GROSVENOR
v.
THE ADVOCATE CO. LTD. ET AL
[COURT OF APPEAL - CIVIL APPEAL NO. 29 of 1991
(Williams, P., Smith and Moe, JJ.A.]
September 6-7, 9-10, 13, 14, 1993;
December 16, 1994, January 24, 1994]
(1994) 30 Barb. L.R. 3
Labour law - Contract of service - Termination - Wrongful dismissal - Appellant employed with
company - Ownership of company changed hands several times - During last change over appellant
was retained on same conditions as previously on a three year contract which was to expire on
January 31, 1987 - On February 23, 1987 appellant was informed by Board of Directors that
employment would continue under same terms and conditions - Appellant reached retirementage
but employment continued - In November 1987 Board set up committee to find replacementfor
appellant - On April 18, 1988 appellant was informed that he was not eligible to receive directors'
fees and on April 27, 1988, by letter, that his employment would end on July 31, 1988 and he would
proceed on three months pre-retirement leave on August 1, 1988 – Whether appellant's contract
breached and appellant wrongfully dismissed - Whether notice of six months lawfully terminated
appellant's contract.
Damages - Wrongful dismissal - Breach of contract - Application of Severance Payments Act,Cap.
355A, s. 45(1) - Quantum.
Facts: The appellant was employed by the Advocate Company continuously for 44 years from1944
until in 1988 when his employment with the company came to an end.
In 1966, the majority shareholder Overseas Newspapers Ltd. had sold its shareholding toThompson
West Indies Holdings Ltd. which in 1984 sold the shares to the second respondent, McEnearney
Alstons (Barbados) Ltd.
The appellant was Managing Director in 1984 and on January 31, 1984 the Chairman of the
Advocate wrote to him confirming his continued employment for a period of three years from the
said date "on terms no less favourable than the terms of your present employment." A summary
ofthe terms of employment was attached to the letter. A contributory pension scheme was
incorporated into the provisions of the appellant's contract. A term of the plan indicated that the
normal retirement for a member was age 60 and at the employer's discretion, age 65. Theappellant's
contract was due to end on January 31, 1987 and he brought this to the attention of McEnearney's
chairman beforehand.
At a meeting of the Advocate's Board of Directors held on February 23, 1987 after the
appellantraised the question of his continued employment, he was informed by the Board that there
was no intention to terminate his services and that [3] his employment would continue under the
same terms and conditions as existed.
At a Board meeting on November 2, 1987 a committee was set up to find a replacement for the
appellant. At a meeting on April 18, 1988 the appellant was informed that he was not eligible to
receive directors' fees. Four days later a new President was appointed and on April 27, 1988
theChairman of the Advocate wrote to the appellant informing him of his continued employment
until July 31, 1988 and that he would proceed on 3 months pre-retirement leave on August 1, 1988.
The appellant commenced proceedings alleging breach of contract or wrongful dismissal against the
Advocate and for inducement of breach of contract against McEnearney. At first instance itwas held
that there was a contract with the appellant for 3 years; that his employment wasterminated on July
31, 1988 without good cause, and that the Advocate was in breach of contract.It was also held that
there was no direct evidence to support the appellant's case againstMcEnearney. On appeal by the
appellant and cross appeal by the Advocate Held: (1) The effect of the Board's decision of February 23, 1987 was to renew the contractbetween
the plaintiff and the Advocate for 3 years commencing on the expiration of the previouscontract on
the same terms and conditions on which he had been engaged. When a suitablesuccessor for the
appellant was found, the appellant had become surplus to the Advocate's needsand his departure
from the Advocate had been rationalised by invoking the pension scheme as if he had recently
reached age 60. The letter of April 27, 1988 was one of dismissal since there was animplied
understanding that the Advocate would not terminate his employment as President beforethe
expiration of his contract on January 31, 1990 and it was in breach of its undertaking when it did so
on October 31, 1988;
(2) the claim against McEnearney for wrongful interference with the appellant's contract
failsbecause McEnearney was not interfering when its representative engineered the removal of the
appellant's director's fees;
(3) the appellant's appeal against the decision in favour of the Advocate is allowed and the
advocate's cross-appeal is dismissed. The appellant's appeal against the decision in favour of
McEnearney is dismissed;
(4) damages in the sum of $467,689.00 awarded against the Advocate.
Cases referred to:
Barbados Plastics Ltd. v. Taylor (1981) 16 Barb. L.R. 79.
Bray v. Ford [1895-99] All E.R. Rep. 1009.
British Transport Commission v. Gourley [1956] A.C. 185.
Clarke et al v. Nathu (1992) 27 Barb. L.R. 291.
Correia's Jewellery Store Ltd. v. Forde (1992) 28 Barb. L.R. 180.
Ogdens Ltd. v. Nelson, Same v. Telford [1904-7] All E.R. Rep. 1658.
Rigby v. Ferodo Ltd. [1987] IRLR 516.
Shindler v. Northern Raincoat Co. Ltd. [1960] 2 All E.R. 239.
Southern Foundries (1926), Ltd., and Federated Foundries Ltd. v. Shirlaw [1940] 2 All E.R.445.[4]
Stirling v. Maitland (1864) 5 B & S 841.
Statutes referred to:
Severance Payments Act, Cap. 355A, ss. 10, 11, 45(1).
Severance Payments (Pensions) Regulations, 1972 as amended in 1976, Reg. 3(1), 4(1).
Mr. D. Simmons, Q.C. in association with Mr. P. Cheltenham for the appellant.
Mr. H.B. St. John, Q.C. in association with Mr. J. Hanschell for the respondent.
WILLIAMS, P.: In 1944, Mr. Neville Grosvenor, the plaintiff-appellant ["the plaintiff"] entered
into the employment of the Advocate Co. Ltd., the first defendant-appellant ["the Advocate"] as
aproduction trainee and continued to work for the Advocate until 1988 when his employment with
the company came to an end. He was, at that time, designated President and Publisher.
Over the years the ownership of the Advocate changed hands on more than one occasion. In
1961the majority shareholder was Overseas Newspapers Ltd., but that company sold its
shareholdingin 1966 to Thomson West Indies Holdings Ltd. ("Thomson"] which in 1984 sold the
shares to the second defendant, McEnearney Alstons (Barbados) Ltd. ["McEnearney"].
The terms of Thomson's agreement with McEnearney were set out in a letter dated January 17,1984
from Thomson to McEnearney and accepted and endorsed by the latter on January 18, 1984.
Paragraph 12 of the letter stated * "12. On the Closing Date the Company shall enter into an employment agreement with Neville
Grosvenor in the form annexed hereto as Schedule "B". It is understood that it is your intention
from and after the Closing Date, to cause the Company to continue to employ all other employees
employed by the Company on the Closing Date on terms and conditions no lessfavourable than
those under which they are employed on the Closing Date, including allexisting employee benefits."
Mr. Neil Fitzwilliam who was at the time Chairman of the Advocate, wrote the following letter
dated January 31, 1984 to the plaintiff who at that time was Managing Director -
"Dear Mr. Grosvenor,
This is to confirm our understanding that you are to continue to be employed as Managing
Director of the Advocate Company Limited ["the Company"] for a period of three years from the
date hereof on terms no less favourable than the terms of your present employment, a summary of
which terms is attached hereto.[5]
You shall, during the term of such employment, exercise and carry out all such duties and shall
observe all such lawful directions as the Board of Directors or the Company or its authorised
representatives may from time to time give you. During such term you shall faithfully, honestly and
diligently serve as Managing Director of the Company, and, except during periods of illness or
holidays, shall devote the whole of your working time, labour, skill and attention to such
employment and shall use your best endeavours to promote the interests and welfare of the
company.
Would you kindly confirm this arrangement, by signing and returning to us the enclosed copy of
this letter."
There is an endorsement on the letter to the effect that the foregoing arrangement was confirmed by
the plaintiff on the same date.
The summary of terms attached to the letter was a reproduction of Schedule B referred to
inparagraph 12 of the Thomson-McEnearney agreement. It reads -
"The Advocate Company Limited
SUMMARY OF PRESENT TERMS OF EMPLOYMENT
OF NEVILLE GROSVENOR
as Managing Director of
THE ADVOCATE COMPANY LIMITED
And Publisher of the Advocate Newspapers
SALARY: $6,700 per month with annual increments averaging $600 per month
ENTERTAINMENT ALLOWANCE: $900 per month with annual increases averaging$150 per
month
HOUSE ALLOWANCE: nil
DIRECTOR'S FEES: $2,400 per annum
EXECUTIVE COMPANY CAR: Fully serviced and maintained by the Company
CONTRIBUTORY PENSION SCHEME: 7 1/2 per cent of salary paid by the Company and a
similar amount personally [6]
MEDICAL SCHEME: Nil
GROUP LIFE ACCIDENT AND DISMEMBERMENT: Coverage of twice annual salary
PROFIT SHARING: one tenth of the 10 per cent of operating profit before corporation tax
allotted to staff
VACATION: six [6] weeks annual leave per year with two first class passages for self and family
and an additional allowance of two months salary every third year;
SEVERANCE PAY: The existence of this employment contract shall in no way affect
theseverance pay to which Mr. Grosvenor would otherwise be entitled under law should
hisemployment terminate during or after the term of this contract. "
It is not in contention that the reference in the above summary to the contributory pension scheme
had the effect of incorporating its provisions in the plaintiff's contract. Section 4 of the Scheme,
asamended, was as follows "The normal retirement date for a member shall be the anniversary of the effective date nearest
the attainment of age 60 for males and females.
At the discretion of the employer, a member may retire within the five years preceding or five
years following his normal retirement date. The benefits payable to the member on such optional
retirement date shall be adjusted to be actuarially equivalent to his accrued benefitsdue to
commence at his normal retirement date.
In the case of late retirement, no units of benefit shall accrue in respect of service beyond the
member's normal retirement date."
The plaintiff continued to serve as Managing Director pursuant to this contract and by letter
datedDecember 8, 1986 brought to the attention of Mr. David McKenzie, McEnearney's Chairman,
the act that his three-year contractual agreement was to expire on January 31, 1987. Mr. Mckenzie,
together with Mr. Conrad O'Brien and Mr. Mark Conyers, had been made directors of the Advocate
with effect from the completion of the sale by Thomson to McEnearney, filling some ofthe
vacancies created by the resignation of the Thomson directors. [7]
On February 23, 1987 at a meeting of the Advocate's Board of Directors the plaintiff raised the
question of his continued employment with the Advocate after the expiration of his contract on
January 31, 1987. The following paragraphs are recorded in the minutes of the meeting -
"The Managing Director drew to the attention of the Board that his three year contract with the
Advocate Co. Ltd. had come to an end on the 31st January, 1987.
He explained that the contract referred to was Appendix "B" of the sale agreement
betweenThomson Newspapers and McEnearney Alstons (Barbados) Limited. He therefore wanted
to be informed as to what was now his position with the Advocate Company Limited inrelation to
the terms and conditions of his continued service.
The Board informed the Managing Director that there was no intention to terminate his services
and that his employment would continue under the same terms and conditions as existed under the
sale agreement. "
The plaintiff continued to serve as Managing Director. Some paragraphs of the minutes of a
meeting of the Advocate's Board of Directors held on April 13, 1987 are of significance. At page 4
it is recorded "Appendix B of Sale Agreement
Mr. McKenzie stated that he did not recollect seeing a copy of Appendix "B" of the Sale
Agreement and requested that the Managing Director forward a copy of that Appendix to him so
that he could investigate the contents.
The Board approved his request."
At pages 5 and 6 "Appointment of Officers in Accordance with By Law No. 1
Mr. McKenzie informed the Board that in keeping with the policy of the Parent Board all
Managing Directors or Chief Executive Officers of subsidiary companies of McEnearney Alstons
(B'dos) Ltd. were now designated as President instead of Managing Director.
It was resolved that persons listed in the first column here under be appointed to the office listed
opposite their name. [8]
Neville Grosvenor - President
Hyacinth A. Lord - Secretary
This was moved by Mr. Mark Conyers and seconded by Mr. Foster."
At page 6 - Correspondence
"The Secretary read the following correspondence to the board:
(1) A letter from the Secretary of McEnearney Alstons (Barbados) Ltd. informing theAdvocate
Co. Ltd. of a resolution of the parent board at a meeting held on April 8, 1987whereby Mr. John
David S. Mckenzie was appointed the Company's representative at all general meetings of the
Advocate Company Limited..."
At a meeting of the Advocate's Board of Directors on 2nd November 1987 the Board, on the
recommendation of Mr. McKenzie, approved the immediate setting up of a committee of three
directors to deal with, inter alia, the finding of a suitable person who would eventually be able to
take over from Mr. Grosvenor and Mr. Best (Managing Editor) and an assessment of the
management structure of the Company. The Committee members selected were Sir Neville
Osborne, Chairman, Mr. Mckenzie and the plaintiff.
The Advocate held its Eightieth Annual General Meeting on April 18, 1988 and the relevant partof
the minutes is as follows:
"At the request of the Chairman, Mr. David McKenzie moved and seconded the
followingmotions 3 That the retiring directors Sir Neville Osborne, Mr. Percy Chenery, Mr. Mark Conyers, Mr.
Paul Foster, Mr. Philip Goddard, Mr. Neville Grosvenor and Mr. David McKenzie be re-appointed
for another year.
In moving the re-appointment of the directors, Mr. McKenzie explained that in accordance with
the policy of the parent Board, only non-executive directors were eligible for director'sfees. He then
moved and seconded that the following fees be paid:
Chairman $700 per month
Non-Executive Directors $400 per month
Mr. Neville Grosvenor as Chief Executive of the Advocate Company would not be eligible to
receive director's fees if he accepted the appointment of being a director. Mr. Grosvenor informed
the meeting [9] that he had nothing against the policy of the Parent Board butsince he was made a
director of the Advocate Company Limited, he was always paiddirectors' fees, and in the existing
terms of his employment, directors ' fees formed part of his remuneration. He asked leave of the
meeting to seek advice on the decision to discontinue paying him directors' fees."
In reply, Mr. McKenzie stated that Mr. Grosvenor's appointment as a director would be subject
tothe conditions stated and requested Mr. Grosvenor to get back to him as soon as possible so
thatthe matter of his appointment as a director could be settled.
Four days later Mr. McKenzie wrote as follows to Mr. Patrick Hoyos "Dear Patrick,
Further to our various conversations held to date and your letter of April 8th, 1988 let mesay or
behalf of the directors of our parent company, the directors of the Advocate andmyself, how very
happy and pleased we are to welcome you into our group as President and Publisher of the
Advocate Company Limited. As was verbally agreed between us, it is understood that you will take
up your appointment as from July 15th, 1988.
Attached, please find a schedule confirming your position, salary, conditions of employment and
perquisites as discussed and agreed between us earlier today. For our records it would be
appreciated if you would sign and return the duplicate copy also attached. Once again I would like
to say how happy I am to have you with us and I look forward to a long, happy and mutually
beneficial association over the years.
Yours very truly
The Advocate Company Limited
J.D.S. McKenzie
Director"
On April 27th 1988 the Chairman of the Advocate wrote to the plaintiff in these terms "Dear Neville,
The Board of Directors have been reviewing the existing management arrangements of the
Company and have given careful consideration to your contract of employment with the
Company.[10]
As you are aware, the Employees' Pension Plan provides inter alia, that the norma lretirement age
shall be sixty years. You have now passed that age with both you and ourselves agreeing to your
temporary continuance in office. The directors have come to the decision however, that your
retirement should take place in accordance with your contractand the provisions of clause 4 of the
Pension Plan and become effective on 31st October,1988. It is proposed that you continue in office
until 31st July, 1988 and as from 1stAugust, 1988 go on three months pre-retirement leave on full
basic pay until retirement date.
The Directors further propose for your consideration, that you should act as consultant tothe
Company for a period of six months immediately following retirement. The contract would provide
for up to 200 hours of consultancy service at a fee of $2,000 per month. If you are wi11ing to enter
into such a contract, further details could be discussed. The Directors would also be pleased to have
you serve as a non-executive director of theCompany after the date of your retirement.
With regard to the Company car which you now use, we would be pleased to arrange a special
price should you be interested in taking it over.
After you have had an opportunity to consider the foregoing, I would be glad if you would get in
touch with me so that we can discuss and finalise the matter in more detail.
Yours very truly
The Advocate Company Limited
Sir Neville Osborne
Chairman"
The plaintiff replied to the Chairman's letter two days later -
"Dear Sir Neville,
This is to acknowledge receipt of your letter of Wednesday, April 27 last in which you informed
me that the Board of Directors of the Advocate Company Limited are reviewing the existing
management arrangements of the Company and have given careful consideration to my contract of
employment with the Company.
I have read the Board's proposal for the termination of my services on the grounds of normal
retirement as stated in the Employees" Pension Plan of July 1, 1973 and its further proposal to
rehire me as a consultant with the [11] Company with non-executive director status.
Before I can arrange to meet with you to discuss this proposal, I will be seeking legal advice on
the matter following which I will inform you of an appropriate date.
Yours very sincerely
The Advocate Company Limited
Neville S. Grosvenor
President.
c.c. Mr. David McKenzie
Chairman,
McEnearney Alstons [B'dos] Ltd."
The following is an extract from the minutes of a meeting of the Advocate's Board of Directors held
on 5th May, 1988 "The Chairman informed the Board that the Sub-Committee had held several meetings tolook
into the management of the Company, and had reached certain decisions.
Mr. McKenzie stated that Mr. Grosvenor had now reached the age of to which was the retirement
age under the Pension Plan of the Company and the Committee had decided tha this retirement
should take place in accordance with his contract and the provisions of thePension Plan.
Mr. McKenzie informed the Board that a letter had been written to Mr. Grosvenor to this effect
and that the retirement should take effect at the end of October 1988 and that Mr.Grosvenor would
go on three months pre-retirement leave at the end of July 1988. Hefurther told the Board that the
letter contained:
1. An offer for consultancy after his retirement for a six month period for 200 hours
ofconsultancy service at $2,000.00 per month.
2. An offer to have him serve as a non-executive director of the Company.
3. An offer to arrange a special price for the Company car which he now drives should hewish to
take it over.
He further explained to the Board that the Company would like to pay tribute to Mr.Grosvenor on
his retirement and he proposed that a farewell dinner be held in his honourand that a suitable gift
from the Company be presented 12] at the function.
Mr. McKenzie further informed the Board that arrangements had been made with Mr.Patrick
Hoyos and Mr. Tony Cumberbatch to come on as President/Publisher and Vice President,
Marketing and Sales respectively ...
The Board then agreed with the arrangements made by the Committee.
It was noted that Messrs. Hoyos and Cumberbatch would assume duty as from July 15,1988.
The Chairman said that he had received an acknowledgement of the letter written to
Mr.Grosvenor, which indicated that he was seeking legal advice on the matter.
Mr. Grosvenor informed the Board that he did not object to the parent Board's decision as he was
getting older, however, he had worked with the Advocate Company Limited for 44 years, and under
the Pension Scheme, he would only be receiving $1,602.27 per month.
He further said that at the time of the sale of the Advocate Company Limited toMcEnearney
Alstons [B'dos] Limited on January 16, 1984 the clause in his contract for severance pay was
questioned by McEnearney Alstons [B'dos] Limited and it was explained by the Thomson
representative. This explanation was accepted and signed the following day by both parties.
As a result of this departure from the agreement, he was seeking legal advice on this
compensation, and he would like to have the matter settled amicably, as he did not want to leave
with any acrimony.
The Board asked Mr. Grosvenor to get back to them as soon as possible after being advised, as an
announcement had to be made when the matter was resolved."
It is also recorded in the minutes of that meeting that the Board instructed the secretary that
nofurther contributions should be made to the Pension Scheme in respect of the plaintiff with
effectfrom July 1, 1988.
The plaintiff's case, as pleaded
The substance of the plaintiff's case as pleaded is that (1) it was an implied term in the plaintiff's contract of employment that the plaintiff would only
be dismissed for good cause or upon reasonable [13] notice being given;
(2) in pursuance of and in accordance with the terms and conditions express and implied inthe
contract the plaintiff continued to work for the Advocate dutifully, faithfully andhonestly and in
January, 1987 the contract expired but the Advocate's Board of Directors atits meeting of 23rd
February, 1987 and as the Advocate's agents, agreed with the plaintiff that his employment would
continue under the same terms and conditions as existed underthe Thomson-McEnearney
agreement. In the premises, at all material times after 23rdFebruary, 1987 the plaintiff's contract of
employment continued upon the same terms andconditions as had been the case prior to that date;
(3) at the Advocate's 80th annual general meeting held on or about 18th April, 1988 Mr.David
McKenzie, a director representing McEnearney's shareholders by proxy, and inducedby
McEnearney, moved a resolution that only non-executive directors be eligible fordirectors' fees and
that the remuneration therefor, be $400 per month;
(4) by reason of the passing of that resolution, notwithstanding the plaintiff's objections,
theAdvocate, in breach of the plaintiff's contract of employment and its terms, refused
and/orneglected to pay the plaintiff director's fees and, in the premises, wrongfully terminated
thecontract or constructively dismissed the plaintiff from his employment;
(5) in further breach of his contract of employment, the Advocate, acting by its Chairman oragent
Sir Neville Osborne, without reasonable notice [which the plaintiff says is one year]and/or without
good cause wrongfully terminated the plaintiff's contract or wrongfullydismissed him therefrom on
or about 27th April, 1988;
(6) further, McEnearney, well knowing at all material times that the plaintiff and theAdvocate
had entered into the aforesaid contract of employment, wrongfully and with intentto injure the
plaintiff, authorised, procured and induced Mr. McKenzie, the holder of itsproxy, to cause the
Advocate to break its contract with the plaintiff and to refuse to performor further perform it;
(7) by reason of such procurement and inducement the Advocate did break and refuse toperform
the contract.
Particulars of constructive dismissal are pleaded at paragraph 14(a), (b) and (c) and particulars
ofwrongful inducement at paragraph 16.
The plaintiff's claim against the Advocate is for damages for breach of contract [14] and/orwrongful
dismissal and against McEnearney for damages for inducement of breach of his contractwith the
Advocate. He also claims interest and further relief.
The Advocate's case as pleaded
The Advocate admits that the plaintiff continued to work for it until January 1987 when hiscontract
of employment expired and that its Board of Directors at its meeting of 23rd February,1987 agreed
with the plaintiff that his employment would continue under the same terms andconditions as
existed under the Thomson-McEnearney agreement but denies that it was an impliedterm of the
contract that the plaintiff would only be dismissed for good cause or upon reasonablenotice. The
Advocate goes on to say that continuation of the plaintiff's contract of employmentwas not on the
agenda for the 23rd February meeting but was raised informally by the plaintiffhimself and it was at
all material times the intention of the Board of Directors that the matterwould be formally
considered at a later stage. The Advocate also says that it was the intention ofits Board of Directors
that the plaintiff's employment would continue under the same terms andconditions on a temporary
basis with no fixed period.
It is further pleaded that the plaintiff attained the age of 60 years in May 1987 which was thenormal
retirement age under its Employees' Pension Plan, that it had been agreed that the plaintiffwould
continue in office temporarily notwithstanding that he had reached the age of retirement,that it was
subsequently decided that his retirement should take place in accordance with hiscontract and with
effect from 31st October, 1988, and that on 27th April, 1988 the Chairman ofits Board of Directors
by letter proposed to the plaintiff that he continue in office until 31st July,1988 and as from 1st
August, 1988 go on three months pre-retirement leave on full pay until theretirement date. The
Advocate denies that it terminated the plaintiff's contract of employment asalleged or at all or that it
wrongfully dismissed him as alleged or at all.
Estoppel is also pleaded - that the plaintiff is estopped from alleging that he was
wrongfullydismissed and that he was not retired in accordance with the provisions of his agreement
with theAdvocate because he received $51,109.89 as a lump sum pension payment and $1,233.64
permonth as a pension from the Advocate.
The Advocate counterclaims -
(a) for the delivery up of its car which it had provided for the use of the plaintiff, or itsvalue:
(b) for the sum of $177,009.30 which it claimed is the difference between the emolumentsand
other benefits which the plaintiff had wrongfully and in breach of contract paid himselfand those
that had been approved by its Board of Directors; and
(c) damages for the breach by the plaintiff as a director of his duties and [15] obligations toit.
Paragraphs 27 to 29 amplify the Advocate's claim under this head, viz:
(i) at the time of the Board of Directors' meeting on 23rd February, 1987 and the 18th April,1988
the plaintiff acted both in the capacity of an employee and in the capacity of a directorbut the
plaintiff's presence at those meetings was by virtue of his office as a director and notas an
employee;
(ii) the plaintiff as a director owed a duty of good faith to it and was under an obligation
toexercise his powers properly for its benefits and not to fetter his discretion by placinghimself in a
position where there was a conflict of interest between his duties and hispersonal interests;
(iii) wrongfully and in breach of such duties and obligations the plaintiff acted in bad faithand
against its interests at the directors' meetings and was motivated by his personalinterests which were
in conflict with his duties as a director. Particulars of these allegationsare pleaded.
McEnearney's case
McEnearney denies that Mr. McKenzie was induced by it to move the resolution that onlynonexecutive directors of the Advocate be eligible for directors' fees and that the remunerationtherefor
be the sum of $400.00 per month. It goes on to state that the resolution was moved byMr.
McKenzie so that the Advocate's policy would be in accordance with the policy ofMcEnearney, the
Advocate's parent company.
The plaintiff's reply
The plaintiff in his Reply contends that the Advocate arbitrarily or unilaterally ceasedcontributions
to the Pension Plan as from 1st July, 1988 when he was 61 years oldnotwithstanding that the
provisions of the Plan permit participants to retire at age 65. In thepremises, in so far as the
provisions of the Plan were implied in the plaintiff's contract ofemployment, the Advocate was in
breach of contract.
In his Defence to the Advocate's Counterclaim he sets up -
(a) with respect to the car, the Advocate's established policy and his reasonable andlegitimate
expectations having regard to an established course of conduct or dealing by theAdvocate. He
legitimately expected to be offered the opportunity to purchase the car at itsbook value in
accordance with the Advocate's established policy and he was at all [16] timesready, willing and
able to purchase the car at that value;
(b) with respect to the overpayment of emoluments and other benefits, an estoppel byreason of
matters which he particularised and of the conduct of the Advocate's Board; and
(c) with respect to the claim for damages for breach of his duties and obligations as adirector, he
says that at all times he exercised his powers and discharged his duties with theAdvocate's full
knowledge, consent and approval. The Advocate caused and permitted himto hold the office of
director and at the same time function as an employee and at no timedid he act in breach of his
duties or in bad faith against the Advocate's interests nor was hemotivated by his personal interests
or allowed such interests to conflict with his duties as adirector as alleged or at all.
The judge's decision
The learned judge, after reviewing and commenting on the evidence, concluded that the decisionof
the Advocate Board as recorded in the minutes of 23rd February, 1987 was expressed in clearand
unambiguous language and created a contract with the plaintiff for 3 years on the terms
andconditions of Schedule B. He went on to hold that the plaintiff's employment was terminated
on31st July, 1988 without good cause, by the Chairman's letter of 27th April, 1988 and that
theAdvocate was in breach of its contract with the plaintiff. He held that, as damages for breach
ofcontract, the plaintiff was entitled to receive the emoluments to which he would have been
entitledduring the unexpired period of his 3 year contract. He awarded the plaintiff
$267,714.00($14,873.00 x 18) in damages.
The learned judge later stated that on the question of the notice given in the letter of the 27thApril,
1988, he would hold, if it were at all necessary for his decision, that having regard to all therelevant
circumstances, reasonable notice required in this case would be 12 months.
With respect to the plaintiff's case against McEnearney for inducing the Advocate to break
itscontract with the plaintiff, the learned judge held that there was no direct evidence to support
theplaintiff's claim as pleaded and the circumstantial evidence was such as would lead to a number
ofreasonable inferences. The claim, he said, must fail.
He awarded the Advocate $22,000 on its counterclaim in respect of the car. The counterclaim
forover-payment of emoluments, and other benefits had been abandoned at the trial. The
thirdcounterclaim failed, the judge holding that the evidence in the case, including the minutes of
Boardand General Meetings did not disclose bad faith or unethical behaviour or a conflict of
interests inthe performance by the plaintiff of his duties. Neither party has appealed against the
decisions onthe counterclaims. [17]
The Appeal
The plaintiff in his appeal alleges error in law -
(1) in the computation or assessment of his true measure of damages;
(2) in construing his contract of employment in so far as it made provision in respect ofseverance
pay;
(3) in dismissing his claim against McEnearney for damages for the tort of inducing orprocuring
a breach of his contract of employment with the Advocate; and
(4) in failing to determine as was his duty, whether the appellant had in law beenconstructively
dismissed by the Advocate.
The Advocate's cross-appeal is against the findings of the learned judge -
(l) that the decision of its Board of Directors as recorded in the minutes of 23rd February,1987
created a contract with the plaintiff for three years on the terms and conditions ofSchedule B;
(2) that the plaintiff was wrongfully dismissed by it by the letter dated 27th April 1988;
(3) that the date of termination of the plaintiff's employment was 31st July, 1988;
(4) that the definition of "basic pay" in the Severance Payments Act may not be ascribed tothe
words "basic pay" in the letter of 27th April, 1988; and
(5) that it was in breach of its contract with the plaintiff.
The Advocate also alleges that the judge erred in law and/or held against the weight of theevidence
in the computation and/or assessment of the plaintiff's measure of damages because thesum of
$267,741.00 awarded to him was erroneous and/or excessive and/or unjustified in thecircumstances.
Was the decision of 23rd February 1987 a nullity?
It is crucial to the resolution of the issues between the plaintiff and the Advocate to find out whatthe
Board of the Advocate actually decided on 27th February, 1987 with respect to the
plaintiff'scontinued employment. But before I can reach that [18] question I must consider and deal
withMr. St. John's submission that the decision itself is flawed because the plaintiff's conduct in
thematter fell far short of what the law required of him in the circumstances: it is said that it is
anullity and cannot support the plaintiff's claim.
The argument is that he was reaching the age of 60 and knew that was the normal retirement agefor
members of the pension scheme and that continued employment after that age was in theAdvocate's
discretion. Therefore, as President and Publisher and a director, he should have placedthat
information before the Board so that the other directors would be aware of all the facts
andcircumstances when exercising their discretion whether or not to extend the plaintiff's
employmentage after 60. There is no record in the minutes that the plaintiff disclosed this
information at themeeting. It is also said that the other directors were taken unawares when the
item, which was noton the agenda, was unexpectedly raised towards the end of the meeting and that
the plaintiffshould have withdrawn from the meeting when the question was considered and the
decisiontaken.
Palmer's Company Law, 24th Ed., 1987 sets out the principles on which reliance is placed (vol. 1,p.
943):
"Like other fiduciaries directors are required not to put themselves in a position where thereis a
conflict (actual or potential) between their personal interests and their duties to thecompany ... the
position of a director, vis-a-vis the company, is that of an agent who maynot himself contract with
his principal and ... is similar to that of a trustee who, however faira proposal may be, is not allowed
to let the position arise where his interest and that of thetrust may conflict ... he is, like a trustee,
disqualified from contracting with the company andfor a good reason: the company is entitled to the
collective wisdom of its directors, and ifany director is interested in a contract, his interest may
conflict with his duty, and the lawalways strives to prevent such a conflict from arising."
The allegations made against the plaintiff are breach of his fiduciary relationship with theAdvocate,
non-disclosure of material facts, conflict of interest, mala fides and the like, but, as Mr.Simmons for
the plaintiff points out, thought these matters were raised on the pleadings in theform of a
counterclaim (which was dismissed and against which there has been no appeal) theywere not
pleaded against the plaintiff's assertion in paragraph 12 of the Amended Statement ofClaim that the
Advocate's Board of Directors agreed with him that his employment wouldcontinue under the same
terms and conditions as existed under the sale agreement. What ispleaded is that the matter was
raised informally and the extension of his employment was on atemporary basis with no fixed
period but there is no allegation that the decision is a nullity.
In any case, whether pleaded or not, I do not think that the proposition advanced by Mr. St. Johncan
succeed in the circumstances. The judge specifically accepted certain evidence about themeeting
given by the plaintiff (p. 143 of the record): [19]
"At the said meeting the plaintiff says he submitted a draft agreement for the Board'sapproval but
it was returned to him unsigned. The plaintiff says, and I accept, that Mr.McKenzie told him it was
not the policy of McEnearney Alstons to have written contractswith employees and that the age of
retirement in McEnearney Alston's was 65 years. Theplaintiff was then 59 years old. He said he left
the meeting with the understanding that hiscontract had been renewed for three years."
It is reasonable to infer from Mr. McKenzie's telling the plaintiff that the age of retirement
inMcEnearney was 65 years, that the Advocate's retirement age of 60 and the plaintiff's
imminentattainment of that age were before the Board. So that although there is no record in the
minutesthat the plaintiff disclosed his age or the relevant provision of the pension plan, the
probability isthat those at the meeting knew not only that he was approaching the age of 60 but also
that hiscontinued employment after that age, was a matter for them to decide.
The picture that emerges from the evidence as a whole is that on 23rd February 1987 theAdvocate
still needed the plaintiff's expertise and experience and the fact that he would soon reachthe age of
60 was of no consequence. New computerised machinery was going to be installed.The evidence
shows that the machines arrived in September, 1987 and were installed betweenSeptember and
November. The minutes of the Board meeting of 2nd October, 1987 reflect theimportance of the
plaintiff to the Advocate during that period:
"The Board complimented the President for the volume of the work he did, the long hourshe
worked and all his efforts during the transition."
And later:
"Mr. McKenzie congratulated the President for the work he had done in the installation ofthe new
equipment and said that without him he did not think it would have been done. TheBoard endorsed
the sentiments expressed by Mr. McKenzie."
It was at this meeting that the Board approved the setting up of a Committee, one of whosefunctions
was to find a suitable person who would eventually be able to take over from theplaintiff.
In my view, in assessing the plaintiff's conduct relative to this question his status as an
executivedirector has to be borne ln mind. He was an employee, his contract had expired and he
wasconcerned about his position. In my opinion, in deciding on the validity or otherwise of
thedecision, the words of Lord Herschell in Bray v. Ford [1895-9] All E.R. Rep. 1009 at 1011
areapposite:
"It is an inflexible rule of a Court of Equity that a person in a fiduciary position ... is not,unless
otherwise provided, entitled to make a profit; he is [20] not allowed to put himself ina position
where his interest and duty conflict. It does not appear to me that this rule is, ashas been said,
founded upon principles of morality. I regard it rather as based on theconsideration that, human
nature being what it is, there is danger, in such circumstances, ofthe person holding a fiduciary duty
being swayed by interest rather than by duty, and thusprejudicing those whom he was bound to
protect. It has, therefore, been deemed expedientto lay down this positive rule. But I am satisfied
that it might be departed from in manycases, without any breach of morality, without any wrong
being inflicted and without anyconsciousness of wrongdoing."
The plaintiff's conduct did not cause the Advocate any prejudice. If the other directors had
beentaken by surprise and needed time for reflection, their experience would have led them
topostpone consideration of the question. The probability is that the Advocate could not afford tobe
without the plaintiff at that time and there was no alternative but to continue to employ theplaintiff
after he became 60. There was nothing ln the Pension Plan to preclude that and theevidence is that
the normal retirement age in McEnearney and the other members of the groupwas 65. The decision
is not a nullity.
The decision
Both sides led evidence as to what transpired at the meeting - the plaintiff in support of his caseand
Sir Neville Osborne and Mr. McKenzie for the Advocate. According to the plaintiff, hehanded to
the Chairman for the Board's approval a draft agreement similar to that which Mr.Fitzwilliam had
signed in 1984, but it was returned to him unsigned. Mr. McKenzie told him - andthe judge
accepted this - that it was not the policy of McEnearney to have written contracts withemployees
and that the age of retirement in McEnearney was 65. He said he left the meeting withthe
understanding that his contract had been renewed for 3 years.
The Chairman and Mr. McKenzie do not dispute that the minute records the substance of what
themeeting decided. But they both say that their understanding was that the plaintiff would
continueon a temporary basis and the Board would, after informing itself and examining the terms
ofAppendix B, determine what to do about the renewal of the contract.
On this state of the evidence the judge sought the truth from the record of the meeting. There
isnothing there about the employment being from month to month or on a temporary basis
orpending the renewal of the contract. He went on to hold that the decision of the Board asrecorded
in the minutes created a contract with the plaintiff for three years.
It seems to me that the period over which it is agreed that contractual arrangements are to
haveeffect is as much a term and condition of the contract as the salary or other matters that the
partiesagree upon. The judge was entitled to regard the formal minute of the meeting as
authoritative ofwhat was decided and [21] go on to hold that reference to the same terms and
conditions asexisted under the Sale Agreement included a reference to the 3 year period over which
the plaintiffwas engaged by virtue of Mr. Fitzwilliam's letter of 31st January. The judge's approach
was notunreasonable since those who were at the meeting would have had ample opportunity to
have theminute corrected if it did not reflect what had been decided.
The judge's conclusion accorded with the plaintiff's account of what transpired at the meeting.
Thedraft agreement is not in evidence but if it was similar to that which Mr. FitzWilliam had signed
in1984. lt would have contained provision for a three year period, and Mr. McKenzie's telling
theplaintiff that it was not McEnearney's policy to have written contracts with employees and
thereturn of the**-***** draft to the plaintiff, would have induced the belief in the plaintiff
thatcontinued employment for 3 years had been agreed.
The judge's conclusion is also consistent with the plaintiff's subsequent conduct. The evidence isthat
before the meeting he had been concerned about his future with the company. The judgeaccepted
his evidence that in November 1986 he had informed Mr. McKenzie that his contractwas due to
expire in 2 months' time. He wrote a letter to Mr. McKenzie dated 8th December 1986in which he
mentioned that his 3 year contract was due to expire on 31st January 1987. It issignificant that he
did not thereafter continue to pursue the question of his standing with thecompany.
In my opinion the effect of the Board's decision of February 1987 was to renew the contractbetween
the plaintiff and the Advocate for three years commencing on the expiration of theprevious contract
on the terms and conditions on which he had been engaged under that contractby virtue of Mr.
Fitzwilliam's letter, that letter having been issued by Mr. Fitzwilliam, theAdvocate's Chairman at
the time, under the Thomson-McEnearney agreement.
Constructive dismissal
Continued employment under the same terms and conditions meant that the plaintiff had a claim
tothe director's fees to which he was entitled under the contract that had expired.
Under the Thomson-McEnearney agreement, the plaintiff was given $2,400 per annum asdirector's
fees and his employment was to continue on terms not less favourable than the terms ofhis
employment at that time. This in my view meant that his director's fees could be increased butnot
withdrawn or reduced.
When on the occasion of the Advocate's 80th Annual General Meeting on 18th April, 1988
Mr.McKenzie announced that only non-executive officers would be eligible for directors' fees and
thatthe plaintiff, as the Advocate's chief executive would not be eligible to receive director s fees if
heaccepted appointment as a director, he was signalling a breach of the plaintiff's contract
ofemployment.
In Rigby v. Ferodo Ltd. [1987] 1RLR (H.L.) their Lordships agreed with the speech of LordOliver
of Aylmerton who said [at p. 516] - [22]
"It is common ground that the unilateral imposition by an employer of a reduction in theagreed
remuneration of an employee constitutes a fundamental and repudiatory breach ofthe contract of
employment, which, if accepted by the employee, would terminate thecontract forthwith. "
Lord Oliver later said (at p. 16) that he knew of no principle of law that any breach which
theinnocent party is entitled to treat as repudiatory of the other party's obligations brings the
contractto an end automatically.
Grunfeld, The Law of Redundancy, Second Edition, at p. 113 deals with repudiation by
theemployer of the contract of employment and "acceptance" by the employer of the repudiation -
"Repudiation of the contract of employment by the employer may involve breach of anexpress
term of the contract or of an implied term. For example, it may take the form of aunilateral
reduction of wages, or of both status and wages, or of ordering the employee towork at another
workplace without the contractual power so to transfer him, or ofinstructing the employee to
undertake different work from that which he was engaged to do- such attempted unilateral variation
will at common law be a repudiation of the contract ofemployment by the employer which, if
"accepted" by the employee, constitutes dismissal bythe employer...
As to `acceptance' by the employee of the repudiation, this may also occur in different ways.The
employee may respond to the employer's repudiation by leaving the employmentwithout more; or
he may enter upon a unilaterally varied job under protest until, within areasonable time, he obtains
other employment...; or he may take the altered job for a fewweeks in order to mitigate his loss
while looking for and finally obtaining alternative work;or he may undertake the new or altered
work explicitly or impliedly on a trial basis. In anyof these alternative responses, it may be
emphasised that, from the point of view ofconstituting a good `acceptance' of repudiation, it is
immaterial whether the employee finallyleaves with notice or without notice. "
In this case the plaintiff protested the decision and asked leave of the meeting to seek advice on
it.Mr. McKenzie requested the plaintiff to get back to him as soon as possible so that the matter
ofhis appointment as a director could be settled.
The evidence is that the plaintiff's lawyer wrote to the Advocate through the Chairman. There isno
evidence of the contents of the letter, but not long afterwards the plaintiff received theChairman's
letter of 27th April proposing that he should continue in office until 31st July, 1988and go on three
months pre-retirement leave with effect from 1st August, 1988. The plaintiff'stestimony is that he
received his accustomed perquisites of office between 27th April and 31st July(p. 74 of the [23]
record) and he did not leave the employ of the Company (p. 85). A reasonableinference is that the
lawyer's letter led to a modified implementation of the Advocate's new policyon directors' fees in
relation to the plaintiff and in the limited period it had by that time beendecided that he should
remain in its employment.
Mr. McKenzie's announcement of the new policy on directors' fees and its consequences for
theplaintiff did not bring his contract to an end. Did the plaintiff accept the breach? Having regard
towhat transpired subsequently it cannot be said that the plaintiff did anything that could
beconstrued as an acceptance of the breach. In my view the evidence does not support a finding
thatthe plaintiff was constructively dismissed.
The letter of 27th April 1988
I turn now to the Chairman's letter to the plaintiff of 27th April, 1988 said by the Advocate to be
aletter retiring the plaintiff at 60 pursuant to the provisions of the pension scheme. The notice
givenby the letter was, it is said, generous and far more than was required in the circumstances.
Mr. Simmons for the plaintiff does not agree. It is, he submits, no more than a letter of
dismissalmasquerading as a letter retiring the plaintiff.
What is the true purport and significance of the letter? First, it speaks of the plaintiff "now"
havingreached the age of 60. This language corresponds to that used by Mr. McKenzie when he
reportedto the Advocate's Board on 5th May, 1988: "Mr. McKenzie stated that Mr. Grosvenor had
nowreached the age of 60." However, the plaintiff had reached that age about a year earlier.
Second, it speaks of the Pension Plan's normal retirement age of 60 years without reference to
thepossible retirement age of 65. The judge found that Mr. McKenzie had told the plaintiff at
themeeting of February 23, 1987 that the age of retirement in McEnearney was 65.
Third, it speaks of the plaintiff having passed age 60 with him and the Advocate agreeing to
histemporary continuance in office. But the minutes of the February 23, 1987 meeting speak of
theplaintiff's employment continuing "under the same terms and conditions as existed under the
saleagreement."
Mr. McKenzie's letter to Mr. Hoyos is significant in this context. It is dated April 22, 1988
andrefers to various conversations held between Mr. McKenzie and Mr. Hoyos and to Mr.
Hoyos'letter of April 8, 1988. It then went on to welcome Mr. Hoyos into the group as President
andPublisher of the Advocate.
What appears to have taken place is that although a committee, which included the plaintiff,
hadbeen set up on November 2, 1987 to deal with, among other things, the finding of a
suitableperson "who would eventually be able to take over from the plaintiff", Mr. McKenzie had,
withoutreference to the plaintiff, approached Mr. Hoyos as a possible replacement and had met
withsuccess. The time taken to find a suitable successor for the plaintiff had not been as long
asexpected, but once that person was found, the plaintiff had become surplus to the [24]
Advocate'sneeds. Therefore, the decision was taken to terminate his employment by six months
notice, threeto be spent in the office and three on leave. His departure from the Advocate scene
wasrationalised by invoking the pension scheme as if he had recently reached age 60 and treating
hisservice after that age as if his employment after January 31, 1987 had been continued from
monthto month and without any fixed duration.
When regard is had to all the circumstances, my opinion is that the letter of 27th April, 1988
wasone of dismissal and the issue which arises is whether the notice of six months given to
theplaintiff lawfully terminated his contract of employment.
Was the dismissal wrongful
There had been no provision in the original contract whereby the Advocate could of its ownmotion
terminate it by a period of notice and consequently there was no provision in the contractas renewed
whereby it could be so terminated. The principle of law applicable was stated byCockburn, C.J. in
Stirling v. Maitland (1864) 5 B. & S. 841 at 852:
"if a party enters into an arrangement which can only take effect by the continuance of acertain
existing state of circumstances, there is an implied engagement on his part that heshall do nothing
of his own motion to put an end to that state of circumstances, under whichalone the arrangement
can be operative."
Reference was made to that principle in Ogdens Limited v. Nelson, Same v. Telford [1904-7]
AllE.R. Rep. 1658 and Southern Foundries (1926) Ltd., and Federated Foundries Ltd., v.
Shirlaw[1940] 2 All E.R. 445 and in Shindler v. Northern Raincoat Co., Ltd. [1960] 2 All E.R.
239Diplock, J., as he then was, applied the principle (at p. 224):
"It does, however, seem to me that all five of their Lordships in the Southern Foundriescase were
agreed on one principle of law which is vital to the defendant company'scontention in the present
case."
After reproducing the passage from Stirling v. Maitland quoted above, Diplock, J. continued:
"Applying that respectable principle to the present case, there is an implied engagement onthe
part of the defendant company that it will do nothing of its own motion to put an end tothe state of
circumstances which enables the plaintiff to continue as managing director. Thatis to say, there is an
implied understanding that it will not revoke his appointment as adirector, and will not resolve that
his tenure of office be determined." [25]
Applying the principle to this case, there was an implied engagement on the part of the
Advocatethat it would do nothing of its own motion to put an end to the state of circumstances
whichenabled the plaintiff to continue as President and Publisher. There was an implied
understandingthat it would not terminate his appointment as President before the expiration of his
contract on31st January, 1990 and it was in breach of its undertaking when it did so on 31st
October, 1988.
I will return to this and the quantum of damages payable by the Advocate to the plaintiff
forwrongful dismissal after I have dealt with McEnearney's alleged tortious act in inducing
theAdvocate to break its contract with the plaintiff.
The tort of wrongful interference with contract
Mr. McKenzie's participation in the Advocate's 80th Annual General Meeting on 18th April,
1988sprang from his appointment by McEnearney to represent it at all of the Advocate's
generalmeetings. It is recorded in the minutes of the meeting of the Advocate's Board of Directors
on13th April, 1987 that the Secretary had read a letter from McEnearney's secretary informing
theAdvocate of a resolution of McEnearney's Board to that effect at a meeting held on 8th
April,1987.
Whether this tort is referred to as an inducement of breach of contract, wrongful interference
withcontract or otherwise, an essential ingredient is interference by the defendant wrongdoer with
theplaintiff's contract with a third person. I understand the law to be that if A without
justificationknowingly and intentionally interferes with a contract which B has with C and causes
damage toB, he commits an actionable wrong against B. But there mustbe an interference.
The plaintiff's case that McEnearney interfered with his contract with the Advocate must in myview
fail because McEnearney was not interfering when Mr. McKenzie as the representativeengineered
the removal of his director's fees. McEnearney, as the Advocate's parent company, hada right to
exercise its control in whatever way it saw fit. If the result was a breach of theAdvocate's contract
with the plaintiff, that gave rise to a claim by the plaintiff against theAdvocate. But it could not give
rise to any claim by the plaintiff against McEnearney with whomhe had no contractual relationship.
To hold McEnearney liable in tort to the plaintiff in such circumstances would have far
reachingsignificance for shareholders and indeed for company law. Is a shareholder, individual
orcorporate, to be exposed to liability in tort whenever his, hers or its shares are voted in support ofa
resolution that entails the breach of their company's contract with a third person?
This is not in my opinion a question of McEnearney having to prove that there was justificationfor
what it did. It is a case of McEnearney not having interfered with the Advocate's contract withthe
plaintiff because, as a shareholder of the Advocate, the Advocate's business was its
legitimatebusiness.
The plaintiff's appeal against the judge's dismissal of its claim in tort against McEnearney must
inmy view be dismissed.[26]
Damages for wrongful dismissal
Section 45(1) of the Severance Payments Act, Cap. 355A enacts -
"45 (1) Notwithstanding any rule of law to the contrary, where, in any action brought by
anemployee against an employer for breach of their contract of employment, the employeeclaims
damages for wrongful dismissal, the Court shall, if
(a) it finds that the employee was wrongfully dismissed; and
(b) it is satisfied that, had the employee been dismissed by reason of redundancy or
naturaldisaster, the employer would be liable to pay him a severance payment,
assess those damages at an amount not less than such severance payment."
The subsection makes special provision in respect of the assessment of damages for
wrongfuldismissal in the circumstances to which it applies. For the provision to have effect the
followingconditions must be satisfied:
(1) there must be an action brought by an employee against an employer for breach of
theircontract in which the employee claims damages for wrongful dismissal;
(2) the Court must have found that the employee has been dismissed by reason ofredundancy or
natural disaster, the employer would be liable to pay him a severancepayment.
Once these three conditions are fulfilled the court must assess the damages payable at an amountnot
less than the severance payment - notwithstanding any rule of assessment that says otherwise.
In the present case conditions (1) and (2) are clearly satisfied. Condition (3) is also fulfilled. Infact,
the Schedule B provisions and the summary of terms attached to Mr. FitzWilliam's letter of31st
January, 1984 contemplated the possible application of statutory provisions on severancewhen it
was stated -
"The existence of this employment contract shall in no way affect the severance pay towhich Mr.
Grosvenor would otherwise be entitled under law should his employmentterminate during or after
the terms of this contract."
This does not say that a severance payment would be payable to the plaintiff when or after
hisemployment with the Advocate came to an end. It contemplates that such a payment
couldbecome payable pursuant to the statute, depending on the [27] circumstances in which
hisemployment came to an end. In this case no severance payment is payable, but, because
theplaintiff was wrongfully dismissed, section 45(1) requires the computation to be made as if he
isso entitled.
Conditions (1) to (3) being fulfilled, an assessment of the damages payable to the plaintiff has tobe
made pursuant to section 45(1).
This involves two assessments, one at common law and the other as if the plaintiff had beensevered
and whichever is greater is the amount payable under the subsection.
At common law, damages in a case such as the present would be assessed by calculating
theplaintiff's earnings had his contract run its full course and deducting therefrom what amount,
ifany, he earned or should reasonably have earned in fulfillment of his duty to mitigate.
The First Schedule to the statute applies for the purpose of calculating the severance payment
thatthe plaintiff would have received had he been dismissed by reason of redundancy or
naturaldisaster.
Common law damages
The learned judge found that on 31st July, 1988 the plaintiff was entitled to monthly emolumentsof
$14,873 made up as follows:
Salary: $10,000.00
Director's fees: 500.00
Entertainment allowance: 1,650.00
Car: 525.00
Telephone: 33
Petrol: 300.00
Air fares: 1,083.00
Accommodation: 555.00
Club allowances: 227.00
(Total): $14,873.00
No deduction was made of any amount which was or should reasonably have earned by theplaintiff
in mitigation of damages and the plaintiff was awarded $267,714 calculated bymultiplying $14,873,
his monthly emoluments, by 18 which was the number of months held by thejudge to be the
unexpired portion of the contract.
In this court, there was no criticism of, or submissions on, the figures found by the judge to be
theplaintiff's monthly emoluments, no reference to, or submission on the effect, if any, of
BritishTransport Commission v. Gourley [1956] A.C. 185 on the award. Holding the view as I do
thatthe plaintiff's contract with the Advocate was terminated on 31st October, 1988, I would take
amultiplier of 15 (i.e. November 1988 to January 1990) and calculate damages at common law
at$223,095.[28]
The severance payment
Paragraph 3 of the Schedule applies for the purpose of determining the number of complete yearsof
employment to be used in the calculation. The plaintiff had been employed by the Advocate for44
years but an upper limit of 33 complete years of employment is imposed.
Four weeks' basic pay is allowed by paragraph 2 for each complete year of employment,
"week'sbasic pay" being defined in paragraph 6 to mean, in relation to an employee like the
plaintiff, histotal basic pay during the one hundred and four weeks immediately preceding the date
on whichhe ceased to be employed, divided by one hundred and four. In the same paragraph "basic
pay" isdefined for the purposes of the Schedule to mean -
"the rate of pay of an employee, plus overtime payments, incentive or productivity paymentsand
any other payments, allowances, or additions to the pay of an employee that are madeon a regular
basis before any deductions are made: but does not include intermittent bonusesthat are not related
directly to the productivity of the employee."
Paragraph 4 of the Schedule provides that the preceding provisions of the Schedule are to
haveeffect without prejudice to the operation of any regulations made under section 11 of the
Actwhereby the amount of a severance payment, or part of a severance payment, may be
reduced.The Severance Payments (Pensions) Regulations, 1972 (amended in 1976) were made
under thatsection and a question raised during the addresses of counsel is whether any amount that
would bepayable pursuant to the Schedule falls to be reduced pursuant to those regulations.
I will consider first whether any reductions fall to be made under the Act. Section 11(1) provides:
"The Minister may by regulations make provision for excluding the right to a severancepayment,
or reducing the amount of any severance payment, in such cases as may beprescribed by the
regulations, being cases in which an employee has (whether by virtue of anenactment or otherwise)
a right or claim (whether legally enforceable or not) to a periodicalpayment or lump sum by way of
pension, gratuity or superannuation allowance which is tobe paid by reference to his employment
by a particular employer and is to be paid, or beginto be paid, at the time when he leaves that
employment or within such period thereafter asmay be prescribed by those Regulations."
Subsections (2) and (3) of section 11 need not be reproduced.Regulation 3(1) of the
Regulationsprovides:
"3(1) Subject to paragraphs (2) and (3), for the purposes of these regulations "pension"means a
periodical payment or a lump sum by way of [29] a pension, gratuity orsuperannuation allowance as
respects which the National Insurance Board is satisfied that -
(a) it is to be paid in accordance with any scheme or arrangement having for its object orone of
its objects to make provision in respect of persons serving in particular employmentsfor providing
them with retirement benefits; and
(b) except in the case of such lump sum which had been paid to the employee, the benefitsunder
the scheme are secured by
(i) an irrevocable trust which is subject to the laws of Barbados, or
(ii) a contract of assurance or any annuity contract which is made with an insurancecompany
registered under the Insurance Act; and
(c) the scheme or arrangement is established by an enactment or other instrument having theforce
of law in any part of the Commonwealth outside Barbados; and
(d) the provisions made to enable benefits to be paid (taking into account any additionalresources
which could and would be provided by the employer or any person connectedwith the employer, to
meet any deficiency) are adequate to ensure payment in full of thebenefits."
Paragraphs (2) and (3) are not pertinent. Regulation 4(1) provides:
"4(1) These regulations apply in any case where an employee who is entitled, or but forthese
Regulations would be entitled, to a severance payment from an employer, has a rightor claim to a
pension for himself which
(a) is to be paid by reference to the employee's last period of continuous employment withthat
employer;
(b) (i) if it is a lump sum, is to be paid, or
(ii) if it is a periodical payment, is to begin to accrue,
the time when the employee leaves the employment with that employer or within 90
weeksthereafter; and
(c) in so far as it consists of periodical payments, satisfies the conditions specified inparagraph
(2)." [30]
Paragraph (2) sets out the conditions referred to at paragraph (1)(c) which are that the Boardmust be
satisfied that, subject to certain specified exceptions, the pension is payable for life and isnot
capable of being terminated or suspended.
Regulation 5(1) provides that the employer of a pensioned employee (defined to mean anemployee
who has a right or claim to a pension of a kind referred to in regulation 4) may, bynotice in writing
given to that employee, claim to exclude the right of the employee to, or reducethe amount of, the
severance payment to which the employee would otherwise be entitled underthe Act in accordance
with, or to the extent permitted by, the First Schedule, and in such a casethe employee is not entitled
to a severance payment, or, as the case may be, is entitled only to thereduced amount thereof.
Paragraph (2) prescribes what the notice is to contain.
In brief, these Regulations make provision in respect of certain pensions as defined in regulation
3and apply to the cases provided for in regulation 4. Regulation 5 enables an employer of
anemployee who has a right or claim to a pension, as defined in Regulation 3, and of a kind
referredto in Regulation 4, by notice in writing given to the employee, to claim to exclude the right
of theemployee to, or reduce the amount of, the severance payment to which the employee
wouldotherwise be entitled under the Act in accordance with, or to the extent provided by, the
FirstSchedule.
These Regulations, by themselves, cannot have the effect of reducing the amount of a
severancepayment. There is no evidence that the Advocate made a claim under Regulation 5 or that
a noticein writing was served pursuant to that regulation; there is no evidence that the National
InsuranceBoard was approached to exercise its powers under Regulation 3; and, in any case the
Boardcould not be satisfied in respect of Regulation 3(1)(c) because that provision requires that
thescheme or arrangement must be established by an enactment or other instrument having the
forceof law in any part of the Commonwealth outside Barbados. Clearly that is not the case with
theAdvocate's pension scheme which was a private pension scheme arranged in Barbados with Life
ofBarbados Ltd.
Section 10 of the Act enacts as follows:
"10(1) Where at any time there is in force an agreement between one or more employers
ororganisations of employers and one or more trade unions representing employees,
wherebyemployees to whom the agreement applied have a right in certain circumstances to
paymentson the termination of their contracts of employment, and on the application of all the
partiesto the agreements, the Minister having regard to the provisions of the agreement, is
satisfiedthat section 3 should not apply to those employees, he may make an order under this
sectionin respect of that --------agreement.
(2) The Minister shall not make an order under this section in respect of an agreementunless the
agreement indicates (in whatsoever terms) [31] the willingness of the parties to itto submit to a
tribunal such questions as are mentioned in paragraph (b) of subsection (3).
(3) Where an order under this section is in force in respect of an agreement
(a) section 3 shall not have effect in relation to any employee who immediately before
therelevant date is an employee to whom the agreement applies; and
(b) section 38 shall have effect in relation to any question arising under the agreement as tothe
right of an employee to a payment on the termination of his employment, or as to theamount of such
a payment, as if the payment were a severance payment and the questionarose under this Part.
(4) An order under this section may be revoked by a subsequent order thereunder, whetherin
pursuance of an application made by all or any of the parties to the agreement in questionor without
any such application."
I reproduce this section to show that it cannot apply to the present case. It contemplates
privatepension or severance payments arrangements between an employer or employers or
anorganisation or organisations of employers and a union or unions representing employees.
Itenables the Minister to make an order excluding the statutory severance payments on his
beingsatisfied in terms of subsection (2). There is no evidence that the Advocate's pension scheme
wasnegotiated with a union or that an order was made by a Minister under thesection.
Section 12 makes provision for the modification of the provisions of the Act where a
previousseverance payment has been made to an employee. It has no application to the present case.
Under the Advocate's pension scheme the plaintiff received $51,109.89 as a lump sum paymentand
draws a pension of $1,233.64 per month and the question is whether in calculating theseverance
payment any reduction is to be made on account thereof. A conclusive answer in thenegative is
provided by section 13 of the Act which enacts:
"13. Except as provided for by regulations made under section 11 or by section 12, the rightof an
employee to a severance payment under this Act shall not be excluded and the amountof a
severance payment due to that employee shall not be reduced because of any right orclaim to any
other payment due to the employee."[32]
The computation
The multiplier to be used in the calculation is 33, but ascertainment of the multiplicand is not
asstraightforward. The learned judge did not address his mind to section 45(1) and consequently
didnot make any finding as to what amount represented 4 weeks' basic pay. The question was
raisedin this Court but not addressed in any detail. In the Amended Statement of Claim the
plaintiffclaims $354,791.11 under this head but this figure was not broken down and is not even
exactlydivisible by 33.
In these circumstances, I would refer the matter to the parties to see whether agreement on thefigure
can be reached failing which there will have to be an inquiry for the purpose of ascertainingthe
amount to be allowed as 4 weeks' basic pay.
Before closing I will refer to two cases on which submissions were made in the course ofargument:
Barbados Plastics Ltd. v. Taylor [1981] 16 Barb. L.R. and Clarke et al v. Nathu(1992) 27 Barb.
L.R. 291, both decisions of the Court of Appeal on appeal from magistrates.
As was pointed out in Correia's Jewellery Store Ltd. v. Forde a decision of this court delivered
onDecember 9, 1992, Barbados Plastics Ltd. v. Taylor (1981) 16 Barb. L.R. 79 was on the
factscorrectly decided but statements made in the course of the judgment are misleading and should
becorrected. It was said that whether a dismissal is wrong cannot depend on whether or not
noticewas given and that where there is no good cause for the dismissal of an employee he can
invokesection 45(1) and obtain the benefits which the Act provides for them.
These statements are misleading because there are circumstances in which a servant's
employmentcomes to an end which do not give rise to an action for wrongful dismissal. For
instance, acontract may have run its course or may be determined in accordance with provisions
agreed uponbetween the parties or otherwise in accordance with law. In such circumstances, the
employeecannot claim to have been wrongfully dismissed and consequently there would be no basis
for theapplication of the special assessment provisions of the subsection.
Clarke et al v. Nathu (1992) 27 Barb. L.R. 291 was the case of a weekly-paid delivery driver
whowas summarily dismissed after being employed for 15 months. This court held that in
thosecircumstances section 45(1) could play no part in the assessment of damages for wrongful
becauseshe did not have a sufficient number of complete years of employment to qualify for a
severancepayment. Counsel draws attention to the words towards the end of the judgment: "In this
case therespondent was a weekly worker and was entitled to a week's notice," and commented that
theywere causing difficulty to some magistrates. However, the court was saying no more than that
inthe circumstances of that case a week's notice was reasonable. It was not being suggested that
aweek's notice would be reasonable in every case. What is reasonable notice depends on
thecircumstances of the particular case.[33]
Costs
I would postpone the question of costs until there is an agreement or a determination on
whatamount constitutes 4 weeks' basic pay and would adjourn this case for two weeks in order to
seewhether the parties can reach agreement on that amount
Decision on costs
On December 16, 1993 a decision on the question of costs was reserved until there was agreementor
determination on what amounts constitutes 4 weeks in order to see whether the parties couldreach
agreement as to that amount.
On resumption on January 5, 1994 Mr. Simmons for the plaintiff stated that two sums had
beengiven to him by the other side, first $442,266.00 and, shortly before the resumption,
$437,943.Clearly, these sums represented awards on the basis of 33 being the multiplier and it
follows thatthe figure for 4 weeks' basic pay as given by the first defendant was $13,402.00 and
later$13,271,00.
Mr. Simmons stated that the plaintiff is willing to accept the smaller sum. An award of section
45damages on the basis of a multiplication of that sum by 33 (the number of complete years
ofemployment) would be $437,943.00.
Mr. St. John for the first defendant wishes now to argue for a reduction of the award on the basicof
Gourley's case. Mr. Simmons opposes on the ground that it is too late to raise Gourley.
Section 45 damages were in issue from the commencement of this case. In both the Statement
ofClaim and the Amended Statement of Claim there was a claim for compensation in
accordancewith the provisions of that section. Gourley was not argued before the trial judge and he
made noreference to that case in his judgment. The first defendant in its grounds of appeal did not
allegeany error in not taking Gourley's case into account. That case was not raised in argument
duringthe many days that this case occupied the attention of this court and in the judgment read
onDecember 16, 1993, it was specifically stated that there was no submission on the effect, if
any,Gourley's case would have on the award.
No reason has been put forward to show why leave should now be given to the first defendant
toargue Gourley's case and leave to do so is refused.
The plaintiff is entitled to section 45 damages against the first defendant in the sum of$437,943.00
and his appeal against the award of $267,714.00 by the trial judge is allowed withthe first
defendant's cross appeal being dismissed.
The plaintiff's appeal against the judge's decision in favour of the second defendant is dismissed.
The plaintiff has never been paid for the months of September and October 1988 when he was
stillin the employment of the first defendant. The trial judge (at p. 24 of his judgment) found that
onJuly 31, 1988 the plaintiff was entitled to emoluments $14,873.00 per month. This figure
wasnever in issue before this court and seems appropriate as the basis for the plaintiff's entitlement
forthe months for [34] which he was not paid. On that basis judgment is given for the plaintiff
againstthe first defendant for the sum of $29,746.00.
Interest is granted on the total sum of $467,689.00 ($437,943 and $29,746) at the rate of 4%
perannum from the date of the filing of the writ until today's date and hereafter at the rate of 8%
perannum.
The award of the trial judge (save that with respect to the motor car in which he gave judgementfor
the first defendant against the plaintiff and against which there has been no appeal) is set asideand
judgment is given in the terms stated above.
The plaintiff is to have his costs against the first defendant on his appeal against the trial
judge'saward and on the cross-appeal by the first defendant with a certificate for two attorneys-atlaw.
The second defendant is to have its costs against the plaintiff on the plaintiff's appeal against
thedismissal of his claim against the second defendant with a certificate for two attorneys-at-law.
[35]