Carvill v Irish Industrial Bank Ltd

Judgment Date31 July 1968
Date31 July 1968
Docket Number[1962. No. 1705 P.]
CourtSupreme Court
Carvill v. Irish Industrial Bank Ltd.
[1962. No. 1705 P.]

Supreme Court.

Master and servant - Misconduct - Summary dismissal - Master unaware of servant's alleged misconduct at time of dismissal - Damages for wrongful dismissal - Company - Director - Removal - Office of managing director held subject to terms of contract - Implied term requiring reasonable notice of removal - Rules of the Superior Courts, 1962 (S.I. No. 72 of 1962), Or.22, r. 6.

The plaintiff had been a director of the defendant company. The articles of association of the company provided that the company could remove a director before the expiration of his term of office, that the directors of the company could appoint a director to be the managing director for a fixed term or indefinitely, that the provisions of the articles relating to the removal of directors should apply to a managing director "subject to the provisions of any contract between him and the company", and that a managing director would cease to hold that office upon ceasing to hold the office of director. The plaintiff was not appointed to be managing director of the company but he had acted as such and he had been remunerated and treated by the company as its managing director.

While acting as managing director, the plaintiff bought a new carpet for his own house and at the same time he instructed the suppliers to take an old carpet from the house, to alter the old carpet and to re-lay it in the company's premises. The total cost of these transactions was £129 15s., of which £90 15s. was apportioned by the plaintiff as a debt due by the company to the suppliers. The company paid that sum to the suppliers without having been informed of the plaintiff's interest in the matter. Later the company duly resolved that the plaintiff be removed from the office of director, without being aware of any misconduct by the plaintiff and without giving the plaintiff any notice of his removal.

The plaintiff sued the defendant company in the High Court and claimed damages, amounting to 12 months salary, for wrongful dismissal. At the hearing of the action in the High Court the plaintiff conceded that the defendant company could justify the dismissal by proof of sufficient misconduct by the plaintiff prior to the dismissal, while the defendant company conceded that (if any notice were required) twelve months notice of dismissal was reasonable, and the company justified the dismissal on the ground of the plaintiff's conduct in the carpet transaction.

Held by Kenny J., in dismissing the plaintiff's claim, that the defendant company had been entitled to terminate the plaintiff's contract of employment as a salaried employee, who was called the, managing director, without giving the plaintiff 12 months notice of such termination, which otherwise would have been necessary.

On appeal by the plaintiff it was

Held by the Supreme Court ( Ó Dálaigh ó dálaigh C.J., Lavery, Haugh, Walsh and O'Keeffe JJ.), in allowing the appeal, 1, that there was compelling evidence of a consensus of opinion among the directors of the defendant company that the, plaintiff was the managing director of the company and that, accordingly, he, should be deemed to have been appointed validly to that office.

2, That the plaintiff must be deemed to have held the office of managing director under a contract and that, as his salary had been fixed on a yearly basis, he must be regarded as having been employed as managing director from year to year with an implied term requiring reasonable notice of the termination of the contract.

Read v. Astoria Garage (Streatham) Ltd. [1952] Ch. 637 distinguished.

3, That the conduct of the plaintiff in the carpet transaction did not warrant his summary dismissal by the company, and that the company had sought to establish fraud by unsatisfactory evidence and without pleading fraud.

4, That, in any event, a master, in defending an action by a servant for wrongful summary dismissal, cannot rely upon misconduct of the, servant which was not known to the master at the time of the dismissal, unless the misconduct constitutes a breach by the servant of a fundamental term of the contract of service and amounts to a repudiation of the contract by the servant.

Cussons v. Skinner 11 M. & W. 161 considered.

Boston Deep Sea Fishing and Ice Co. v. Ansell 39 Ch.D. 339 not applied.

5, That, accordingly, the plaintiff was entitled to damages equivalent to twelve months salary as the defendant company (while denying the necessity for any notice of dismissal) had agreed that twelve months notice would have been reasonable.

Witness Action.

The facts have been summarised in the head-note and are stated in the judgment of Kenny J., post. The plaintiff's action for damages for wrongful dismissal was commenced by plenary summons on the 1st November, 1962, and his statement of claim was delivered on the 14th January, 1963. The defence of the defendant company was delivered on the 14th June, 1963. Paragraphs 1-5 of the defence were in the following terms:—

"1. The defendant admits that prior to the month of July, 1961, the plaintiff was a shareholder and director of the defendant company and further admits that at the time of his dismissal as hereinafter mentioned the plaintiff was employed by the defendant as managing director thereof, but the defendant denies that the terms of his said employment are correctly set forth in para. 2 of the statement of claim herein . . .

2. The defendant denies that the plaintiff was entitled to receive notice of not less than twelve months duration of the termination of his said contract of employment under the terms and provisions of his said contract of employment as alleged in para. 3 of the statement of claim or at all.

3. The defendant denies that the defendant wrongfully removed or purported to remove the plaintiff from his said employment as alleged in para. 4 of the statement of claim or at all, and says that on the 6th day of July the defendant company validly and properly passed a resolution at an extraordinary general meeting of the defendant company removing the plaintiff from office as a director of the defendant company and that upon the same day at a duly convened meeting of the directors of the defendant company, the defendant company removed the plaintiff from his said office of managing director of the said company.

4. The defendant says that before such removal from office as aforesaid the plaintiff misconducted himself in his said employment and the defendant therefore discharged the plaintiff from his said employment in manner aforesaid.

5. If (which is denied) the plaintiff was entitled to reasonable notice of termination of his said employment, the defendant denies that twelve months was a reasonable notice as alleged in para. 5 of the statement of claim and denies that the defendant wrongfully determined the said employment of the plaintiff or dismissed him therefrom as alleged in para. 5 of the statement of claim or at all."

At the hearing of the plaintiff's appeal to the Supreme Court, the title of the action was altered by the substitution of Lloyds and Scottish (Ireland) Limited as defendant in place of Irish Industrial Bank Limited.

The plaintiff appealed to the Supreme Court against the decision of Kenny J. in relation to the carpet transaction and the defendant company cross-appealed against the decisions of Kenny J. in relation to four of the remaining eight alleged acts of misconduct by the plaintiff.

Cur. adv. vult.

Kenny J. :—

In this action the plaintiff claims a judicial declaration that he is still the managing director of the defendant company and that his removal from that office on the 6th July, 1961 (by a resolution passed at an extraordinary general meeting of the company) was invalid. He also claims damages for wrongful dismissal and arrears of salary.

The defendant company were incorporated in the Republic of Ireland on the 4th May, 1953, under the name of The Erne Trust Company Limited. Before that date a company called the Erne Motor Cycle Company Limited had developed a prosperous business in the sale of motor-bicycles and in the financing by hire-purchase of the goods which it sold. A company incorporated in England called Olds Discount Company Limited, which had carried on hire-purchase business for a number of years, wished to extend its business to the Republic of Ireland and decided to do this in association with Erne Motor Cycle, of which all the shares were owned by members of the Carvill family. Negotiations between representatives of Olds Discount and the members of the Carvill family led to the incorporation of the Erne Trust Company Limited, in which the members of the Carvill family were to hold 50% of the shares and Olds Discount, or their representatives, were to hold the same interest; while the chairman was not to have a casting vote. The parties to the negotiations intended that Erne Trust would take over all the hire-purchase business carried on by Erne Motor Cycle. On the 2nd December, 1957, Erne Trust changed its name to Irish Industrial Bank Limited (the defendants).

The articles of association of the defendants provided, amongst other things, as follows:—

"88. Until otherwise determined by a general meeting, the number of the directors shall not be less than four nor more than eight. The first director of the company shall be nominated in writing by the signatories to the memorandum of association."

"90. It shall not be necessary for a director to be a shareholder."

"103. The company may by extraordinary resolution remove any director before the expiration of his period of office and may appoint another qualified person in his stead; the person so appointed shall hold office during such time only as the director in whose place he is appointed would have held the same if he had not...

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