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Cite as: [2003] ScotSC 25

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Walker v. Tidewater Cyprus Ltd [2003] ScotSC 25 (03 March 2003) SHERIFFDOM OF GRAMPIAN HIGHLAND AND ISLANDS AT ABERDEEN

A1770/00

		JUDGEMENT of SHERIFF PRINCIPAL SIR STEPHEN S T YOUNG Bt QC
		in the cause
		FORBES GRANT WALKER
		Pursuer and Appellant
		against
		TIDEWATER CYPRUS LTD
		Defenders and Respondents

Act: Mr McNeill, advocate, instructed by Eileen Dommer, Dundee

Alt: Mr Clark, advocate, instructed by Burnside Kemp Fraser, Aberdeen

Aberdeen: 3rd April 2003

The Sheriff Principal, having resumed consideration of the cause, allows the appeal in part; recalls the interlocutor of the sheriff dated 26^th November 2001; of new repels the first plea-in-law for the pursuer; sustains the first plea-in-law for the defenders to the extent of excluding from probation the whole of the pursuer's averments other than those directed to the question whether or not the defenders paid wages to the pursuer in respect of the period between and including 1^st and 23^rd November 1998; allows parties a proof of their respective averments restricted to this question and appoints the proof to proceed on a date to be afterwards fixed; reserves meantime all questions of expenses and appoints parties to be heard thereon on Wednesday 16^th April 2003 at 10.00 am.

Note

In this case the pursuer and appellant was employed by the defenders and respondents as a cook onboard one or other of their ships. Indeed, if the submissions advanced on his behalf are sound, it may be that he is still so employed. In form the present action is a claim for payment of damages for breach of his contract of employment measured by reference to the wages which ought to have been paid to him over the period of twenty two months between
31^st October 1998 (when, according to him, he was last paid by the defenders) and the date upon which the action was raised, namely 26^th September 2000. Thus the legal basis of his claim is stated in his second plea-in-law which reads: "2. The pursuer, having suffered loss and damage through the defenders' breach of contract, is entitled to payment for loss and damage arising therefrom". But in substance the claim is a straightforward claim for payment of these wages - and this notwithstanding the fact that the pursuer has admittedly carried out no work for the defenders since 31^st October 1998.

The factual basis of the pursuer's claim is set out in articles 2 and 3 of the condescendence. The averments in these two articles were the subject of certain amendments in the course of the appeal hearing. Despite these, they remain distinctly confused and confusing. So far as I understand them, they are to the following effect.

The pursuer was employed by the defenders as a cook with effect from 1^st May 1998. The terms of his employment from that date were, inter alia, that he would work one month on ship followed by one month's leave. Notwithstanding this, the defenders' agents Fairway Personnel Services Limited ("Fairway") regularly asked the pursuer to return to ship one week early, and he did so. On or about 28^th October 1998 Fairway telephoned the pursuer and asked him to join a ship that same day. He duly did so and there was then an incident between himself and the skipper of the ship, the details of which need not now be rehearsed. The upshot was that the pursuer left the ship at around 7.25 pm that same day without signing the ship's articles and log. The following day the pursuer was telephoned by Fairway's Personnel Manager,
Mr Nigel Parkes, and they thereafter met at the latter's office. There was evidently a discussion about what had taken place the previous day, and Mr Parkes advised the pursuer that he might receive a warning letter. In general discussion Mr Parkes told the pursuer that there might be a de-manning of the ships because of a downturn in business.

The pursuer then avers that around the end of November 1998 he received a P45 in an envelope with no covering letter. In their answers, the defenders aver that it was they who issued the P45 to the pursuer and, although this is not admitted by him, I understood counsel for the pursuer to accept for present purposes that this was correct. Upon receipt of the P45, the pursuer telephoned a manager of the defenders and three of Fairway's managers and was told that none of them knew anything about his termination of employment. He avers that Fairway's managers were responsible for manning the ships and rotating the staff and that he assumed that he was being temporarily laid off due to a period of de-manning. He then avers that during a period of de-manning he was still entitled to receive his pay for a period of three months.

Approximately four weeks later the pursuer received a letter dated 31^st December 1998 from Fairway. It was signed by Mr Parkes and advised the pursuer of certain new terms of employment. In particular it said that his salary was to be increased by 5% and that with effect from 1^st January 1999 his employers (the defenders) would not be paying for sick pay or medical severance. About a fortnight later the pursuer received a further letter from Mr Parkes dated 15^th January 1999. With this letter there was enclosed a revised contract of employment between the defenders and the pursuer for signature and return by him. In short, the pursuer was given the choice of, on the one hand, continuing to work for the defenders subject to his existing contract of employment but without any increase in salary and, on the other hand, accepting the revised contract of employment which incorporated the 5% increase in salary, the deletion of the previous sick pay and medical severance provisions and certain other changes. Two copies of the revised contract were enclosed in the letter and the pursuer signed them and inadvertently returned both to the defenders. One copy was thereafter returned to him by the defenders under cover of a hand-written (undated) note which read: "You inadvertently sent me back both copies of your new contract. I am therefore returning one copy to you which you should keep for your own records".

The pursuer received two further letters from Fairway dated respectively 1^st and 18^th February 1999. The first of these thanked him for returning his new contract of employment so promptly, while the second stated that consideration might have to be given to the possibility of a reduction in the number of sea staff employed by the defenders and that the precise number of redundancies had yet to be determined but was likely to be reasonably substantial.

The pursuer avers that following receipt of the revised contract he assumed that he was no longer subject to de-manning. He telephoned Fairway every day seeking work for a period of six weeks. He received a response each time he telephoned that a ship was not available. He avers that he was not advised by Fairway that they did not regard him as an employee until February 1999. On being so advised he immediately telephoned the defenders and advised them of the revised contract. The defenders' representative advised him that she would investigate and get back to him but she did not communicate further with him. He also attempted to speak with Mr Parkes, but he was not available.

The upshot of these proceedings is stated by the pursuer in certain averments which appear towards the beginning of article 2 and which read as follows:

The defenders have not terminated the pursuer's employment with them in terms of his contract of employment. In particular, the defenders did not advise the pursuer that his employment had been terminated. Further, the defenders gave no notice to the pursuer that his employment was terminated ..... admitted that the pursuer was not paid any sums from 23^rd November 1998 for wages or otherwise under explanation that he had not been paid by the defenders since 31^st October 1998 ...... admitted that the pursuer has carried out no work for the defenders under explanation that in terms of his contract of employment with the defenders he was to remain on call to work offshore when required and not undertake any other employment and he did so remain on call and did not undertake any other employment. In such circumstances, he was entitled to salary (the emphasis is mine).

A copy of the revised contract of employment (which is dated 15^th and 19^th January 1999) has been produced and its terms incorporated into the pleadings brevitatis causa. It is headed: "Contract of employment for ratings employed on designated vessels working in the North Sea region". The name of the employer is stated to be defenders and the pursuer is stated to be the employee. The date when his continuous employment commenced for statutory purposes is stated as 29^th May 1998 and it is said that he will be employed as a cook. Clause 1.0 provides that the agreement covers the terms and conditions of service for all ratings employed by the defenders for service onboard offshore support vessels owned or managed by two named companies. Clause 4.0 provides that all employees agree to serve in a higher or lower rank (without loss of earnings) at any time to meet the vessel operating needs. Clause 6.0 provides:

Leave can only be taken when authorised by the Master or accredited representative of the Company.

Leave is based on the schedule attached at Appendix C.

Excess leave accrued on normal tours of duty may be cashed in quarterly up to a maximum specified in Appendix C.

The Company will maintain a minimum 3 days leave in hand for administrative purposes.

Clause 8.0 deals with payment of salary. Paragraph (a) provides that salary will be paid by 12 equal payments per year into the employee's bank account, effectively on the last working day of each month. Paragraph (b) provides that the salary is the employee's sole remuneration which will include all overtime, and other payments relating to all required duties, plus any bonus payments as applicable. Paragraph (c) refers to deductions such as income tax and national insurance contributions. There are then some provisions about what is called "Standby Salary" which appears to be payable when an employee is prevented from joining a vessel on the due date through no fault of his. These provisions appear to have featured at an earlier stage in the case, but towards the end of his opening submissions counsel for the pursuer explicitly stated that he did not rely on these particular provisions.

Clause 15.0 provides for redundancy payments to be made to an employee in the event that he is made redundant. The amount of these depend upon the employee's age and length of service. But it is quite clear that the pursuer does not found upon these particular provisions. Clause 20.0 deals with notice of termination of the contract. For ratings (such as the pursuer) it is provided that one week's notice per completed year of service up to a maximum of 12 weeks for 12 years will be given by the Company. Employees are required to give not less than one week's notice in writing to the Company via Fairway. The pursuer's position in the present case is that the defenders have not given him notice of termination either in terms of his original contract of employment or in terms of the revised contract of employment.

As indicated, the provisions about leave are to be found in Appendix C. Paragraph (a) provides: "Leave is based on one day's leave per every day served on the Ship's Articles". Paragraph (d) provides: "Time spent standing by, away from home waiting to join or to be repatriated from a vessel will neither earn or consume leave". Paragraph (e) provides: "Excess leave accrued on normal tours of duty may be cashed in quarterly up to an annual maximum of 12 days per employee ......" Paragraph (f) provides: "Normal tours of duty are 28 days for standby vessels". Paragraph (g) provides: "While the Company will seek to adhere to the agreed tours of duty, circumstances may dictate that both periods onboard and ashore have to be extended or curtailed".

In article 3 of the condescendence the pursuer avers once again that he has not been paid by the defenders since 31^st October 1998. He then says that in February 1999, following the unsuccessful telephone calls to the defenders, he consulted law agents and instructed them to seek payment due to him in terms of the contract of employment. A solicitor duly wrote on his behalf on 25^th February 1999 to Fairway and, in short, demanded payment to the pursuer of the arrears of wages due to him. The pursuer then avers that his net salary was £1,011.55 per month, that to date (that is, the date of raising the action) he has lost £22,254.10 (which is the sum sued for) and that he has a continuing loss of £1,011.55 per month. It will be observed that this last sum multiplied by 22 comes to £22,254.10.

I have already indicated the legal basis of the pursuer's claim for payment of this last sum as set forth in his second plea-in-law. The defenders' primary position in response is, in short, that the pursuer's employment was terminated on 23^rd November 1998 when the P45 was sent to him. They have tabled a variety of pleas-in-law directed to the merits of the action. In addition, their first plea-in-law is directed to the relevancy and specification of the pursuer's averments. It reads:

The pursuer's averments being irrelevant et separatim lacking in specification ought not to be admitted to probation.

After debate the sheriff sustained the defenders' first plea-in-law and dismissed the action. The pursuer thereafter appealed against this decision. For present purposes, I do not think that it is necessary to consider the sheriff's judgement in any detail since it is plain that the arguments which were presented on appeal differed significantly from those which were presented to the sheriff.

Much of the time during the appeal was taken up by a consideration of the question whether the sending of the P45 by the defenders to the pursuer had had the effect of terminating his original contract of employment with the result that the revised contract of employment was of no effect since, by the time it was executed, there was no contract in force between the parties which could be varied or revised. Counsel for the pursuer submitted in short that the sending of the P45 had constituted a repudiation by the defenders of the original contract of employment, but that such a contract was in no different position from any other type of contract in respect that it would not be terminated by a repudiation made by one party unless this was accepted by the other, innocent, party as terminating the contract (in which event his remedy would be payment of damages for wrongful termination of the contract) - see White & Carter (Councils) Limited v McGregor 1962 SC (HL) 1. In the present case there was no suggestion in the pursuer's pleadings that he had at any stage accepted the defenders' repudiation, so that the original contract of employment remained in force as subsequently varied by the revised contract.

Counsel for the defenders accepted that it was a general rule in the law of contract in Scotland that a repudiation of a contract by one party required to be accepted by the other in order that the contract might thereby be terminated. But he emphasised that this was a general rule, and that there were exceptions to it. Under reference to Gunton v Richmond-upon-Thames LBC 1980 ICR 755, Rigby v Ferodo Ltd 1987 IRLR 516, Boyo v London Borough of Lambeth 1995 IRLR 50 and First Edinburgh and Leith 415^th Starr-Bowkett Building Society v Munro 1884 21 SLR 291, counsel submitted that in the present case there had been no need for the pursuer to accept the defenders' repudiation of the original contract of employment before it might be terminated. Thus there had been no contract to be varied by the revised contract of employment and hence no continuing contract in force upon the basis of which the pursuer might found his claim for payment of wages for the period of twenty two months between 31^st October 1998 and the date of raising the present action. Counsel then submitted that if, contrary to the authorities upon which he had relied, the view was taken that acceptance by the pursuer of the defenders' repudiation of the original contract of employment was required in order to bring it to an end, then this could easily be inferred from the pursuer's averments in the present case, and it was pointed out that he had made no positive assertion in his pleadings that the original contract had continued in force after the sending of the P45. Finally, counsel submitted that in any event, even if acceptance by the pursuer of the defenders' repudiation was required and could not be inferred in light of the pursuer's averments, it was beyond argument on the authorities that the pursuer's remedy was restricted to payment of damages for the period of notice set forth in his contract of employment (and here counsel for the pursuer stated that it was a matter of agreement that one week's notice would have been required to terminate the contract of employment in its original form or as subsequently varied by the revised contract). Counsel for the defenders pointed out in this context that the pursuer's claim as presented was not for payment of one week's wages in lieu of notice but in effect for payment of wages supposedly due to him for a period of twenty two months in pursuance of a contract of employment which remained in force down to the date upon which the action was raised. Counsel acknowledged that the court might take the view that the claim for payment of the greater sum of twenty two months wages might include the lesser sum of one week's wages, but in his closing submissions counsel for the pursuer stated explicitly that the present claim was not for payment of one week's wages in lieu of notice.

In point of fact I do not think that I need to decide whether or not it was necessary that the pursuer should have accepted the defenders' repudiation of the original contract of employment in order to bring it to an end and so undermine the possibility of its being subsequently varied by the revised contract. I say this since it seems to me that, even if it be the case that the original contract remained in force following the sending of the P45 and thereafter as varied by the revised contract right down to the date upon which the action was raised, this would not have entitled the pursuer to payment of wages under the contract for the whole period of twenty two months in question. It will be recalled that it was a matter of admission by the pursuer that he had done no work for the defenders since 31^st October 1998. As I understood him, his counsel acknowledged that in the normal case an employee faced with a repudiation by his employer of his contract of employment would not be entitled to pursuer a claim for payment of wages due to him under the contract following the repudiation since, as counsel put it, to earn the right to a day's pay the employee must do a day's work. In the normal case therefore the employee was bound to accept the employer's repudiation and his only remedy was to sue for damages for wrongful dismissal. But in the present case, said counsel (and this was a recurring theme in his submissions), all that was required of the pursuer in terms of his contract of employment with the defenders in order to be entitled to payment of his wages was that he should (a) be available, ready and willing to work if and when he was asked by the defenders through their agents to join one of their ships, and (b) refrain from taking any other employment. As a matter of fact the defenders at no stage during the period of twenty two months had asked him to join one of their ships but, having been available, ready and willing to do so, he was entitled to be paid his wages in terms of his contract - see the averments which I have emphasized in paragraph [8] above.

In response counsel for the defenders submitted, rightly in my opinion, that (even if the defenders were wrong in their primary contention) there was nothing in the pursuer's contract of employment to support this last proposition which had been advanced on his behalf. To my mind the notion that an employee who is not said to be unfit for work might be entitled in terms of his contract of employment to payment of his wages over a period of twenty months during which he does no work at all for his employer is somewhat startling, to say the least, and, if this was to have been the effect of the pursuer's contract, it might be thought that it would have been stated in clear and unequivocal terms. Needless to say, counsel for the pursuer did not refer me to any provision in the revised contract of employment, and I have not myself been able to find any such provision, which could remotely support the contention that, in order to be entitled to payment of his wages throughout the period of twenty two months (and indeed thereafter, as his counsel would have it), the pursuer had only to sit quietly at home for month after month all the while claiming to be available, ready and willing to work.

At one point in his opening submissions counsel for the pursuer drew attention to the averments in article 2 of the condescendence where it is said that, after the sending of the P45, "The pursuer assumed that he was being temporarily laid off during a period of de-manning. During a period of de-manning the pursuer was still entitled to receive his pay for a period of three months". Counsel referred here to the provisions of section 1 of the Contract (Scotland) Act 1997 and pointed out that there was no statement in the revised contract of employment that it contained all the terms of the contract of employment between the pursuer and the defenders. In this situation, said counsel, the pursuer would be entitled to seek to prove, if he had to, that there was an arrangement between the parties to the effect that, if he was not getting any work from the defenders, he would still be entitled to be paid for a period of three months.

By the time he came to present his closing submissions, it appeared that counsel for the pursuer had departed from this particular contention. In any event, as counsel for the defenders pointed out, there was nothing in the pursuer's contract of employment to the effect that he should be entitled to receive his pay for a period of three months during a period of de-manning. As for the suggestion under reference to section 1 of the Contract (Scotland) Act 1997 that a term to this effect might have been incorporated into the contract in some other way, I agree with counsel for the defenders that the pursuer's pleadings are totally bereft of specification as to how and in what circumstances such a term might have been incorporated into the contract.

At another point in his opening submissions counsel for the pursuer referred to the averment towards the end of article 2 to the effect that the pursuer had telephoned Fairway every day seeking work for a period of six weeks. As I understood him, counsel maintained that, at the very least, the pursuer would be entitled to payment of his wages for this period of six weeks. But again by the time he came to present his closing submissions counsel appeared no longer to be insisting upon this particular argument. In any event, it appeared to be based upon the provisions in clause 8.0 of the revised contract of employment which provide in certain circumstances for payment of what is described as "Standby Salary". As I have already indicated, counsel for the pursuer stated that he did not rely on these particular provisions in clause 8.0. At another point in his argument counsel appeared to say that the defenders had at least admitted that the pursuer would be entitled to payment of his wages for the period of six weeks during which he telephoned daily to Fairway. But counsel did not indicate where this admission was to be found in the defenders' pleadings, and I cannot myself see it anywhere.

For the sake of completeness I should mention that the pursuer tabled two pleas-in-law directed to the relevancy and specification of the defences. The first was as follows: "1. The defenders' averments in answer being irrelevant et separatim lacking in specification should not be admitted to probation". The pursuer's fourth plea-in-law was in identical terms and was deleted by amendment on the motion of the pursuer on the first day of the appeal hearing on 9^th January 2003. In his closing submissions counsel for the pursuer accepted that, if the first of two amendments proposed by the defenders during the second day of the appeal hearing on 26^th February 2003 were to be allowed, then he could no longer insist upon the pursuer's first plea-in-law which would fall to be repelled accordingly. In the event I did allow this amendment and I have therefore repelled the pursuer's first plea-in-law.

In his closing submissions counsel for the pursuer submitted that, on any view of the matter, the defenders did not claim to have terminated his contract of employment earlier than
23^rd November 1998 and that the pursuer was accordingly entitled to payment of damages in respect of non-payment of his wages at the very least for the period between 31^st October 1998 and 23^rd November 1998. The defenders' position was that he had been paid his wages for this period and accordingly there would have to be a proof on the question whether or not this was so. Counsel for the defenders accepted that there would indeed have to be a proof on this question (and hence, so it appeared, that the pursuer would be entitled to payment of these wages if they had not been paid to him), and I have allowed this accordingly. But, lest there be any doubt about the matter, the most that the pursuer can hope to recover by way of damages in this action is an amount equal to the net wages to which he claims he was entitled between 1^st November 1998 and 23^rd November 1998 inclusive which the defenders say were paid to him and which he says were not paid. Quoad ultra I have sustained the defenders' first plea-in-law.

It was agreed that all questions of expenses should be reserved for a further hearing.