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Jersey Unreported Judgments


You are here: BAILII >> Databases >> Jersey Unreported Judgments >> De Sousa v Danny Yau Limited trading as Princess Garden 02-Sep-2019 [2019] JRC 169 (02 September 2019)
URL: http://www.bailii.org/je/cases/UR/2019/2019_169.html
Cite as: [2019] JRC 169

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Employment - appeal by the Appellant against a decision of the Employment and Discrimination Tribunal.

[2019]JRC169

Royal Court

(Samedi)

2 September 2019

Before     :

Sir William Bailhache, Bailiff, sitting alone.

 

Between

Maria da Piedade de Sousa

Appellant

And

Danny Yau Limited trading as Princess Garden

Respondent

Advocate M. P. Cushing for the Appellant.

Advocate L. A. Ingram for the Respondent.

judgment

the bailiff:

Introduction

1.        This is an appeal by the Appellant against a decision of the Jersey Employment and Discrimination Tribunal dated 10th September, 2018, when the Tribunal (Advocate Michael Preston, Deputy Chairman) dismissed the Appellant's claim for compensation for unfair dismissal arising from the termination of her employment with the Respondent.  Leave to appeal was granted by me on 12th November, 2018 on the papers.  The sole ground of appeal on which leave was granted was whether the Tribunal erred in law by failing to direct itself that in order to constitute a resignation from employment, there must be clear and unambiguous communication between the parties so that both parties must understand what has taken place and when the employment is to come to an end. 

2.        The appeal was listed for 21st March, and on that day Advocate Ingram on behalf of the Respondent applied for an adjournment on the basis that a new case had been added to the skeleton, namely that of Alwitry v States Employment Board [2019] JRC 014.  Advocate Ingram submitted that it was an important decision, albeit that it was then under appeal (that appeal has subsequently been heard and judgment delivered), and he suggested an adjournment was necessary so that contentions from both sides could be re-written and the Court would be assisted by submissions on the Alwitry decision.  Advocate Cushing responded that he relied on Alwitry solely for the summary of résolution at paragraph 288 and it was not necessary to have any further round of contentions. 

3.        In the exercise of my discretion I considered that this appeal should go ahead. The parties would be able to make such submissions as they wished on the Alwitry decision and it was unnecessary to have an adjournment specifically for written contentions on that case. 

The facts

4.        By the JET 1 and JET 2 forms dated 10th October, 2017 and 17th October, 2017, the parties made plain what was in issue.  The claimant sought statutory compensation for unfair dismissal, damages for wrongful dismissal, outstanding holiday pay and outstanding pay for public holidays, together with a compensation claim for failing to give the claimant written payslips.  The Respondent employer asserted that the employer believed that the Applicant had resigned and was not coming back to work and it employed someone else to carry out the Applicant's role. 

5.        The judgment of the Tribunal makes it plain that, having heard the evidence of the Applicant and the evidence of the employer, it preferred the evidence of the employer.  At paragraph 17 of his judgment, the Deputy Chairman, said that the Tribunal found as a matter of fact that the Applicant told the employer that she was going away for the month of August, and did not mention any illness on the part of her brother.  When the Applicant failed to return at the end of August, the employer reasonably assumed she had resigned and was not returning.  She did in fact return on 19th September, by which time the employer had employed someone else to do the Applicant's job.  There is a finding of fact by the Tribunal that the employer had tried to contact the Applicant without success after 1st September. 

6.        Against that background of facts found to have been established, the Deputy Chairman decided that the employer was reasonably entitled to assume that the Applicant had resigned and would not be returning.  In those circumstances the claim for unfair dismissal failed and, given the finding of fact that the Applicant had resigned, the claim for wrongful dismissal failed as well. 

7.        This summary, which appears in the decision giving leave on 12th November, 2018, was agreed by Advocate Cushing as accurate for the purposes of this appeal.  He informed the Court that his client disagreed with the factual findings made by the Tribunal, but he and the Appellant were aware that this was an appeal on a point of law.  

8.        In effect, the appeal was on a narrow point of law - was the Tribunal wrong to find as a matter of law that the Appellant's failure to turn up for work between 1st and 19th September, 2017, amounted to a resignation?  In this context, I recall the comments of Crow JA in States Employment Board v Alwitry [2019] JCA134 at paragraph 30 that where an appellate court is conducting an evaluative exercise on facts which are admitted or have been established in the tribunal below, the court does not need to be as deferential to the lower tribunal as is required in relation to findings of primary fact, but the views of the tribunal are nonetheless given some weight. 

9.        The issue involves not just contract law but also whether there had been what amounts to an unfair dismissal and therefore a breach of the statutory rights created by the Employment (Jersey) Law 2003 ("the Law").

The contract

10.      I start with the position as a matter of the law of contract.  The contract in this case provided for the employment of the Appellant as a kitchen porter, setting out her basic duties and responsibilities, her hours of work each week, her salary and her holiday entitlement.  The contract provided for sick leave, termination of employment, confidentiality, disciplinary procedures and dismissal.  The relevant provisions of the contract are set out below:-

"Termination of Employment

Four weeks' notice must be given.

The employer reserves the right to pay your basic salary in lieu of notice instead of requesting that you work your notice period.  In these circumstances, you may not be employed by any other person or company whilst receiving pay in lieu of notice. 

The employer reserves the right to dismiss you without notice in cases of serious breach of the terms of your employment, gross misconduct or gross negligence by you. 

...

Disciplinary procedures:

Minor problems will be dealt with and resolved informally.

In cases of more serious problems, depending on the seriousness of the breach of terms and conditions of contract or conduct and performance of your duties, one of the following disciplinary actions may be taken.

Verbal warning which will be confirmed to you in writing and recorded in your personnel file for a period of six months.

A first written warning, which will be confirmed to you in writing and recorded in you (sic) personnel file for a period of 12 months.

A final warning which would be confirmed to you in writing advising that further misconduct could lead to dismissal and recorded in your personnel file for a period of 12 months.

Dismissal

In cases of gross misconduct there will be no period of notice given.

Before any of these actions are taken you will receive a letter setting out the details of the alleged misconduct and inviting you to a meeting to discuss the matter.  You will have the right to be accompanied to the meeting by a work colleague or trade union representative.  After the meeting, you will be informed if any further action will be taken. You have the right to appeal but must do so within 10 working days of receipt of the notification of the decision."

The decision appealed against

11.      The decision of the Tribunal can be found in two paragraphs of the Deputy Chairman's judgment:-

"3. The finding of the Tribunal is that the Claimant resigned or that the respondent was reasonably entitled to treat her conduct as a resignation.  As such, the Claimant was not unfairly dismissed and that her claim is not successful; the Respondent did not wrongfully dismiss the Claimant in breach of contract and so no notice was due; the Claimant failed to prove that she was owed any holiday pay or pay in respect of Public Holidays; and, the Respondent did not provide written pay slips and so no compensation was payable in this respect.  As a consequence, no award is made in her favour.

...

17. As indicated above, the Tribunal preferred the evidence of the Respondent to that of the Claimant.  The Tribunal finds as a matter of fact that the Claimant told Mr Wan that she was going away for the month of August and that there was no mention of the fact that the Claimant's brother was ill.  When the Claimant did not return, without giving any information to the Respondent, Mr Wan reasonably assumed that she had resigned and was not returning.  There was evidence that he had tried to contact her without success.  On the facts, this was a case where the Claimant resigned and was not dismissed.  As such, her claim for unfair dismissal fails. In addition, given that the finding of fact is that this was a case of resignation, the claim for wrongful dismissal also fails."

The Appellant's submissions

12.      The submissions of Advocate Cushing were that the contract provided for four weeks' notice on either side with appropriate disciplinary procedures.  The steps which could reasonably be required of the employer did depend upon the size of the employer's business and workforce but while it was right that the employer, should try to contact the employee, there was in this case an obligation on the part of the employer, if that contact failed, to follow through the contractual procedures, write to the employee to set out the details and require that to be put right.  Accordingly, he submitted that this employer did not follow a fair process. The employer was not entitled to make assumptions as to why the employee was not there, and therefore not entitled to conclude that she had resigned.  It might be that the employee was in breach of contract, and that might provide a good reason for dismissal, but it was clearly not a resignation.  Advocate Cushing agreed that the general law of contract applies save to the extent that the Law provides otherwise. 

13.      He further submitted that Article 64(4) of the Law provided the process which the Tribunal was required to go through.  I set out Article 64 of the Law in full below:-

"General

(1)       In determining for the purposes of this Part whether the dismissal of an employee is fair or unfair, it shall be for the employer to show -

(a)       the reason (or, if more than one, the principal reason) for the dismissal; and

(b)       that it is either a reason falling within paragraph (2) or some other substantial reason of a kind such as to justify the dismissal of an employee holding the position which the employee held.

(2)       A reason shall fall within this paragraph if it -

(a)       relates to the capability or qualifications of the employee for performing work of the kind which the employee was employed by the employer to do;

(b)       relates to the conduct of the employee;

(ba)     is that the employee was required to retire;

(c)       is that the employee was redundant; or

(d)       is that the employee could not continue to work in the position which the employee held without contravention, (either on the employee's part or on that of his or her employer) of a duty or restriction imposed by or under an enactment.

(3)       In paragraph (2)(a) -

(a)       "capability", in relation to an employee, means the employee's capability assessed by reference to skill, aptitude, health or any other physical or mental quality; and

(b)       "qualifications", in relation to an employee, means any degree, diploma or other academic, technical or professional qualification relevant to the position which the employee held.

(4)       Where the employer has fulfilled the requirements of paragraph (1), the determination of the question whether the dismissal is fair or unfair (having regard to the reason shown by the employer) shall -

(a)       depend on whether in the circumstances (including the size and administrative resources of the employer's undertaking) the employer acted reasonably or unreasonably in treating it as a sufficient reason for dismissing the employee; and

(b)       be determined in accordance with equity and the substantial merits of the case.

(5)       Paragraph (4) shall be subject to Articles 63 and 65 to 72."

14.      It was submitted that an employee could not resign simply by not turning up without more - there must be a combination of factors which take one to the point where there had been a resignation but not turning up of itself was insufficient.  Accordingly the process provided by Article 64 of the Law required to be followed.

15.      Advocate Cushing then turned his attention to the Alwitry case, where the Court said at paragraph 288:-

"Under Jersey law, it is the remedy of résolution that allows a party to treat a contract as having been terminated.  The law was summarised by Sir Philip Bailhache, then Bailiff, in Grove and Briscoe v Baker [2005] JLR 348 at paragraph 14:-

'In Hamon v Webster, the court determined that a contract could be terminated (résolu) without an application to the court. It did not decide that the right to treat a contract as terminated followed the English model or was to be considered in accordance with English law. In fact, the law relating to résolution is not dissimilar to the English remedy of rescission. Nonetheless, there is at least one important distinction, in that the remedy of résolution in Jersey law is available at the discretion of the court wherever the failure to comply with an obligation can be said to be sufficiently serious to justify a cancellation of the contract. A trivial or insignificant failure to comply with an obligation would not be sufficient. The failure must go "to the root of the contract" (Hamon v Webster and New Guar. Trust Fin. Ltd v Birbeck (1977 J.J. at 83)), or involve "a breach of a fundamental condition" (Hanby v Moss) or be "sufficiently serious to justify the termination of a contract" (Hotel de France (Jersey) Ltd v Chartered Institute of Bankers). These are the principles to be applied to the first submission of counsel for the plaintiffs that the failure to pay interest at the due time was a fundamental breach of the contract of loan which entitled the plaintiffs to terminate the contract.'"

16.      Advocate Cushing accordingly submitted that résolution was an effective remedy which was subject to the discretion of the Court.  That had not been applied for in this case. 

17.      Advocate Cushing submitted that the Tribunal had consistently adopted an English law approach to questions of constructive dismissal.  He referred to the judgment of the Tribunal in Young v Sowney (Claim number 03/18, under reference [2018] TRE003). In that case, Mrs Griffin, the Chairman of the Tribunal said this:-

"Acceptance and resignation in response to breach

60. A repudiatory breach by an employer does not bring the contract to an end automatically.  The contract is not terminated until the point at which the breach is accepted by the employee (Société Générale, London Branch v Geys [2012] UK SC 63).

61.  It is not necessary for an employee to expressly communicate their acceptance of the breach to the employer.  However, the fact that they have accepted the repudiatory breach must be unequivocal and unambiguous."

18.      In referring to the Société Générale decision of the Supreme Court, reliance was placed on the judgment of Lord Wilson at paragraphs 93 to 97.  At paragraph 93, Lord Wilson referred to the decision in London Transport Executive v Clark [1981] ICR 355.  In that case, the employee went to Jamaica for seven weeks contrary to the terms of the contract and to the employer's express instructions.  So it was a repudiatory breach falling short of purported resignation.  On the contrary, the employee wished to resume his employment upon his return.  While he was away, however, the employer told him, by letter, that his employment was at an end.  The first question posed by his complaint of unfair dismissal related to the identity of the party who had terminated the contract.  Lord Wilson cited with approval the decision of Templeman LJ, in the majority in the London Transport case, who said this:-

"The general rule is that a repudiated contract is not terminated unless and until the repudiation is accepted by the innocent party ...

[C]ontracts of employment cannot provide a general exemption to that rule because it would be manifestly unjust to allow a wrong doer to determine a contract by repudiatory breach if the innocent party wished to affirm the contract for good reason.  Thus in Thomas Marshall (Exports) Limited v Guinle [1978] ICR 905, which contains a full discussion of principles and of the conflicting authorities, a contract of employment was repudiated by the employee.  The Court could not enforce specific performance of the contract for personal services, but Sir Robert McGarry VC enforced against the wrongdoing employee at the behest of the innocent employer who had not accepted the repudiation a confidentiality and non-competition obligation which was only effective during the continuance of the contract.  Repudiation cannot determine a contract of service or any other contract while there exists a reason and an opportunity for the innocent party to affirm the contract."

19.      Interestingly, at paragraph 97 Lord Wilson said this:-

"In proposing that the Court should endorse the automatic theory, the bank invites it to cause the law of England and Wales in relation to contracts of employment to set sail, unaccompanied, upon a journey for which I can discern no just purpose and can identify no final destination.  I consider, on the contrary, that we should keep the contract of employment firmly within the harbour which the common law has solidly constructed for the entire fleet of contracts in order to protect the innocent party, as far as practicable, from the consequences of the other's breach." 

20.      Accordingly Advocate Cushing submitted that the same analysis ought to be applied as a matter of Jersey law.  Absent an election to determine the contract, the contract continued.  Advocate Cushing went as far as to say that if the employee turned up as much as five years later, then she still could not be treated as having resigned, albeit her conduct would amount to a breach of contract. It may indeed have been gross misconduct - but it was still a dismissal and she was entitled to ask the Tribunal to consider that conduct against the law on dismissal.

The Respondent's case

21.      Advocate Ingram submitted that there had not been continuous employment for 52 weeks and it followed that the Appellant was not entitled under Article 73 of the Law in any event.  Article 73 provides as follows:-

"Qualifying period and hours of employment

(1)       Subject to the provisions of paragraphs (2) to (4), Article 61 shall not apply to the dismissal of an employee unless the employee has been continuously employed for a period of not less than 26 weeks or such other period as may be prescribed, computed in accordance with Article 57, ending with the effective date of termination.

(2)       Paragraph (1) shall not apply if Article 65, 66, 67(1) or (2), 68(1), 69(1), 70 or 70A applies.

(2A)    Paragraph (1) shall not apply if the reason or principal reason for the dismissal is, or is connected with, the employee's membership of a reserve force (as defined in Article 55U)."

22.      The 26 week period has been replaced by a 52 week period.  Implicit in this submission is that the right not to be unfairly dismissed, conferred by Article 61 is removed by Article 73 where there has not been continuous employment for more than 52 weeks.  Accordingly it might not matter whether the appellant had been dismissed or had resigned. 

23.      However, on the point of law which had been referred in this particular case, it was agreed that the issue of resignation or dismissal was key to what I have to decide.  The Tribunal does not seem to have made a finding of fact as to the length of the employment and in those circumstances I would remit this matter to the Tribunal if the appeal were to succeed and not seek to resolve the Article 73 dispute myself. 

24.      Advocate Ingram submitted that in a contract of employment there is a mutuality of obligation, and the obligation on the employee to turn up for work is critical.  If the employee does not turn up for work, the objet of the contract of employment has gone, and the contract accordingly automatically comes to an end.  In his submission, the Royal Court was entitled to follow the dissenting views of Lord Sumption in the Société Générale case that a repudiation can amount to an automatic termination of that contract.  Having noted the general rule that the repudiation of a contract did not necessarily bring the contract to an end and left the innocent party with the right to choose either to accept the repudiation, thus bringing the primary obligations in the contract to an end but leaving him with a right to enforce the secondary obligation to pay damages for loss of the bargain; or to treat the contract as subsisting and claim any sums falling due under it as and when they fall due, together with any damages for the repudiating party's failure to perform as and when performance should have occurred, and having noted the various authorities in this connection, Lord Sumption said this at paragraph 116:- 

"These decisions are authority for a general rule that the innocent party to a repudiated contract cannot treat it as subsisting if (i) performance on his part requires the cooperation of the repudiating party, and (ii) the contract is incapable of specific performance, with the result that cooperation cannot be compelled.  The purpose of the right to treat a repudiated contract as subsisting is to enable it to be performed at the option of the innocent party.  It is difficult to see why the law should recognise such a right in a case where the contract cannot be either performed or specifically enforced."

25.      Advocate Ingram submitted that the contract in the Société Générale case required a letter of notice and that was why it was different from the current case. Thus the question in Société Générale was whether it was the letter or the earlier repudiation of the contract which brought the contract to an end. In the present case, there was no requirement that the parties should agree to bring a contract for personal service to an end.  A contract for personal service could not be the subject of an order for specific performance, and it followed that one party's notice was sufficient.  In the current case, the Respondent had accepted the wrongful resignation of the Appellant by appointing another employee.  He emphasised that unlike Société Générale, here there was no explanation at all from the Appellant.  She simply did not turn up for work.  In his submission, the Royal Court should follow the minority in the decision of the Supreme Court, and treat the contract as having been automatically terminated by the breach.  He put it to me that there might be an employer who wrongfully sought to terminate the contract - if the employee did not accept the termination, was he entitled to his wages until many years later, on ordinary contractual principles, even though he had been prevented from performing the contract of service by the employer excluding him from the place where that service was to be performed?  This illustrates what was submitted to be a fundamental problem with the elective approach.  Furthermore, the contracting parties should not have to wait for a court to decide if conduct amounts to gross misconduct or not in order to conclude that a contract had come to an end.  Common-sense suggested that if an employee did not turn up for work, that contract was brought to an end by the employee's repudiation of it. 

26.      In his reply, Advocate Cushing submitted that Article 63 of the Law provided for the effective date of termination, and he confirmed that under the Employment (Qualifying Period) (Jersey) Order 2014, the new minimum period of time prescribed for the purposes of Article 73(1) of the Law was a period of continuous employment of 52 weeks.  He did not suggest that an employer was required to return to court to seek an order that there had been a repudiation of the contract.  However he posed the question as to what the position would be if both the Appellant and the Respondent reasonably thought that the Appellant would be returning to work on 19th September, and 1st September respectively.  In those circumstances, she would lose her rights, including a right to a fair process, whether she was right or not in her belief; and that is not what the Law was itended to achieve. 

Discussion

27.      I start by referring to the Alwitry case.  For reasons which will appear below, the law on résolution has in some respects been unsettled, but it is far from clear that Alwitry bears on it conclusively in any event.  The pleaded claim in that case was not that the contract of employment had not, as a matter of law, been terminated; rather, the complaint was that de facto the contract had been terminated, but as a matter of law the SEB did not, under the terms of the contract, have the legal right to do so.  Hence it was said that the SEB acted in breach of contract and as a result the plaintiff sought damages, and not a declaration that the contract still subsisted in law.  As the case was put that way, and there seems to have been no argument before the Royal Court on the questions of résolution, it is not clear that the Alwitry decision of the Royal Court necessarily takes us much further.  Indeed at paragraph 289, the Royal Court indicated it had not been provided with any other authority from this jurisdiction.  The position ultimately adopted was one which the parties agreed.  At paragraph 291, the Court said:-

"It was not in dispute that in every contract of employment there is an implied term of mutual trust and confidence, the loss of which would go to the root of the contract.  As Lord Nicholls said in Malek v Bangor (sic) Credit and Commerce International (A) [1998] AC 20 at page 13, there is a general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in a manner the employment contract implicitly envisages.  He made clear that the conduct must be looked at objectively in all of the circumstances."

28.      The Royal Court went on to refer to the comment of Lord Millett in Johnson v Unisys Limited [2001] 2 WLR 1076 when he said that the implied term of trust and confidence is now generally imported into a contract of employment and usually expressed "as an obligation binding on both parties not to do anything which would damage or destroy the relationship of trust and confidence which should exist" between employer and employee. 

29.      There have been other authorities in Jersey, apparently not cited to the Royal Court in Alwitry, but before reviewing those, I note that résolution has been of a judicial nature in French law where, under Article 1184 of the former Civil Code, the remedy of résolution was available in a bilateral contract if one party failed to perform his contractual obligations.  The innocent party in effect had a choice between claiming enforcement of the contract and opting for résolution whereby the contract could be terminated and damages claimed.  French law thus required in principle resort to the Court because indeed the contract was binding in its nature and formed the law of the parties.  As Professor Fairgrieve notes, however, in his Comparative Law in Practice (2016) at page 162, there are a number of exceptions to the judicial nature of termination - French contracts commonly now contain a clause résolutoire, whereby the parties provide in the contract for the circumstances under which termination may occur and do so without need to resort to the Courts.  This is explicitly recognised in Article 1224 of the current Civil Code.  Secondly, there has been developing case law whereby creditors who have unilaterally brought to an end a contract in case of serious non-performance have been subsequently authorised to do so.  Professor Fairgrieve puts it in this way:-

"This self-help remedy (known as résolution unilatérale or extrajudiciaire) avoids the need to resort to the courts, though the action is at the party's own risk and the other side may themselves bring proceedings to contest the rupture."

30.      Jersey laws developed by the Royal Court in more recent years could be said to have been internally inconsistent.  In Hamon v Webster (unreported 19th July, 2002) the Court held that, other than in relation to leases, the Court would prefer the English approach (see paragraph 67 of the judgment).  Birt DB referred to New Guarantee Trust Finance Limited v Birbeck (1977) JJ 71 and Hanby v Moss (1966) JJ 625 to assist him in this respect and he cited also the criticism of the French approach to résolution which he had made in Rossborough (Insurance Brokers) Limited v Boon [2001] JLR 416.  Accordingly the Court held in that case that an innocent party could terminate the contract where the breach of contract was one which went to the root of the contract, or where the contract itself specifically provided that he would have a right to terminate the contract in respect of the breach in question. 

31.      On the other hand, in Grove v Baker [2005] JLR 348, the case to which Commissioner Clyde-Smith referred in Alwitry, the plaintiffs had brought an action seeking repayment of a loan and accumulated interest.  he loan agreement had provided for the payment of interest but it made no provision for the repayment of capital.  The plaintiff alleged that the failure to make timely interest on three separate occasions constituted a fundamental breach of the contract which entitled them to treat it as terminated, or résolu, and to demand repayment of the capital. 

32.      The extract from Sir Philip Bailhache's judgment in Grove v Baker is set out at paragraph 15 above.  The difference in approach is summarised by Professor Fairgrieve at page 165 (op cit) in this way:-

"The Royal Court accepted the rule as expounded in Hamon v Webster that termination is permitted without going to court where the breach is sufficiently serious or the contract gives a specific termination right covering the reach in question.  The Royal Court did not agree, however, with the proposition that the law of termination of contract followed exactly the English model. The Court held that whilst the law relating to résolution is not dissimilar to the English remedy of termination for breach, it is different in that the remedy of résolution in Jersey law is available at the discretion of the court whenever the failure to comply with an obligation can be said to be sufficiently serious to justify a cancellation of the contract."

33.      In that case, the Court did not consider that a failure to pay interest on the due dates on three occasions was sufficiently serious to justify the contract of loan as having been terminated and while the plaintiffs could sue for overdue interest, they were held not to be entitled to reclaim the capital by treating the contract as terminated. 

34.      Commentators have taken different approaches to this problem - for some, to follow the French approach is thought to lead to expense, delay, inconvenience and uncertainty.  For others, the French approach works perfectly well in France, and it would be odd if contracts formed under French legal principles were terminated under English legal principles. 

35.      The English cases which talk of the implied trust and confidence which must exist between employers and employees carry a resonance with passages from Pothier in his Traité des Obligations. These were summarised in relation to dol at paragraphs 44 et seq of in HRCKY Limited v Hard Rock Limited and another [2019] JCA 123.

36.      The Court of Appeal in Hard Rock also referred to an extract from Le Gros in his Traité du Droit Coutumier at paragraph 50 of its judgment and this passage also resonates with the implied duty of good faith in a contract of employment. 

37.      I note also the judgment of Crow JA in Alwitry in the Court of Appeal at paragraph 27 where it is said:-

"Whether an obligation of good faith arises in every contract is not a matter for this judgment, but we accept that there is a mutual obligation of good faith in a contract of employment."

38.      Clearly the dol of one party which induces the contract fundamentally affects the willingness or volonté of the other party to make it and that absence of genuine consent means that the contract is void ab initio.  Neither that situation nor the remedy which flows from it is the subject of this judgment.  Dol which arises during the contract is a breach of contract which can give rise to the contract being rescinded or to damages or both.  This is because fraudulent conduct can strike fatally at the implied duty of good faith which employers and employees owe to each other. Similarly, a party to an employment contract who deliberately breaches that duty does by that conduct leave herself exposed to the assertion that she has terminated it. 

39.      The question which next follows is whether the conduct in this case, assuming it amounted to a repudiatory breach by the Appellant, was sufficient to bring the contract to an end.  In the Société Générale case, as set out at paragraph 18 above, the general rule is said to be that a repudiated contract is not terminated unless and until the repudiation is accepted by the innocent party.  That decision may well have been reached to ensure that the innocent party was protected from the breach - to ensure the restraint of trade provision in the contract continued to have effect -but the rationale applies on a wider basis.  Depending on the nature of the contract, that innocent party might well wish to see the contract continued, whether that be for reasons of restraint of trade or other positive benefits which the continuation of the contract might have.  The Supreme Court in that case declined to find different rules for employment contracts than for contracts at large.  Whatever the position may be under the common law of England and Wales in relation to contracts, there are in my judgment differences depending on the type of contract in question.  There is, for example, no doubt that an insurance contract is a contract uberrimae fides, and as Crow JA said in Alwitry, whatever the position in other types of contract, there is a mutual obligation of good faith in a contract of employment.  However, even assuming that there is a mutual obligation of good faith in all contracts, and therefore no particular difference between employment contracts and other forms of contract, in my judgment the position in Jersey is well summarised by the approach to résolution which is set out below.  Indeed this is consistent with the judgment of Lord Sumption in the Société Générale case an extract of which appears at paragraph 24 above.  

40.      Where the contract has not come to an end as a result of the breach, that breach may give rise to a right in the innocent party to repudiate the contract itself.  At that point, the size of the business may be an important consideration in determining the significance of the breach of contact.  As Lord Hoffman observed in Cooperative Insurance Society Limited v Argyll Stores (Holdings) Limited [1998] AC 1:-

"From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on a business at a loss if there is any plausible alternative by which the other party can be given compensation.  It is not only a waste of resources but yokes the parties together in a continuing hostile relationship."  

41.      In saying this, Lord Hoffman was upholding the dissenting views of Millett LJ in the Court of Appeal where he was emphasising that equitable relief is discretionary and exceptional.  At common law in England, if a defendant breaks his contract, the plaintiff has a claim in damages, subject to those cases where equitable relief is extended to him.   I do not find the law in Jersey to be very different in principle, although the remedy of résolution is wider.  I note there is nothing in the Law which dictates a conclusion that the ordinary rules about who has repudiated the contract cease to apply.  The heart of this appeal is not a legal question but a factual one - was the conduct of the Appellant to be treated as a repudiation by her of the contract, and therefore, for the purposes of the Law as a resignation; or was it merely a breach which meant that the contract subsisted and the employer had a choice between dismissing the Appellant by repudiating the contract himself as a result of the breach or alternatively suing for résolution and/or damages. 

42.      The factual issue therefore falls to be determined by analysing who brought the contract to an end in accordance with the Jersey law of résolution. 

43.      In my judgment, it is consistent with the principles underlying la convention fait la loi des parties that where a contract provides a basis for the termination of the contract without recourse to the courts, then, subject to the exercise of judicial discretion should there be room for that, any such termination in accordance with the agreed contractual terms will be valid.  If the parties have entered a valid contact which provides the law between them, it is entirely appropriate that, absent circumstances justifying the exercise of judicial discretion, they should be held to it and the enforcement of that particular term should have effect. 

44.      It is unnecessary to circumscribe the cases where the Court might exercise such a discretion, although it is apparent from previous authority that there are at least two.  The first is in the area of contractual penalties where for many years, the Royal Court has set aside or reduced a contractual penalty if the amount provided for is excessive - see Basden Hotels Limited v Dormy Hotels Limited (1968) JJ 911, Viscount v Treanor (1969) JJ 1243, and Doorstop Limited v Gilman and Lepervier Holdings Limited [2012] JRC 199.  These cases are more directed to the exercise of judicial discretion as to the enforcement of a contractual term post termination rather than the question of termination itself.  The second area in which the Royal Court has exercised such a discretion is in relation to those lease contracts which contain a provision that in the event of late payment of rent or breach of covenant by the lessee, the lease is automatically cancelled and at an end, where the court has held that termination of the contract expressly needs its consent.  If this is a cancellation which requires to be registered in order that a lease recorded in the Public Registry is officially cancelled, one can see that it would naturally need an order of the Royal Court to that effect; but even where the lease is for a period of nine years or less and has not been registered at the Public Registry, it has been held that such a provision in the lease would ultimately be subject to the discretion of the Court.  In essence the Court would exercise jurisdiction over the termination provision in that case to ensure that it was not exercised unconscionably. 

45.      What, then, of the position where the contract does not provide a basis for terminating the contract without recourse to the courts, and does it make any difference if one is considering an employment contract as opposed to any other sort of contract? 

46.      In my judgment, the approach which has been adopted in developing case law in France which enables a contracting party unilaterally to bring to an end a contract in the case of serious non-performance by the other contracting party, is consistent with the approach advanced by Birt DB in Hamon v Webster and Rossborough (Insurance Brokers) Limited v Boon.  Whenever a contract has been terminated without judicial sanction for what is alleged to be a serious case of non-performance of obligation under the contract, in essence the terminating party takes the risk that his unilateral termination will be successfully challenged.  Adopting this approach allows for a convenient termination of contracts for breach of obligation without reference to a court, and a mechanism for challenging such a termination through judicial process if that should be appropriate. 

47.      In any event, although in the Société Générale case the majority held that there is no special rule for employment contracts, in my judgment there is an important distinction to be drawn with them which arises from the principle that such contracts will not be the subject of an order for specific performance, both at customary law and under the statutory jurisdiction conferred on the Employment Tribunal under the Law.  That statutory jurisdiction is understood to be exercised against a backdrop that the Court will not make an order for specific performance of a contract of service - see for example Article 88(5)(a) of the Law and the alternative to a direction for reinstatement by the making of an award of compensation pursuant to Article 77E of the Law. 

48.      I can see there is every reason to be cautious about a conclusion that a repudiation of the contract automatically brings the contract to an end, especially where, as in the Société Générale case, there was a need to ensure that a restrictive covenant contained in the contract should continue to have effect. It would be unconscionable to permit a repudiating party to benefit from his breach of contract. But we are not bound by the English law of contract - see Grove v Baker - and on the application of the principle that, following a breach, résolution can occur unilaterally, it then becomes a question for the court in the absence of express contractual provision as to whether the course taken by the innocent party is reasonable.

49.      I therefore conclude that the decision of the majority in the Société Générale case is not one which under customary law the Jersey law of contract requires me to follow, and I do not do so. 

50.      The present case, however, is slightly different. It requires me to consider whether a breach of contract can amount to a repudiation of it such that the contract automatically comes to an end. In my judgment, where the implied duty of good faith in an employment contract is destroyed, that goes to the heart of the contract and the party who causes that state of affairs to come about cannot assert against the innocent party that the contract continues. 

51.      In the present case, the findings of fact by the Tribunal show that despite agreement that the employee would return to work on a particular date, the employee did not do so.  In the absence of any reasonable excuse, that was a breach of contract the effect of which the Tribunal had to consider in accordance with the general law.  Was it reasonable for the employer to treat that as a resignation?  Alternatively, was the duty of good faith destroyed by the conduct of the Appellant?  The Tribunal considered on the first of these questions that it was, and I do not think that was an unreasonable evaluative decision.  The employer, on the facts, tried to contact the employee without success.  The absence from work - in the light of there being no contact and no explanation - lasted for 14 days.  The employer's business, as was known to both employer and employee, was of a size which could not withstand the loss of the employee for such a period.  In the light of those facts, I do not think it was unreasonable for the employer to treat the contract as brought to an end by the employee's breach of contract, and accordingly the evaluative decision of the Tribunal was one which it was entitled to make.  But the other way of approaching the issue is in my judgement equally valid.  

52.      The conduct of the Appellant in failing both to turn up for work for 14 days and to make any contact with the Respondent destroyed the implied trust and confidence which the contracting parties needed to have in each other.  It almost certainly would have amounted to gross misconduct enabling the Respondent to terminate the contract without notice but it is unnecessary to get to that point.  The Respondent's power to dismiss without notice would have been relevant if the Appellant had by her conduct generally evinced an intention that the contract continue.  However, on the facts, she has evinced no such intention.  The only reasonable conclusions that the Respondent could draw from her conduct, given the findings of fact, were that either the Appellant did not intend to return to the island at all or, if she did, that she did not intend to return to work for him.  Either way, that would amount to a repudiation of the contract by her which, in other language, amounts to a resignation. 

53.      Her conduct therefore amounted to a résolution unilatéral.  The Respondent was faced with the choice of accepting that repudiation or bringing proceedings in court against the Appellant.  On the facts here, by employing someone else, it is clear the Respondent accepted it and the contract was brought to an end by the Appellant's resignation. 

54.      Those being my conclusions on the question as to who brought the contract of employment to an end, the only question which is left is whether there is anything in the Law which requires the matter be approached differently. 

55.      The right not to be unfairly dismissed from employment arises under Part 7 of the Law.  the circumstances in which an employee is dismissed are set by Article 62 which is in these terms:-

"Circumstances in which an employee is dismissed

(1)       For the purposes of this Part an employee is dismissed by his or her employer if (and, subject to paragraph (2), only if) -

(a)       the contract under which the employee is employed is terminated by the employer (whether with or without notice);

(b)       the employee has been employed under a fixed term contract of employment, or a series of fixed term contracts, and the term of the subsisting fixed term contract expires without being renewed under the same contract; or

(c)       the employee terminates the contract under which he or she is employed (with or without notice) in circumstances in which the employee is entitled to terminate it without notice by reason of the employer's conduct.

(2)       An employee shall be taken to be dismissed by his or her employer for the purposes of this Part if -

(a)       the employer gives notice to the employee to terminate his or her contract of employment; and

(b)       at a time within the period of that notice the employee gives notice to the employer to terminate the contract of employment on a date earlier than the date on which the employer's notice is due to expire,

and the reason for the dismissal is to be taken to be the reason for which the employer's notice is given."

56.       It is noteworthy that there is a dismissal by the employer in circumstances where either the employer gives notice or otherwise terminates the contract of employment, or where the employee terminates it with or without notice in circumstances in which the employee would be entitled to terminate it without notice by reason of the employer's conduct.  What is absent from the definition of the circumstances in which an employee is dismissed is the circumstance where the employee terminates the contract with or without notice for reasons of his or her own which are unrelated to the employer's conduct. 

57.      It follows that there is nothing in the definition of circumstances in which an employee is dismissed which gives the employee rights if the employee resigns on his or her own initiative. 

58.      For all these reasons therefore the appeal fails.  The Deputy Chairman was right to find that the Appellant had resigned employment in the factual circumstances which appertained in this case. 

Authorities

Alwitry v States Employment Board [2019] JRC 014. 

States Employment Board v Alwitry [2019] JCA134. 

Employment (Jersey) Law 2003. 

Young v Sowney (Claim number 03/18, under reference [2018] TRE003). 

Société Générale, London Branch v Geys [2012] UK SC 63. 

London Transport Executive v Clark [1981] ICR 355. 

Employment (Qualifying Period) (Jersey) Order 2014. 

Johnson v Unisys Limited [2001] 2 WLR 1076. 

Article 1184 of the former Civil Code. 

Comparative Law in Practice (2016).   

Hamon v Webster (unreported 19th July, 2002). 

New Guarantee Trust Finance Limited v Birbeck (1977) JJ 71. 

Hanby v Moss (1966) JJ 625. 

Rossborough (Insurance Brokers) Limited v Boon [2001] JLR 416. 

Grove v Baker [2005] JLR 348. 

Pothier in his Traité des Obligations. 

HRCKY Limited v Hard Rock Limited and another [2019] JCA 123. 

Traité du Droit Coutumier. 

Cooperative Insurance Society Limited v Argyll Stores (Holdings) Limited [1998] AC 1. 

Basden Hotels Limited v Dormy Hotels Limited [1968] JJ 911. 

Viscount v Treanor [1969] JJ 1243. 

Doorstop Limited v Gilman and Lepervier Holdings Limited [2012] JRC 199.  

 


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