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England and Wales Court of Appeal (Civil Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Cobley v Forward Technology Industries Plc [2003] EWCA Civ 646 (14 May 2003) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2003/646.html Cite as: [2003] IRLR 706, [2003] ICR 1050, [2003] EWCA Civ 646 |
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT
APPEAL TRIBUNAL
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE MUMMERY
and
LORD JUSTICE RIX
____________________
KENNETH COBLEY |
Appellant |
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- and - |
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FORWARD TECHNOLOGY INDUSTRIES PLC |
Respondent |
____________________
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Ms Suzanne McKie (instructed by Lovells) for the Respondent
____________________
AS APPROVED BY THE COURT
CROWN COPYRIGHT ©
Crown Copyright ©
Lord Justice Mummery :
Introduction
Factual Background
"17.1 Resignation of directorships In the event of the executive ceasing to be a director of the company, his employment hereunder shall terminate automatically…provided that if the executive shall himself resign as a director…the executive may elect by notice in writing to the company…that his employment shall not so terminate but shall continue on the basis…that he shall continue to be employed as chief executive."
Employment Tribunal
(1) Mr Cobley was dismissed on 8 February 2000. His employment with FTI came to an end when his directorship of the company was terminated.
(2) The reason for his dismissal was (paragraph 6(A))
"…the very fact of the acquisition by Crest resulting in [his] removal as director and employee. We agree with the Respondents' submission that new shareholders are entitled to choose their own board of directors after acquisition and that the choice of new board directors might well result in the removal of the old board so that the chief executive would not continue in place. The other directors resigned. The EGM on 8 February was called by Crest with the purpose of replacing the existing directors with its own nominees "
(3) In case they were wrong on point (2), the tribunal found (in paragraph 6B) that the breakdown in trust and confidence would be a substantial reason justifying the dismissal of Mr Cobley. The tribunal found that, looking at Mr Cobley's conduct from FTI's viewpoint, Mr Goodson believed that the use of the scheme of arrangement had caused Crest to incur extra legal costs; that Mr Cobley had attempted to acquire FTI at half its market value; that his persistence in the management buy-out had caused the shares to double in price and created an additional cost of $10m; and that he was planning to "flip" the company to an American company at a considerable personal profit.
(4) The dismissal was fair within s 98(4). They found (paragraph 7) that Mr Cobley knew that he was likely to have to go and to have been aware of the fact that, if he lost the take-over battle, he would risk being removed from the board. There were discussions in December 1999 as to what his termination package would be. He clearly knew he would be leaving the company. There were no irregularities in the procedure at the meetings on 19 January and 8 February 2000.
The Employment Appeal Tribunal
"20. …It seems to us axiomatic that an employed Managing Director must also be a member of the board. That was reflected in this Appellant's contract. Once he was removed, lawfully, as a director he could no longer continue in employment as the Managing Director and Chief Executive of the Company. The Respondent made out some other substantial reason for dismissal.
21. Was it then open to the Tribunal to find that dismissal for that reason was fair under Section 98(4)? We think it was. Against the background of a bidding war against opposition led by the Appellant it was inevitable that he and his colleagues would cease to be directors. The new owners of the Company were entitled to appoint their own nominees to the board to replace the old board, as the Tribunal found."
Some other substantial reason: s 98(1)(b)
" A reason for the dismissal of an employee is a set of facts known to the employer, or it may be a set of beliefs held by him, which cause him to dismiss the employee."
"…for the tribunal to use its own common sense and experience, and, unless it can be shown that its answer is so obviously wrong that it has or must have misdirected itself, it is not for this appeal tribunal to say that it has gone wrong in law."
Fairness of dismissal
Result
Lord Justice Rix:
Lord Justice Aldous