Easter Term
[2016] UKPC 11
Privy Council Appeals
No 0037 of 2014 and 0038 of 2014
JUDGMENT
Grewals (Mauritius) Ltd (Appellant) v Koo Seen
Lin (Respondent) (Mauritius)
Koo Seen Lin (Appellant) v Grewals (Mauritius)
Ltd (Respondent) (Mauritius)
From the Supreme Court of
Mauritius
before
Lady Hale
Lord Kerr
Lord Hughes
JUDGMENT GIVEN ON
5 May 2016
Heard on 13 April 2016
|
Appellant
Patrice Doger de
Spéville SC
Ravi Bhookhun
(Instructed by
Blake Morgan LLP)
|
|
Respondent
Antoine Domingue SC
Yasser Caunhye
(Instructed by M A
Law (Solicitors) LLP)
|
LORD HUGHES:
1.
The claimant Koo Seen Lin (“KSL”) brought an action against his former
employers, Grewals Mauritius Ltd (“Grewals”) in relation to his dismissal from
his post as General Manager of their timber business. The issues which arose
before the Industrial Court and subsequently on appeal before the Supreme Court
were:
(i)
had he been constructively dismissed during March 2002 (as he contended)
or dismissed by letter of dismissal dated 22 April 2002 (as Grewals contended)?
(ii)
had he been guilty of misconduct justifying dismissal? and
(iii)
was he entitled to severance pay, and if so at the standard or the
punitive rate, and based upon what contractual remuneration?
2.
Both the Industrial Court magistrate and the Supreme Court answered the
first question by holding that he had been constructively dismissed during
March 2002, thus before the letter of dismissal dated 22 April 2002.
3.
The Industrial Court magistrate held that of the some 20 charges of
misconduct levelled by Grewals, none of them were made out. But on appeal the
Supreme Court, whilst upholding many of his findings, held that some six
complaints afforded Grewals justification for dismissal. It concluded that even
if the full extent of Grewals’ accusations were not proved, KSL had been guilty
of conduct amounting to abusive use of his position as General Manager by way
of favouring a separate company called Jadis Ltd which was owned by his son. In
some instances that was the conclusion even on his own case.
4.
On the findings of the Industrial Court, severance pay at the punitive
rate followed. On the different conclusions of the Supreme Court, that court
held that severance pay only at the standard rate was justified.
5.
There have now been cross-appeals by the parties to the Board as
follows:
(a) Grewals appeal
against the finding of constructive dismissal;
(b) KSL appeals against
the conclusion that his conduct justified dismissal;
(c) separately KSL
challenges the conclusion that severance pay at the standard rate was all that
he was entitled to;
(d) Grewals concede that
if, contrary to their principal argument, there was constructive dismissal,
then severance pay at the standard rate follows, but they contend that the
Supreme Court miscalculated the remuneration package on which it should be
based because it did not apportion the value of a company car as between
private and work use.
Summary of facts
6.
KSL had been employed by Grewals since 1978. He had begun as an
accountant but had progressed to General Manager by 1996. In 2001/2002 the
newly in post Chairman of the company became concerned about a number of
allegations which reached him anonymously and about what he himself saw of
KSL’s methods of work. He commissioned an investigation by forensic investigators.
On 22 February 2002, he suspended KSL from his position. On the same day KSL
was interviewed about complaints then known. The chairman set up a Disciplinary
Committee chaired by Queen’s Counsel, to consider the evidence. The
investigators reported to him on 8 March 2002, concluding that KSL had
misconducted himself in a number of ways. On 19 March some 18 complaints were
formulated for KSL to answer, and two more were added on 26 March. The
Disciplinary Committee began its sittings on 27 March, and on both that date
and on 9 April KSL was present, legally represented, before it.
7.
Whilst this was going on, the chairman of Grewals wrote on 14 March 2002
to a number of its suppliers with whom KSL was in the habit of dealing. The
letters were some in French and some in English. The relevant part of the
English language letters was in these terms:
“We hereby inform your company
that Mr Georges Koo Seen Lin no longer holds a managerial position within our
organisation. Any dealings he may conduct with your company will be in his own
personal capacity.”
The French text was to similar effect but a little more
explicit:
“Nous tenons à vous informer que
Monsieur G Koo Seen Lin n’occupe plus le poste de Directeur General de Grewals
(Mauritius) Ltd. Toutes transactions qu’il pourrait avoir avec votre compagnie
serait en son nom personnel.”
8.
Also in the meantime, Grewals had written to KSL on 6 March stopping his
right to be supplied by a local garage with petrol on the firm’s account. The
letter told him that the firm took the view that he had been abusing the petrol
account, and had used Rs.13,080 for February, when, in its contention, only Rs.4,000
per month was reasonable. A separate letter told the garage to stop supplies to
the firm’s vehicles, but gave no more information about the reason.
9.
At a similar time, Grewals cancelled the credit account for the mobile
telephone issued to KSL.
10.
By 16 April 2002 KSL and his lawyers had become aware of the letters to
the firm’s suppliers. On that day, when a further hearing of the Disciplinary
Committee was planned, his lawyers wrote to Grewals saying that it was plain
that a decision had been made to dismiss him, that the Disciplinary Committee
was in consequence a sham and that KSL declined to take any further part in it.
Grewals responded by letter saying that there had been no dismissal, but simply
a suspension.
11.
The committee continued to sit, but without any participation by or on
behalf of KSL. In due course it reported that he had been guilty of serious
misconduct. On 22 April Grewals wrote to KSL a letter dismissing him for gross
misconduct.
12.
Although that letter was written on 22 April, no salary payment for
April was made to KSL at the end of that month. When, sometime later at about
the beginning of September, Grewals came to make a return to their pension
providers they entered against KSL’s name “cancelled 31/3/2002”.
Constructive Dismissal?
13.
KSL relies upon the letters to the suppliers, the stopping of the petrol
account, the mobile telephone cancellation, the failure to pay his salary for
April and the pension return as demonstrating that Grewals repudiated the
contract of employment.
14.
KSL contended before the Board that the conclusions of the courts below
that there had been constructive dismissal amounted to concurrent findings of
fact, with which the Board ought not, in accordance with its usual practice, to
interfere. That is not, however, the right approach. The primary facts were not
significantly in dispute. Whether they amounted to constructive dismissal or
not was a matter not of fact but of the legal consequences of the facts.
15.
However, in the view of the Board, the conclusion of both courts below
that Grewals had committed a repudiatory breach of the contract of employment
was entirely justified, if not indeed inevitable. When constructive dismissal
is in question, the acid test is not whether the employer intended to
dismiss; it is whether he has by his conduct, objectively judged, repudiated
the contract. If he has, the employee is entitled, by accepting the
repudiation, to treat the conduct as constructive dismissal.
16.
The stopping of the petrol and mobile telephone accounts were not necessarily
indicative of repudiatory behaviour by Grewals. Both actions might well have
been concomitants of mere suspension of KSL. Moreover, the stopping of the
petrol account was in terms for over-use, rather than on the basis that his
employment was thenceforth at an end.
17.
The non-payment of salary at the end of April came after KSL had in any
event been dismissed by the letter of 22 April. Likewise, the return to the
pension providers in September came far too late to constitute an act of
repudiation. Both, however, are of some relevance to the extent that they are
capable of demonstrating that Grewals thought that KSL’s employment had been
ended not on 22 April but on 31 March, and thus that they had intended to dismiss
him by that earlier date. Although an intention to dismiss is not a necessary
part of an employer’s repudiatory conduct before it can amount to constructive
dismissal, if such intention exists it is plainly material to the question
whether such repudiatory conduct has taken place.
18.
But the crucial fact here lay in the letters to Grewals’ trading
partners. The Board entirely understands that it was necessary to tell such
people, who were accustomed to treating KSL as the voice of Grewals, that he no
longer had the authority he had hitherto enjoyed. That is particularly so given
the manner in which, as will be seen, he had been using his position to favour
Jadis Ltd. But that does not answer the question whether what was done amounted
to a repudiatory breach by Grewals of the contract under which they employed
KSL. It is true that the letters were not sent to KSL, but that does not matter
if they demonstrate repudiatory conduct. It may be true, as Grewals submit,
that the chairman was not a lawyer and that in writing he might not have
expressed himself as clearly as he ought to have done. But the question is
whether the ordinary non-lawyer businessman, reading these letters, would
understand that KSL had been dismissed. It is not necessary to be a lawyer to
understand the difference between suspension and dismissal. The letters really
bear only one interpretation. That is that KSL, hitherto employed as General
Manager, no longer is. The French text made it particularly clear by speaking
of his no longer occupying the post to which he had previously been appointed.
In other words, his contract as General Manager was at an end.
Misconduct justifying dismissal
19.
It is unnecessary to say more about most of the 20 complaints of
misconduct which were levelled against KSL. The magistrate dismissed them on
the facts, if in somewhat summary fashion, and the Supreme Court, which
analysed them carefully and succinctly, endorsed his findings in relation to
most of them. But the Supreme Court found that on some six different occasions
KSL had abused his position with Grewals to favour Jadis Ltd. Jadis was a company
controlled by KSL’s son. Its registered office was at KSL’s home. He was its
auditor and an authorised signatory for its cheques. The Supreme Court found
that, in most cases even on his own evidence, he had ignored a plain conflict
of interest and had conducted Grewals’ affairs to benefit Jadis. The judge at
first instance had not dealt with the conflict of interest issue at all. The
Supreme Court found the following instances.
(1)
He had caused Grewals to make a purchase from Jadis of a substantial
quantity of hinges, hooks and adjusters when (a) Grewals had plenty in stock
already and (b) no credit terms were negotiated such as would be normal, and
despite the fact that Grewals had a severe cash flow problem. The items
concerned were not normally bought or sold by Jadis. Grewals did not need them
and in the end could only get rid of them at a loss.
(2)
He had advanced some Rs.50,000 of Grewals’ money to a transport
contractor used by both that firm and by Jadis. An allegation that this was
payment for the transport of Jadis merchandise (juice) was not proved, but
KSL’s own account that this was a loan to the contractor demonstrated a misuse
of Grewals’ funds since there was no occasion for such a loan; moreover the
relevant paperwork suggested that the money was paid for the transport of
timber, and said nothing about a loan.
(3)
Although he denied doing so, he had frequently used Grewals’ vehicles
and their employed drivers to transport juice for Jadis.
(4)
He had caused Jadis to intervene in a sale of poles by Grewals to Wong
Chap Lan, who needed them to fulfil a hotel contract. Although the evidence was
insufficient to prove that Jadis had thus been enabled to make a profit which
Grewals might have made, there was no reason for Jadis to have anything to do
with the contract, and the explanation offered by KSL was rejected.
(5)
He had used Jadis to pay for a container load of pine which Grewals had
imported. The allegation that this had been fraudulent failed for want of
evidence, but it demonstrated a potential conflict of interest.
(6)
He had bought, for Grewals, a consignment of barbed wire from South
African suppliers, Cape Gate (Pty) Ltd, but had then sold the merchandise on to
Jadis and arranged for it to be delivered to that company. It may be that
Grewals had taken a profit on the deal, but the merchandise had been used by
Jadis to develop a business foothold in a new area, Rodrigue, where Grewals
itself had an established commercial presence. Whether or not there was any
loss of profit for Grewals, this was using Grewals to help a competitor.
The Supreme Court also found a further transaction which
demonstrates a similar conflict of interest:
(7)
Grewals owed some catering contractors Rs.4,640. KSL arranged for
payment of this sum to be made not to the contractors but to Jadis. The
allegation that as a result Grewals had to pay twice was not proved, but the
accounting was at the least irregular and, as the Supreme Court held, not
acceptable.
20.
The judge at first instance had not discussed these various transactions
separately. He had contented himself by saying that the explanations offered by
KSL seemed plausible, but that did not address the conflict of interest which
was disclosed even on his own evidence. The Supreme Court, which set out the
detail of these matters, was undoubtedly entitled to find that, even if they
were not proved to have had the more sinister implications which Grewals
alleged, they demonstrated a plain conflict of interest and amounted to conduct
which gave cause for dismissal. The Board can see no basis on which an appeal
against these findings can succeed. Subject to the new point mentioned next,
the consequence of this is agreed to be that KSL is entitled to severance pay
at the ordinary, but not at the punitive, rate.
A new point
21.
Before the Board, KSL sought to argue an entirely new point based upon
section 32(2)(a) of the Labour Act 1975, which he contends demonstrates that
whatever his misconduct may have been he is entitled to severance pay at the
punitive rate.
22.
Section 32, so far as material, reads as follows:
“32. Unjustified termination
of agreements
(1) No employer shall
dismiss a worker -
(a) by reason only of the
worker’s filing in good faith of a complaint, or participating in a proceeding,
against an employer involving alleged violation of a law;
(b) for alleged misconduct
unless -
(i) he cannot in good
faith take any other course; and
(ii) the dismissal is
effected within seven days of -
(A) where the misconduct is
the subject of a hearing under subsection (2), the completion of the hearing;
(B) where the misconduct is
the subject of criminal proceedings, the day on which the employer becomes
aware of the final judgment of conviction; or
(C) in every other case, the
day on which the employer becomes aware of the misconduct
(2)(a) No employer shall dismiss
a worker unless he has afforded the worker an opportunity to answer any charges
made against him and any dismissal made in contravention of this paragraph
shall be deemed to be an unjustified dismissal.
…”
Sections 34-36 then deal with the payment of severance
allowance. Amongst those provisions is section 36(7) which reads:
“(7) The court shall, where it
finds that the termination of the employment of a worker employed in any
undertaking, establishment or service was unjustified, order that the worker be
paid a sum equal to six times the amount of severance allowance specified in
subsection (3).”
23.
The argument which KSL now seeks to advance runs as follows:
(a) on the
finding of constructive dismissal here made, he was dismissed by 31 March 2002;
(b) as at
that date the Disciplinary Committee had begun its hearings but they were not
concluded;
(c) therefore
KSL had not been afforded, before dismissal, the opportunity required by
section 32(2)(a) to answer the charges against him and accordingly the
dismissal is deemed by the statute to be unjustified;
(d) by
section 36(7), it follows from this that severance pay at the punitive rate of
six times the normal rate is payable.
24.
The Board’s role is to hear appeals from decisions in the courts of the
country where the dispute arose. Whilst it sometimes happens that the argument
develops as the case progresses through the courts, the Board will not normally
entertain an argument which was not advanced below unless it can be done
without injustice. This argument was not advanced either before the Industrial
Court or before the Supreme Court. Not only that, but the latter court
expressly inquired of counsel then appearing for KSL what consequences followed
if the finding of constructive dismissal, for which he was contending, were to
be made. It was agreed before the Board that far from advancing the argument
now constructed, counsel then appearing for KSL told the Supreme Court that the
correct approach to severance pay was to apply the principle enunciated in Cayeux
Ltd v De Maroussem [1974] MR 166 and Saint Aubin Limitée v Alain Jean
François Doger de Spéville [2011] UKPC 42; [2011] PRV 3. Neither was a
misconduct case and no point arose on section 32(2)(a). These cases were
concerned with when the termination of the contract of employment was made with
a valid reason. If the presently advanced argument is correct, that submission
to the Supreme Court was not simply a failure to take the point but was
positively misleading. The Notice of Appeal to the Board does not raise the
point but concentrates on issues of conduct. There were references to section
32(2)(a) in KSL’s skeleton argument before the Board, but they were not linked
to a contention that it followed that punitive rate severance pay was due, nor
were the steps of argument itemised above set out. The principal authority
relied on before the Board, Bissonauth v The Sugar Fund Insurance Board
(Mauritius) [2007] UKPC 17 (which was a conviction case raising section
32(1)(b)(ii)(B)) was, although available since 2007, neither referred to nor
included in the authorities submitted to the Board until a very late
supplementary list arrived only a day or two before the hearing.
25.
The consequence of this very late development of a new argument is
twofold. Firstly, it is quite apparent that Grewals had not had a proper
opportunity to consider it, and the Board was in consequence deprived of any considered
argument by way of response to it. Secondly, and more importantly, the Board is
deprived of the considered conclusions of the Industrial Court and Supreme
Court on the point. The argument which it is sought to develop may have
considerable implications for the practice of employment law in Mauritius. An
analysis of how it can or cannot be accommodated within the law and practice of
employment in that jurisdiction is an essential element in arriving at a
correct conclusion about it. It would be unfair to the other party to this
case, and potentially dangerous to the development of Mauritian employment law,
for the Board to rule on this point without the necessary groundwork having
even been attempted.
26.
It may be that in some instances an entirely new argument is so
indisputably correct that it can and should be entertained without injustice
even though it had been overlooked through all the earlier stages of the
litigation. That is not, however, this case. It is possible that the new
argument is well founded. But that is not the only possible conclusion. There
is agreed to be no reported case in which section 32(2)(a) has been applied to
a case of constructive dismissal. One possible view is that it simply does not
apply to such cases, where the employer may be found to have dismissed
constructively without ever intending to do so, but rather is geared entirely
to cases where the employer exercises a voluntary decision to dismiss. The
structure of the subsection, which requires the employer in effect to stay his
hand until the employee has been able to answer the allegations against him,
might be thought to lend some support to that construction. A second
possibility is that if the subsection does apply to a case of constructive
dismissal, it does so in modified fashion when an opportunity to answer was
already afoot, as it was here. On such a view, the employer might be held
indeed to have offered his employee the necessary opportunity to answer the
charges where a tribunal (moreover here legally chaired) is already in
existence and the employee has the option to decline to accept any repudiatory
conduct of the employer and instead to make good his case, if he can, before
that tribunal. Those may well not be the only possible interpretations of
section 32(2)(a) in the context of constructive dismissal, but they show that
this is not an example of a demonstrably unassailable argument to which there
can be no possible answer. Nor does the argument answer the question what
follows in law if, after a dismissal which does not comply strictly with
section 32, it becomes plain beyond dispute that the employee was guilty of
misconduct justifying dismissal, indeed possibly very grave misconduct. Nor
does the Board overlook other difficulties which might attend the literal
reading of the allied section 32(1) for which KSL contended, since if he is
right it might mean that unless there is a hearing the whole process of
learning of misconduct or conviction, giving the employee the opportunity to
make his case and completion of his answer, has to be concluded within
seven days if the dismissal is to be justified. All of these matters call for
sustained and prepared argument on both sides, and the considered view of the
Mauritian courts.
27.
The Board has considered whether the correct approach to the proposed
new argument might be to remit the case to the courts of Mauritius for it to be
developed there. In the circumstances of this case it is satisfied that that
would work plain injustice. The events with which this case is concerned took
place 14 years ago. The litigation before the Industrial Court occupied no less
than 36 days, over a period of over three years between March 2004 and June
2007. Before the Supreme Court a similarly protracted course followed, spread
over a further 17 months from June 2010 to November 2011. Any further
prolongation of this already excessively extended litigation could not possibly
be justified, and would no doubt simply risk yet further congestion of the
overloaded Mauritian courts, to the peril of other litigants as well as of the
other party to this case.
28.
In these circumstances the Board has no doubt that it would be quite
wrong to permit KSL to develop the wholly new argument which he wishes to
advance. He has had ample opportunity to do so in the proper place, but did not
take it.
Apportionment of car benefit
29.
Grewals contend that the Supreme Court ought to have apportioned the car
benefit when calculating the remuneration package on which severance pay (at
the standard rate) fell to be calculated. It founds that submission on the
evidence of KSL that he used the company car with which he was provided about
80-85% of the time for company business and the remainder 15-20% for private
use. Say Grewals, therefore only 15-20% of the cost of the car and its petrol
ought to be considered as part of KSL’s remuneration.
30.
This contention was advanced to the Supreme Court by Grewals but the
court rejected it in the following terms:
“The term ‘remuneration’ in the
Labour Act, as has been authoritatively laid down in Stella Insurance Co Ltd
v Ramphul [1987 MR 151], covers ‘everything which is quantifiable and paid
to the worker.’ We consider that there is no sound basis for any apportionment
of the car or petrol allowance which had been regularly, consistently and
unconditionally paid to the respondent as monthly allowances in a manner which
was commensurate with his office and status as General Manager.”
31.
The Supreme Court thus took the view on the facts that the value of the
car to the employee was not limited to a percentage of its cost, but rather lay
in the fact that it was always available to him for private use whenever he
wished to use it. That appears to the Board to be a legitimate and practical
view of the value to an employee of the provision of a company car. If he did
not have a company car he would not achieve equivalent benefit for 15-20% of
the cost of providing his own car. The case for apportioning the petrol
allowance might well have been regarded as stronger, but the Board is not
persuaded that the court fell into any error of law or principle. The true
value of the benefit in kind fell to be assessed as a practical matter on all
the evidence by the court below.
Disposal
32.
For these reasons the Board concludes that both Grewals’ appeal and KSL’s
cross appeal must be dismissed. The Board invites the parties to make written
submissions as to costs with 14 days from the promulgation of the judgment.
