluating a summary judgment application as set out in paragraph 164 and the extract quoting as follows:-

"164.   Paragraph 24.2.5, of the 2017 White Book also contains the following statement:-

"If the applicant for summary judgment adduces credible evidence in support of their application the respondent becomes subject to an evidential burden of proving some real prospect of success or some other reason for a trial.  The standard of proof required of the respondent is not high.  It suffices merely to rebut the applicant's statement of belief.  The language of r.24.2 ("no real prospect ... no other reason...") indicates that, in determining the question, the court must apply a negative test.  The respondent's case must carry some degree of conviction: the court is not required to accept without analysis everything said by a party in his statements before the court.  In evaluating the prospects of success of a claim or defence judges are not required to abandon their critical faculties.  However, the proper disposal of an issue Pt 24 does not involve the judge in conducting a mini-trial.""[Emphasis Added]

23.      I also refer to paragraph 165 of the said judgment where I refer to the case Amy v Amy [2011] JLR 603 at paragraph 28 which reads as follows:-

""28    On the other hand, as r.7/2(1) makes clear, where the application is within the rule and properly supported by an affidavit on behalf of the plaintiff, it is for the defendant to satisfy the court that there is an issue which ought to be tried. This, in general, requires evidence on behalf of the defendant rather than just an assertion or the production of a pleading; and it is well established that the defendant's affidavit should be specific enough to enable the court to see that there is a real issue to be tried (see Toothill v. HSBC Bank plc. (6) (2008 JLR 77, at para. 29, per Birt, Deputy Bailiff)): [Emphasis Added]

"In short, the court must consider whether the defendant has shown an arguable defence, i.e. whether there is a triable issue. If so, leave to defend should be given. We would, however, refer specifically to the passage at para. 14/4/5, at 173 which states:

'The defendant's affidavit must "condescend upon particulars," and should, as far as possible, deal specifically with the plaintiff's claim and affidavit, and state clearly and concisely what the defence is, and what facts are relied on to support it.' [Emphasis Added]

As is stated later in the same passage: 'Indeed, in all cases, sufficient facts and particulars must be given to show that there is a triable issue.'" [Emphasis Added]

24.      In my judgment, the witness statement of Mr Strange does not condescend upon sufficient particulars as is required to enable me to be satisfied that there is a real issue to be tried.  The plaintiff at paragraph 23 of his affidavit sets out precisely why the Schedule was required.  Mr Strange's witness statement does not deal with paragraph 23 at all.  Yet, the defendant had the opportunity to file further evidence in accordance with rule 7 of the Rules, but did not do so beyond relying on the same witness statement filed before the Tribunal. 

25.      In my judgment, as a matter of construction the words "to pay" appearing on the schedule are only capable of one meaning, namely that the defendant was agreeing to pay.  I agree with Mr Jowitt that if the defendant only wanted to pay when it had the money to do so, Mr Warren Strange should have amended the Schedule to make this clear rather than simply sign it. 

26.      I also accept the plaintiff's argument that what was the point of the Schedule if not to provide certainty.  In my judgment the letter of termination was potentially ambiguous in that the words "as agreed" could be arguably construed to refer to previous arrangements to defer salary.  This is so even though the wording used appears to be in relatively standard form following a termination of employment.  Nevertheless, in reaching a decision to grant summary judgment, I have given the defendant the benefit of the doubt that the letter of 24^th May, 2017 could be construed in the defendant's favour to mean that any arrangements to defer salary would continue. 

27.      However, I cannot construe the Schedule in the same way.  To use Mr Strange's own words in his witness statement given to the Tribunal "it was a compromise agreement, a settlement and a payoff".  There was therefore nothing prima facie about it contrary to paragraph 6 of the defendant's answer.

28.      I am also of the view that the dismissal of the plaintiff by the defendant was a change in circumstances to justify reaching the conclusion that I have reached.  So long as the plaintiff remained in employment with the defendant he had the ability to influence when payment of arrears of salary might take place.  To use a colloquialism, he had "skin in the game".   That no longer applied once his employment had been terminated. 

29.      The context of the termination of the plaintiff's employment leading to the Schedule being agreed is also relevant.  It came out of the blue without any warning to plaintiff.  Not surprisingly he was therefore extremely anxious to ensure that he was going to be paid for being on 'garden leave'.  Otherwise he would have been free to walk away immediately to work elsewhere.

30.      Finally, I do not regard the Tribunal decision as assisting the defendant's argument.  Mrs Griffin was quite clear that she could not making any findings on what the terms of the agreement were.  The Tribunal decision also does not explore whether there was any difference between any agreement prior to termination and after termination.  Mrs Griffin also did not have the benefit of the plaintiff's affidavits. 

Conclusion

31.      In conclusion, the defendant therefore had every opportunity to respond to the plaintiff's first affidavit but did not do so.  The obligations as to when affidavits are to be filed within the Rules are clear.  That was the defendant's opportunity to set out what its case was and to provide the necessary detail to persuade me that there was an issue for trial.  In the absence of any said evidence there is no issue that requires determination by the Royal Court.  The defendant did not do so and therefore has not provided any evidence to support paragraph 8 of its answer or to rebut the plaintiff's evidence. 

32.      Having granted judgment, I ordered the defendant to pay the plaintiff interest at the court rate from the date of the plaintiff's summons and particulars of claim together with costs on the standard basis. 

Authorities

De La Haye v De La Haye [2018] JRC 233.  

Royal Court Rules 2004, as amended

MacFirbhisigh and Ching v CI Trustees and Executors Limited [2017] JRC 130A

Holmes v Lingard & Anor [2017] JRC 113

Amy v Amy [2011] JLR 603