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King v. University Court University St Andrews [2003] ScotCS 186 (03 July 2003)

OUTER HOUSE, COURT OF SESSION

A832/01

OPINION OF LORD BRACADALE

in the cause

PETER KING

Pursuer;

against

THE UNIVERSITY COURT OF THE UNIVERSITY OF ST ANDREWS

Defenders:

________________

Pursuer: Napier, Q.C.; Balfour & Manson

Defenders: Truscott, Q.C.; Simpson & Marwick W.S.

3 July 2003

Introduction
[1] This case came before me on procedure roll on the first and fourth pleas-in-law for the pursuer and the first and second pleas-in-law for the defenders.

Background
[2] The pursuer was formerly in the employment of the defenders as Assistant Principal Director of External Relations at the University of St Andrews. Clause 4 of his contract of employment stipulated:

"The University Court shall be entitled for good cause shown to terminate the appointment of the employee by giving 3 months notice in writing."

[3] On 5 August 1998 the defenders wrote to the pursuer giving him notice that his contract of employment was to be terminated on grounds of conduct and capability. In this action the pursuer seeks damages for the loss of salary arising out of the termination of his contract of employment alleging that the defenders were in breach of contract. In particular, the pursuer avers that the defenders were in breach of the express terms of clause 4. An esto case, based on breach by the defenders of an implied duty of trust and confidence, was pled on record but was departed from by Mr Napier QC who appeared on behalf of the pursuer.

[4] Prior to the issuing by the defenders of the letter of 5 August 1998, a hearing had taken place for the investigation of certain disciplinary charges against the pursuer. The hearing took place on 15 June and 3 August 1998 before a panel which the defenders had appointed for the purpose of investigating the charges and reaching a conclusion as to whether there was good cause for terminating the pursuer's employment. As a result of the findings of the panel the defenders decided to terminate the employment of the pursuer. The pursuer marked an appeal against this decision. The appeal was rejected by an appeals panel on 9 October 1998 and that rejection was intimated to the pursuer on 13 October 1998.

The Pursuer's Submissions
[5] Mr Napier submitted that the point he wished to make was a simple one but went to the very heart of the defenders' case as it stood. If I accepted his submissions then the defences on the merits should be deleted and the case should proceed to proof on the question of loss only.

[6] In article 2 of condescendence the pursuer avers that he was employed under a contract of employment with the defenders for a fixed period. Mr Napier referred to the terms of clause 4 of the contract of employment. He pointed out that the defenders have admitted the existence of the contract in these terms. It was clear from the terms of Answers 3 and 4 that the defenders had relied on the express term in the contract. Mr Napier explained that the pursuer avers that at the point at which the defenders terminated the contract, they did not have good cause to do so. He submitted that the defenders do not offer to prove that there was good cause by reason of anything done or not done by the pursuer in carrying out his duties. Instead, what they do is to aver that they established a panel to consider the matter, and to go on to make averments as to the deliberations and conclusions of the panel. Nowhere in the pleadings as they stood is it averred by the defenders that the reference to good cause in the express term of contract is to be understood as referring to the findings of a disciplinary panel as to whether good cause existed. The defenders' answer to the pursuer's case is that there was good cause because a panel found that there was good cause. Mr Napier submitted that that is inadequate and irrelevant to the claim which the pursuer makes. If the defenders rely on good cause then they must offer to prove good cause based on the conduct of the employee. It is not enough to offer to prove that because of the findings of a panel, the defenders believed there was good cause.

[7] Mr Napier submitted that where the existence of good cause is challenged, the employer has to prove that there was good cause by reference to actions of the employee and not by reference to the findings by a panel which the defender appointed. It would have been possible to have specified by agreement that good cause would have been provided by the findings of a disciplinary panel, but it is not averred by the defenders that it was so agreed.

[8] Mr Napier therefore submitted that the defenders' averments from page 15A to the end of the Answer on page 19A were all irrelevant and should be deleted. That left a wholly non-specific averment at page 15A, namely, that dismissal was for good cause shown. There is no specification of that and therefore that also should be deleted.

[9] In these circumstances he invited me to sustain the first and fourth pleas-in-law for the pursuer and to repel the first, second and third pleas-in-law for the defenders. The result would be that the matter should proceed to proof on the issue whether the pursuer has suffered loss and if so, to quantify that loss.

The Defenders' Submissions
[10] Mr Truscott QC, who appeared for the defenders, submitted that Mr Napier was reading clause 4 short, and inaccurately. He stressed the words at the beginning of clause 4 "The University Court shall be entitled...". He submitted that under the terms of the contract the employer can terminate the employee's employment where good cause is shown to the employer. Clause 4 does not stipulate that the University Court shall be entitled, on good cause shown to a judge, to terminate employment. The context of clause 4 is that of a contract between the employer and the employee. At page 15 the defenders aver that good cause was established by a panel charged by the University Court to investigate and reach a conclusion. The report of the panel is produced and incorporated in the pleadings.

[11] Standing the terms of the clause, the process whereby the University deemed itself entitled to dismiss on good cause shown sets out a relevant case and, indeed, the only case that falls to be made by the defenders.

[12] The role of the court is to determine whether there has been a breach of contract in a specific sense, a breach of the terms of clause 4 of the contract. The court will concentrate on that term and note that it is The University Court that is to be entitled on good cause shown to terminate. It is to The University Court that good cause has to be shown. Mr Napier's approach demonstrated a misunderstanding of the role of the court. The role of the court is to review what the defenders had done in purported compliance of clause 4. The court will review the whole conduct of the defenders in establishing their entitlement to terminate the contract.

[13] Mr Truscott drew attention to the pursuer's own pleadings at page 11C-D in which an attempt is made to attack the basis on which good cause was found. Although Mr Napier had contended that that passage related to the esto case which was now abandoned, Mr Trustcot submitted that it went beyond that and into the substantial issue of whether good cause was established. It was indicative that the pursuer recognised that the nature of the case was as the defenders contend.

[14] Mr Truscott referred me to an Opinion at an earlier debate on procedure roll in this case reported as King v The University Court of St Andrews 2002 IRLR 252. While he recognised that the Opinion of Lady Smith addressed the relevancy of the esto case from which the pursuer has now departed, Mr Truscott submitted that certain passages in the Opinion indicated that the approach for which he contended was correct. In particular, he referred me to paragraph [18] where Lady Smith said:

"The issue that the pursuer seeks to have explored at proof is that of whether, in the investigation and evaluation that they applied to the question of whether good cause had been shown for dismissing him, the defenders breached that implied term."

He also referred me to paragraphs [21] and [22] where Lady Smith identified the two stage process through which the defenders required to go. In paragraph [21]:

"At the stage of consideration of the question of whether good cause for termination had been shown, it is only logical, in my view, that the employer would have to have it as much in mind that the employee might remain in his employment as that he might not. Investigation and evaluation of allegations might show that there was no good cause for terminations. Even if it did show that there was good cause, consideration would then have to be given to the question of whether such cause having been shown, the right to dismiss should be exercised."

And in paragraph [22]:

"It is also important to note, in my view, that the wording of clause 4 is such as to provide that 'good cause' must be 'shown' before the employer has a right to terminate the contract. The wording used envisages, in my view, that before it is decided whether good cause exists or not, some sort of hearing will take place during which the case that there is 'good cause' for dismissal is presented."

[15] Mr Truscott submitted that this reflected a logical interpretation of the clause. It was therefore necessary for the defenders to aver how and on what basis they went about determining whether good cause existed.

[16] This led Mr Truscott on to his own plea to relevancy. He submitted that, standing the level of detail the defenders have set out as the basis for good cause, it was incumbent on the pursuer not just to aver that the defenders did not have good cause, but to set out, with respect to each of the charges, the evidence and the findings, what it is that he says does not constitute good cause about a particular component. The defenders were entitled to know what it was that the pursuer was complaining about. He referred to page 11E and the reference to difficulties that arose between the parties. Mr Truscott posed the question as to what the pursuer was relying on in that passage. As a matter of specification the pursuer must know and should aver what it is he says that has been found but does not constitute good cause. Against the background where he was involved in the entire process, the pursuer should specify what it is he now complains about as being the material respects in which the panels gave findings that he disputes. He should aver why he disputes them. The defenders would then be in a position to answer these by reference to findings of the panel or by making additional averments. The court could adjudicate whether there had been a breach of the term of the contract.

The Pursuer's Submissions in Reply
[17] Mr Napier submitted that it was not correct to submit that the role of the court was simply to review the decision of The University Court. The role of the court was to decide whether there was good cause shown.

[18] With respect to page 11D, Mr Napier submitted that that passage was relevant only to the esto case and that it was therefore wrong to draw any inference from it.

[19] Under reference to the opinion of Lady Smith, Mr Napier submitted that it was clear that the debate there was concerned with the scope of the duty of trust and confidence and that there had been no discussion of what was good cause.

[20] In response to the submission by Mr Trustcott that it behoved the pursuer to give chapter and verse as to why he disputed the findings of the panel, Mr Napier submitted that the findings of the tribunal are irrelevant. Where, as here, an employer is purporting to rely on a contract term which enables him, short of that period, to determine a contract for a fixed period, then the burden of proof was on the party who relies on the contract term to show its existence.

Discussion
[21] The point raised is a short sharp one. It turns upon the proper construction of clause 4 of the contract of employment between the pursuer and the defenders. In my opinion the construction for which Mr Truscott contended is to be preferred. In my opinion the proper construction of clause 4 requires the defenders as the employers, before they would be entitled to take the step of terminating employment, to satisfy themselves that there was good cause.

[22] The terms of clause 4 contemplate that in a case where a question arises as to whether the conduct of an employee was such that termination of employment was a possibility, the defenders would require to carry out some form of inquiry in order to ascertain whether the terms of clause 4 were met. Although I accept that the argument before Lady Smith related to the implied term and that the matter before me was not the subject of argument before her, I agree with Lady Smith's observation in paragraph [22]:

"It is also important to note, in my view, that the wording of clause 4 is such

as to provide that 'good cause' must be 'shown' before the employer has a right to terminate the contract. The wording used envisages, in my view, that before it is decided whether good cause exists or not, some sort of hearing will take place during which the case that there is 'good cause' for dismissal is presented."

[23] Where the employment is terminated the employee may raise an action for breach of contract. The relevant breach of clause 4 would be that the employers had failed to show to themselves that good cause had been demonstrated. The only way in which the court can examine whether there has been a breach of contract is by having regard to the steps taken by the employers in order to satisfy themselves that there was good cause.

[24] In these circumstances, in my view, Mr Truscott was correct in his submission that the defenders' averments in answer do constitute a relevant case and that the pursuer's first and fourth pleas-in-law fall to be repelled. In addition, it follows that the criticisms of the pursuer's case advanced by Mr Truscott are well founded. Mr Truscott invited me to refrain from ruling on the defenders' pleas-in-law at this stage. Instead, he moved me to order that the case be put out by order one month after the issuing of my opinion. Mr Napier did not oppose that motion.

Decision
[25] I shall repel the first and fourth pleas-in-law for the pursuers. I shall at this stage make no ruling on the defenders' pleas-in-law. The case will be put out by order for further discussion one month after the issue of this opinion.