Burke v Independent Colleges Ltd t/a Independent Colleges

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 05 November 2010
• Neutral Citation: [2010] IEHC 412
• Docket Number: [No. 9417P/2010]
• Court: High Court
• Date: 05 November 2010

Burke v Independent Colleges Ltd t/a Independent Colleges

BETWEEN

PHILIP BURKE

PLAINTIFF

AND

INDEPENDENT COLLEGES LIMITED TRADING AS INDEPENDENT COLLEGES

DEFENDANT

[2010] IEHC 412

[No. 9417P/2010]

THE HIGH COURT

EMPLOYMENT

Interlocutory relief

Mandatory injunction - Redundancy - Application to restrain termination of employment - Reinstatement on interlocutory basis - Test to be applied - Whether strong case that plaintiff likely to succeed at hearing of action -Contractual termination conditions - Whether decision of board required to terminate employment contract - Whether term of notice of termination was unlawful, valid or void - Whether failure to provide opportunity to challenge termination - Whether breach of fair procedures -Whether strong case that plaintiff likely to succeed at hearing of action - American Cyanamide v Ethicon Ltd [1975] AC 396; Maha Lingham v Health Service Executive [2006] 17 ELR 137; Bergin v Galway Clinic Doughiska Ltd [2007] IEHC 386, [2008] 2 IR 205; Sheehy v Ryan [2008] IESC 14, [2008] 4 IR 258; Nolan v EMO Oil Services [2009] IEHC 15, [2009] ELR 122; Shortt v Data Packaging [1994] ELR 251 and Phelan v BIC (Ireland ) Ltd [1997] ELR 28 considered - Order restraining purported termination of plaintiff's employment as communicated and from treating the plaintiff as having been placed on âÇÿgarden leave' (2010/9417P - Laffoy J - 5/11/2010) [2010] IEHC 412

Burke v Independent Colleges Ltd

COURTNEY THE LAW OF PRIVATE COMPANIES 2ED 2002 PARA 8.004

HOWARD SMITH LTD v AMPOL PETROLEUM LTD & ORS 1974 AC 821 1974 2 WLR 689 1974 1 AER 1126

THOMAS WILLIAMSON LTD & SOPHOCLES LTD v BAILIEBOROUGH CO-OPERATIVE AGRICULTURAL SOCIETY LTD UNREP COSTELLO 31.7.1986 1986/8/1881

AMERICAN CYANAMID CO v ETHICON LTD (NO 1) 1975 AC 396 1975 2 WLR 316 1975 1 AER 504

CAMPUS OIL LTD & ORS v MIN FOR INDUSTRY & ORS (NO 2) 1983 IR 88 1984 ILRM 85

SHEEHY v RYAN & MORIARTY 2008 4 IR 258 2008/58/12111 2008 IESC 14

NOLAN v EMO OIL SERVICES LTD 2010 1 ILRM 228 2009 20 ELR 122 2009/42/10441 2009 IEHC 15

SHORTT v DATA PACKAGING 1994 ELR 251

COX & ORS EMPLOYMENT LAW IN IRELAND 2009 839

PHELAN v BIC (IRL) LTD & ORS 1997 ELR 208

REDUNDANCY PAYMENTS ACT 1967

LINGHAM v HEALTH SERVICE EXECUTIVE 2006 17 ELR 137 2005/36/7565 2005 IESC 89

BERGIN v GALWAY CLINIC DOUGHISKA LTD 2008 2 IR 205 2007/5/956 2007 IEHC 386

Miss Justice Laffoy

1 2 1.1 On this application the plaintiff, who has been an employee of the defendant since 2007, seeks reliefs in the form of interlocutory injunctions restraining the defendant pending the trial of the action from -

2 (a) terminating the plaintiff's employment by way of redundancy or otherwise,

3 (b) carrying out any steps for the purpose of effecting and/or implementing "the purported termination of the plaintiff's employment as communicated by letter from Independent Newspapers (Ireland) Limited" or otherwise,

4 (c) directly, indirectly or howsoever representing that the plaintiff's employment has been terminated,

5 (d) directly, indirectly or howsoever publishing adverse statements to the effect that the plaintiff's employment has been terminated, and

6 (e) directly or indirectly placing the plaintiff on "garden leave".

7 3 1.2 The history of the proceedings is that the plaintiff issued a plenary summons on 13^th October, 2010. On that afternoon, the plaintiff, on an ex parte application, got leave from the Court to issue a notice of motion seeking the reliefs outlined above returnable for 15^th October, 2010. The application was grounded on the affidavit of the plaintiff sworn on 13^th October, 2010. The defendant's replying affidavit was sworn by Garret Doyle (Mr. Doyle), the Chief Executive Officer of the defendant, on 18^th October, 2010. The application was heard on 19^th and 20^th October, 2010. The Court gave the plaintiff leave to file a supplemental affidavit sworn by the plaintiff's solicitor, Tom Casey, on 20^th October, 2010, which merely exhibited the memorandum and articles of association of the defendant, which is a public document.

8 4 1.3 The reliefs claimed by the plaintiff in the endorsement on the plenary summons are, in addition to permanent injunctions in the terms of paragraphs (a) to (e) inclusive at 1.1 above, declarations that the purported termination of the plaintiff's employment "confirmed by letter from Independent Newspapers (Ireland) Limited to the plaintiff dated 11^th October, 2010" was -

(i) unlawful, invalid or void, and

9 (ii) was procured in breach of fair procedure including breach of the plaintiff's natural and/or constitutional rights.

10 The plaintiff also claims damages for breach of contract, negligence and breach of duty.

11 2 2.1 The defendant is a limited liability company incorporated in the State. It operates a private third level college, Independent Colleges, which specialises in courses in law, both for entry into the professional course run by the Law Society and at undergraduate level, and in accountancy.

12 3 2.2 The largest shareholder in the defendant is Independent News & Media Holdings (Ireland) Limited (Holdings), which I understand is a company in the Independent News & Media Group (INM Group). Its precise shareholding is not averred to in the affidavits before the Court, but the Court was told that its shareholding is in the region of 70%. The plaintiff is a 17% shareholder in the defendant.

13 4 2.3 The plaintiff is one of the seven directors of the company. Mr. Doyle, who has averred that he was "Group Enterprise Director INM, Plc" before becoming Chief Executive Officer of the defendant, is also a director. Of the remaining five directors, four are employees or officers of companies within the INM Group.

14 5 2.4 The shareholding in the defendant is the subject of a shareholders' agreement dated 9^th July, 2009 to which the defendant is a party, as are all the other shareholders, including the plaintiff. The Court was referred to Clause 6 of that agreement which deals with the conduct of the defendant's affairs and the obligations of the shareholders in respect thereof and, in particular, to Clause 6.1.9, which provides that, subject to the express provisions of the agreement, the board of directors of the defendant determines the general policy of the defendant,, including the scope of its activities and operations and that the board reserves to itself all matters involving major or unusual decisions. Further, the Court was referred to Clause 9 thereof, which provides that, in relation to certain matters, including the appointment or removal or entering into any contract, whether of employment or otherwise with, or altering the terms of employment of, inter alia, the Chief Operations Officer and other senior executives, the prior written consent of Holdings is required.

15 6 2.5 Amended articles of association of the defendant, which reflect the provisions of the shareholders' agreement, were filed in the Companies Registration Office on 21^st July, 2009. Regulation 18 and Regulation 21.1 of the articles were obviously intended to reflect Clause 9 of the shareholders' agreement, save that they refer to the consent of the "Shareholder Majority", which, by reference to Regulation 15, appears to mean one or more shareholders who alone or between them hold 70% or more of the equity share capital of the defendant.

16 7 2.6 The position of the defendant, as set out in Mr. Doyle's affidavit, is that the plaintiff's status as a shareholder and as a director of the defendant is not affected by the recent events which the defendant contends have resulted in his ceasing to be an employee of the defendant.

17 2 3.1 There is a lot of background factual material in the plaintiff's affidavit in relation to the setting up of, and his involvement with, Independent Colleges, which I consider not to be material to the determination of the issues before the Court at this juncture. The crucial factual matters are the terms on which the plaintiff was employed by the defendant.

18 3 3.2 The plaintiff's contract of employment was executed in September 2007. His employer was named as the defendant (by its former corporate name) "trading as Independent Colleges", which is referred to thereafter as "the College". The contract provided that commencement of the plaintiff's employment would be 10^th September, 2007 and that he would also be appointed "as a Director of the College and a member of its Management Board". His job title was "Chief Operating Officer and Head of the Law School". He was to report to the Management Board. Subject to the provisions of Clause 16, he was employed on a full time permanent basis.

19 4 3.3 Clause 16 dealt with notice and termination. Clause 16.1 provided that the plaintiff's employment might be terminated during its term by "either party giving to the other 16 week's notice in writing". There was also a provision for termination by the defendant with or without notice in the circumstances listed in Clause 16.2. That provision has not been invoked by the defendant and it has been made clear in Mr. Doyle's affidavit that the defendant has no complaint about the quality of the plaintiff's work and no issue of misconduct arises. Clause 16.4 provided:

"In the event of termination by the College for reasons other than misconduct or poor performance, you will be entitled to compensation payment of an amount equivalent to three month's basic salary. This will be subject to you executing a waiver and release agreement in full and final settlement of all claims as you may have at such time against the College and any associated undertakings in a form reasonably satisfactory to the College. For the avoidance of doubt, in the event of such payment being made, you will not be entitled to the period of notice provided for in Clause 16.1."

20 Clause...