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High Court of Ireland Decisions |
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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Lonergan v. Salter-Townshend [1999] IEHC 205 (9th February, 1999) URL: http://www.bailii.org/ie/cases/IEHC/1999/205.html Cite as: [1999] IEHC 205 |
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1. This
is an application by the Plaintiff for interlocutory relief in which the
Plaintiff seeks the following, namely reinstatement into the post of Chief
Executive Officer of the Second Defendant, the resumption of payment of his
salary from the purported termination date and an injunction to restrain the
second and third Defendants from appointing any other person to the post of
Chief Executive Officer, all pending the hearing of the action.
2. Effectively
the Defence of the second Defendant at interlocutory stage, is that there is
no fair issue to be tried, on the basis (a) that the Plaintiff was never
appointed to the post of Chief Executive Officer of the second Defendant, (b)
that the relationship which he had with the second Defendant was that of
Consultant, paid on a week to week basis, (c) that that Consultancy was
terminated lawfully, (d) that even if he had a different status he was a
probationer, (e) that as such a probationer the second Defendant was entitled
to terminate or not appoint the Plaintiff to the post of Chief Executive, and
(f) that the law does not require the second Defendant in relation to the
Plaintiff’s probationary employment to be bound by the Rules of Natural
or Constitutional Justice insofar as these relate to prior notice, or an
opportunity to be heard, etc.
3. The
third Defendant, who effectively funds the operation of the second Defendant,
at this stage points to the fact that, regardless of whether or not the
Plaintiff establishes a fair issue to be tried, the third Defendant has put in
place a Steering Committee which is in fact carrying on the Management Business
of the second Defendant (including the business previously carried on by the
Chief Executive Officer), and that it would not be in the interests of the
second Defendant to have the Plaintiff reinstated in those circumstances. Both
the second and the third Defendants in any event say that damages are an
adequate remedy.
4. In
order to understand the strength of the arguments made by all of the parties,
it is necessary to set out the background to this dispute. Before I set that
out however, I should say that the First Defendant was Joined by the Plaintiff
to represent the second named Defendant, and I will return to this matter in
due course, since it too forms part of the claims in the Notice of Motion
served by the Plaintiff.
5. The
second Defendant is a Council, effectively representing a number of voluntary
bodies throughout the Country, and established to look after and promote
awareness of disablement in the population, and the interests of disabled
persons. It is not unlike a number of other Councils set up or established to
promote interests of particular segments of the community, but it does not
have the status of an incorporated body established pursuant to statute. It is
funded by voluntary donations, but substantially by subvention from the third
named Defendant as part of a programme, to ensure that the interests of this
particular segment of the community are promoted.
6. There
is a Board of the Council. I do not know the exact membership of the Board. It
is clear from Minutes of certain Board Meetings that certain other persons
appear to have observer status at Board Meetings, not always having a vote
(although on some occasions they do appear to have voted).
7. In
1997 the second Defendant, through an outside recruitment agency, advertised
the post of Chief Executive Officer. The Plaintiff was among those who applied
for the position but was, at that time, unsuccessful. It appears to be common
case that he was ranked next to the successful candidate at the time. The
successful candidate was then appointed to the post of Chief Executive Officer.
The position did not work out. From September of 1997 the Plaintiff kept in
touch with the then Secretary of the second Defendant who in April 1998 asked
the Plaintiff if he would be interested in taking on the position of Chief
Executive Officer when it became vacant in May. He indicated that he would.
8. The
Plaintiff gave evidence (and this is not disputed) that when he was asked if he
would commence work in May of 1998, he was studying and requested that this be
postponed until July of 1998, but was told that he would have to start
immediately. He therefore agreed to do so, and it appears to be common case
that he started work in or around the 22 May 1998. He was told verbally that
he would enter a consultancy arrangement initially for a period of six weeks,
and the second Defendant has exhibited a letter addressed to the Plaintiff
(which the Plaintiff does not recall receiving) which supports his
understanding. I do not at present find anything of significance in the fact
that the letter was written but not apparently received.
9. The
Plaintiff was set certain tasks which he appears to have set about complying
with in the initial period and at the same time a draft contract was prepared
by the second Defendant's legal advisors. This was prepared in a most timely
manner by the Solicitors, and was sent with a letter from the Defendant’s
Solicitors also dated the 22
nd
May to the then Secretary of the Council, under cover of a private and
confidential letter. The Solicitors suggested, again quite correctly, that
there might be certain additional terms which the Council or the Plaintiff or
other Members of the Board might wish to insert.
10. No
such suggestions were made by any Member of the Board, or by the Secretary, or
indeed by the Plaintiff, and therefore no second draft became necessary.
Rather, the agreement was sent to the third Defendant, for its approval, some
time in June 1998. It was eventually returned by the third named defendant,
approved, some time in September, 1998 or perhaps late August. In the meantime
it would appear that the Plaintiff continued to be paid the same amount of
money as he had been paid pursuant to the consultancy arrangement which existed
from the 22
nd
May 1998.
11. Before
I turn to consider other matters relating to the claim, I should point out some
of the salient features of the Agreement as drafted and approved by the third
Defendant, but before doing so, I draw attention to the fact that on the 13
th
June, when the Board met and considered, inter alia, the Agreement, it was
decided that Board Members would have an opportunity of objecting to the terms
of the Agreement within seven days of the agreement being received by them. It
is unclear whether this was to be after it had been approved by the third
Defendant or prior to that, but since the third Defendant’s approval
appears to be key (being the pay master), I think the Agreement would first
have to have the approval of the third Defendant. However I do not have to
reach a concluded view on this point, but this appears to me to be a logical
sequence.
12. The
salient features of the Agreement as originally drafted, and which are relevant
to a consideration of the matters before me, include the following:
13. Having
regard to these matters, I now turn to the further facts which may be relevant.
It is unclear from the evidence precisely who, when, or by what means the
consultancy arrangement was extended as it allegedly was. The first named
Defendant deposes that following the conclusion of the initial consultancy
period Mr. Lonergan “continued to be retained by the Board in a
consultancy capacity”. He also says that at a meeting of the Board held
on Saturday the 13
th
June, it was agreed that the Plaintiff would be retained as Chief Executive
Officer for a probationary period of six months, subject to the approval of the
third Defendant, and the subsequent approval of the second Defendant.
14. I
have looked at the Minutes of the 13
th
June which have been furnished to the Court. I want to comment on the Minutes
furnished. When these Minutes were first opened, it seemed to me that the
copies which had been exhibited were neither signed, nor otherwise bore any
indication that they had been subsequently proposed for acceptance, passed or
approved. Further, when the initial copies of minutes of one of the crucial
meetings, that of the 26
th
September, was not very legible and a more legible copy was furnished to Court
(which was duly exhibited in a Supplemental Affidavit), it became clear that
there were two sets of Minutes of the Meeting of the 26
th
September. However for the purposes of this application for interlocutory
relief, I proposes to accept the Minutes as they stand, and I now turn to the
Minutes of the 13
th
June.
15. I
have to confess that I cannot find the claimed decisions recorded in the
minutes which have been exhibited. So it seems to me that there is a fair
issue to be tried as to whether or not he was engaged under a service agreement
or under a continuous consultancy, and insofar as there is a dispute about
this, it seems to me that it cannot be resolved at interlocutory stage.
16. It
is important to try to assess what the Defendants thought of the Plaintiff
prior to the crucial dates of meetings in September and October. To do so it
is necessary to go back to the Board meeting of the 13
th
June. At that meeting it is clear that the consultancy period which commenced
on the 22
nd
May was considered, as well as the Plaintiff’s work to that date.
18. This
was seconded by another board member and is followed by the word
“unanimous”. I take it that this means that the proposal was put
and was passed. It seems clear at least for the purposes of interlocutory
relief that, after the agreement was approved by the Department and after the
board members did not object within the suggested seven days given to them to
do so, the agreement was in place. It is true that there is the opposite
argument, namely, that only the Board actually sitting and considering the
position after it had approval of the third defendant, could appoint, and that
until then, no agreement was in place. I cannot, of course, decide on the
rights or wrongs of those conflicting points at this stage. The Plaintiff was
clearly considered by the Board to be acceptable. After the 13
th
June and prior to the 26
th
September I find no Board resolution which suggests the Plaintiff was then
acting in an unacceptable manner.
19. An
issue arises in relation to the Plaintiff’s status as an employee, or
rather as to whether or not he was employed on a probationary basis. It is
contended for by the second Defendant that even if the service agreement could
be deemed to have come into operation, that a service agreement itself provided
that the Plaintiff would be employed on a probationary basis initially, and it
is quite clear that Clause 2.2 of the agreement indicates "approximately 5
months", but there is no indication as to the precise date on which this was to
commence. So it seems to me that the second Defendant's argument that an
issues arises as to whether or not the Plaintiff was on probation during the
particular period in question is also a reasonably fair issue to be tried, but
not an issue that can be determined at interlocutory stage, because it requires
further consideration of the precise arrangements entered into which are not
adequately reflected in the minutes, and in respect of which I have no
conclusive evidence.
20. Moreover,
an issue arises as to whether, as a mere probationer, the Plaintiff is not
entitled to invoke the Rules of natural and/or constitutional justice. This is
a serious contention on the part of the second Defendant, as is the subsidiary
argument that it is sufficient for that defendants to be able to establish that
there was justification for his removal, but no requirement to advise the
Plaintiff in advance of the grounds for the same. I am not satisfied on the
authorities cited that the matter is beyond doubt. Some at least of these are
based on the provisions of the Civil Service Regulation Act 1956, which deals
with "established civil servants", who are hired and fired at the will of the
Government. The Plaintiff is not and never was a civil servant.
21. During
the summer of 1998 a dispute arose. This concerned payment of salary to
another staff member of the second defendant, who for the purposes of this
application, should not be named. There appeared to be some irregularity as
to the manner of payment to that staff member and this was queried, inter
alia, by the Plaintiff. Matters continued, without the issue of the salary
being disposed of and without the Plaintiff’s contract being signed. In
the meantime the Plaintiff continued to act as Chief Executive Officer,
liaising also with the third named Defendant, who eventually appointed an
audit team to look a t the finances of the second Defendant.
22. I
mention the dispute, not because it is the cause of the removal of the
Plaintiff, but to suggest that it appeared to be a type of catalyst for the
eventual rather acrimonious meetings which commenced on the 26
th
September. At the Board meeting on that date – and again I have to query
the minutes – both the salary question and the Plaintiff’s position
were considered. When I look a t what are put forward as the official minutes,
there was no actual termination of the consultancy agreement or of the
Plaintiff’s employment. What the Board stated to the Plaintiff was that
the position of the CEO has to go before the Management Committee “before
his contract will again take effect." What precisely is meant by these words
is unclear.
23. In
the course of that meeting there is reference to a Management Committee and it
seems clear from the minutes that that committee existed. It was agreed that
it would be expanded, and four additional members were appointed to it. It is
also unclear whether under the constitution of the Board, such a subcommittee
must in turn be made up of members of the board, or whether others may be
member of it. It is equally unclear when the Management Committee was
established. The Board, under the temporary constitution, was entitled to
devolve its powers, but there is no evidence before me that it ever did so.
An issue arises therefore as to whether the Plaintiff could lawfully be fired
by the Management Committee.
24. However,
on the 5
th
October a Management Committee meeting took place, at which it was proposed
by one member that the Plaintiff’s consultancy agreement be terminated
with effect from “close of business today.” The minutes record
that this proposal was followed by a ”deafening silence”. The
proposal was eventually voted on and carried. The Plaintiff was then
effectively out of his office and his position as Chief Executive Officer.
25. Immediately
after the meeting of the 5
th
October the Plaintiff wrote asking for reasons for his purported dismissal,
and for clarification of other matters, and indicated that until all the
questions raised had been answered he considered himself still in the employ
of the Council. It would appear that letter was not answered.
26. There
is one final set of minutes of the Board which I should consider before dealing
with the submissions made on the part of the Plaintiff and the Defendants, and
these are the minutes of the 30
th
October. They are very lengthy minutes, (at least 14 pages), and the version
of the minutes exhibited originally with the first named Defendants first
Affidavit, are noted ‘’Edited by Sean Leamy’’, and are
headed as being a "draft copy". In the supplemental affidavit of the first
named Defendant, minutes of the 31st October are furnished as being the
definitive version of the minutes, and again for the purposes of this
interlocutory application, I deal with the minutes on that basis. It is of
course unsatisfactory that two different versions of minutes appear. Although
there are two sets of minutes, the following salient matters are recorded in
the minutes, in one or other version:
27. A
series of allegations are then set out in the Minutes of the 30
th
October, concerning Mr. Lonergan, and for the purposes of this interlocutory
application I do not have to consider these, but will return to them when I
deal with the legal argument put forward by the second named Defendant.
28. Against
the foregoing background, which I have set out in considerably more detail than
would normally be the case, the application was brought, and in the course of
the proceedings, several affidavits were filed on behalf of the Plaintiff, and
on behalf of the first and second Defendants, but no affidavit was filed by the
third named Defendant, or on his behalf.
29. It
is clear from the affidavit evidence that a number of issues arise for
consideration and I have mentioned some of these. I have to consider this
application for interlocutory relief, as is submitted by Mr. Keane on behalf of
the Plaintiff, on the basis of the several well established principles which
have been adopted into Irish Law, since as early as the decision in
Campus
Oil v Minister for
(1984) I.R. 1 (which in turn adopted the English decision in
American
Cyanamid v Ethicon (1973) A.C.,
in which the principles were first enunciated in a pithy and discrete manner.
They may be summarised in the following terms, namely, that for a Plaintiff to
succeed in an application for interlocutory relief, he must establish:
30. These,
of course, do not, strictly speaking, repeat what was said either in
American
Cyanamid
,
or in
Campus
Oil
,
because the principles are stated in a more sophisticated manner, but I use
these shorthand terms to describe what must be established by the Plaintiff.
Insofar as the first of these is concerned, over the years a preferable
description has come to be used, namely, that the Plaintiff must establish that
there is a “fair” issue to be tried. This avoids the difficulties
which arise with the use of the word “serious”, which tended to
give the impression that the Plaintiff had to establish that he had a case
which was very strong. It is only where all of the requirements above are
evenly balanced between the parties, that the Court considers the final
principle enunciated by Diplock, L. in the
American
Cyanamid
case, comes into consider the relative strengths and weaknesses of the claims
made by the Plaintiff and the Defendant. In the present case, I do not
consider that I have to reach any view as to the strength or weakness of the
Plaintiff’s case, and I look now to see the extent to which issues have
been established as being a fair issues to be tried. It seems to me that one
of the issues to be considered is whether or not the Plaintiff was in fact
employed by the second Defendant pursuant to a Contract of Employment in terms
of the service agreement which was prepared by its solicitors or whether he
was at all times employed under a consultancy agreement. I find he has made
a fair issue to be tried on this.
31. The
second defendant has contended that, even if the Plaintiff was employed on the
agreement which was approved by the third named defendant, he cannot enforce
this against the second council, because it is an unincorporated body. Again,
I think that matter could not be decided at interlocutory stage. But I would
comment that it seems to me very odd that the second named defendant is
described at all times in the agreement as the "employer". I greatly suspect
it pays its employees, returns PRSI and PAYE in its own name, and in all
respect operates as an employer. It comes to court represented by solicitor
and counsel and if there were any doubt about its status as defendant, I would
be prepared to accept the Plaintiff’s nomination of the first defendant
as a representative defendant. But a fair issue arises on this, as onthe
"probation" point. I do not accept the contention on the part of the second
defendant that there is no fair issue to be tried.
32. In
the circumstances, I now turn to the question of damages, and as to whether
they are an adequate remedy for the Plaintiff. The Plaintiff has said,
uniquivocably, that he is dependent on his salary to meet general day to day
expenses. This is denied on behalf of the second defendant but countered very
strongly by the Plaintiff and also by a third party who has denied, again
strongly, the statements ascribed to her in affidavits sworn on behalf of the
second defendant. I make no final finding on this aspect, but consider that on
balance I am satisfied that the evidence of the Plaintiff supports his
contention as to damages.
33. It
is contended for on the part of the second named Defendant that there is a
separate and important legal issue to be considered in the context of this
aspect of the case, namely that a different legal approach is taken when the
interlocutory relief is, in effect, to force an employer to take back his
employee or to continue to pay his salary. Mr. Horan points to the long line
of authorities which support his contention that this is not permissible. He
accepts that it has been the case that the court has granted such relief, but
he points out that the cases on which Mr. Keans for the Plaintiff relies are
all "exceptional" cases, and that this case is not.
34. It
seems to me therefore that I must look at these to see whether the court is
entitled, notwithstanding a finding that a fair issue has been established, to
grant the relief sought. The cases all arise from disputes as to
re-instatement and/or payment of salary. The first of these is
Fennelly
v Azzicurazzioni Generali,
an unreported decision, but a note of the judgment indicates that the then
President of the High Court stated, in relation to these employment cases:
36. It
is suggested by the second named Defendant that this case was exceptional, and
so it was. However, in subsequent cases, the same relief has been granted,
and I now turn to these. In the first of them, upon which both the Plaintiff
and the second named Defendant rely, the court also ordered the payment to the
Plaintiff of his salary see
Boland
v Phoenix Shannon
(1994) ILRM. While the facts of that case were quite different, the manner in
which this aspect of the relief sought was dealt with followed the same order
as in the Fennelly case.
37. The
next case in time is the case of
Phelan
v Bic Biro
(1995) ILRM . Again the President of the High Court recognised the long
established principle in employment cases, but it is noteworthy that,
notwithstanding that the Plaintiff would not be destitute, he granted
interlocutory relief.
38. Similarly
in the case of
Harte
v Kelly
(1994) ILRM , Laffoy, J. granted an injunction on the basis that it would be
unjust to leave the Plaintiff with only half his salary. The court stated:
39. This
case also followed the decision of Mr. Justice Keane in
Shortt
v Data Packaging
(1994) ILRM in which similar orders were made. I should mention that this case
was also cited with approval in the
Phelan
v Bic
case, supra.
40. Having
regard to these matters and to the evidence which has been adduced, I find that
the Plaintiff has established that he is likely to suffer irreparable loss and
damage if he were deprived of his salary. No evidence has been tendered to me
that, on this aspect, any of the defendants would suffer irreparable loss or
damage.
41. However,
there is another relief sought, namely, the reinstatement of the Plaintiff as
chief executive officer. On that issue, the Plaintiff has given little
evidence that irreparable loss or damage would be caused to him. No evidence
at all has been adduced by the second named defendant to the effect that such
loss or damage would be suffered by them if an order were made. Although the
third defendant did not file an affidavit, it was submitted on his behalf that
a steering committee is now in place. It is, in effect, carrying out the work
which would have been carried out by the Plaintiff. It is also clear that the
Plaintiff at this time does not enjoy the wholehearted support of all members
of the Board (a factor which is distinguishable from some of the other cases).
It is equally fair to say of course that he might well do so had he been given
an opportunity to meet the allegations made against him.
43. Having
regard to the matters set forth above, I do not consider it appropriate to make
an order reinstating the plaintiff, save that, in return for the continuation
of his salary, I will direct that he may be requested by the new steering
committee to carry out work of a nature ordinarily done by the CEO of the
second named defendant, and if he is not requested to carry out such work, this
will not in any way affect his entitlement to be paid his salary until the
hearing of the action.