O'Donovan v Over-C Technology Ltd and Another

• Jurisdiction: Ireland
• Judge: Mr Justice David Keane
• Judgment Date: 12 June 2020
• Neutral Citation: [2020] IEHC 291
• Docket Number: [2020 No. 708P]
• Court: High Court
• Date: 12 June 2020

BETWEEN

DONAL O'DONOVAN

PLAINTIFF

AND

OVER-C TECHNOLOGY LIMITED

AND

OVER-C LIMITED

DEFENDANTS

[2020] IEHC 291

David Keane J.

[2020 No. 708P]

THE HIGH COURT

CHANCERY

Employment – Wrongful dismissal – Injunctive relief – Plaintiff seeking interlocutory relief – Whether the plaintiff’s dismissal was effected in breach of contract

Facts: The plaintiff, Mr O’Donovan, brought an action for wrongful dismissal challenging both the decision made on 7 January 2020 by the first defendant, Over-C Technology Ltd, to terminate his employment, and its subsequent confirmation of that decision on 17 January, when it deemed his appeal against dismissal to have been withdrawn. The second defendant, Over-C Ltd, was the parent of Over-C Technology. On 29 January, Mr O’Donovan issued proceedings. On 18 February, he delivered a statement of claim in which he sought, among other reliefs: declarations that his dismissal was unlawful and, hence, invalid and that he remains employed by the defendants; permanent injunctions requiring the defendants to acknowledge and maintain the position as such; and damages against the defendants for breach of contract, breach of duty, and breach of his constitutional right to fair procedures. On 31 January, he sought, and was granted, leave ex parte to effect short service of this motion. He filed and issued a notice of motion on 31 January, initially returnable to 6 February on the direction of Reynolds J. The principal interlocutory reliefs that Mr O’Donovan sought were injunctions pending trial in terms of the permanent injunctions that he claimed as substantive relief. The part of Mr O’Donovan’s case, as pleaded, that underpinned this application for injunctive relief was his claim that his dismissal was effected in breach of contract and in breach of his constitutional right to fair procedures, such that (in addition – or as an alternative – to damages) he was entitled to a declaration that he continues to be employed by the defendants as chief financial officer (CFO) or that his purported dismissal from that position is invalid, or both.

Held by Keane J that Mr O’Donovan had established a strong case that he had an implied contractual right to fair procedures in the assessment of his performance during his probationary period, which right was breached in the manner and circumstances of both the decision on 7 January to summarily dismiss him for sub-standard performance and the decision on 17 January to deem his appeal against that decision to have been withdrawn.

Keane J held that the balance of convenience favoured the making of a Fennelly order (Fennelly v Assicurazioni Generali S.P.A. (1985) 3 ILT 73, (Unreported, High Court (Costello J, ex tempore), 12 March 1985) in the following terms: that the defendants are restrained from repudiating Mr O’Donovan’s contract of employment pending the trial of the action on the following specific terms: (i) that Mr O’Donovan is to be paid his salary for a period of six months from the end of January 2020 (and any applicable bonus and other benefit arising during that period), on the provision by him of an undertaking to carry out any of the duties of CFO that the defendants may require of him; (ii) that the defendants are not required to assign any of the duties of CFO to Mr O’Donovan at any time pending the trial of the action but, insofar as they do beyond the period of six months from the end of January 2020 and pending the trial of the action, must pay his salary (and any applicable bonus and other benefit) accordingly; (iii) that the defendants may choose to put Mr O’Donovan on leave of absence rather than assign any duties to him, but that is without any prejudice to their obligation at (i) above; and (iv) that the defendants are released from their undertaking not to replace Mr O’Donovan by the appointment of a new CFO and may do so as they see fit. Keane J fixed the period during which the defendants must pay Mr O’Donovan’s salary as one of six months, rather than the entire period pending trial, because, in light of Mr O’Donovan’s acknowledgment that the relationship of mutual trust and confidence between the parties had irretrievably broken down, his claim was, in reality, one for a fair termination process rather than for reinstatement in the role of CFO.

Application granted.

JUDGMENT of Mr Justice David Keane delivered on the 12th June 2020

Introduction

1 This is an employment injunction application, brought against the background of an action for wrongful dismissal challenging both the decision made on 7 January 2020 by the first defendant/respondent, Over-C Technology Limited (‘Over-C Technology’), to terminate the employment of the plaintiff/applicant, Donal O'Donovan, and its subsequent confirmation of that decision on 17 January, when it deemed Mr O'Donovan's appeal against dismissal to have been withdrawn. The second defendant/respondent, Over-C Limited (‘Over-C’), an English-registered company, is the parent of Over-C Technology. Thus, collectively, Over-C Technology and Over-C are the defendants.

Procedural history

2 On 29 January, Mr O'Donovan issued proceedings. A memorandum of appearance was entered on behalf of each of the defendants on 5 and 6 February, respectively. On 18 February, Mr O'Donovan delivered a statement of claim in which he seeks, among other reliefs: declarations that his dismissal was unlawful and, hence, invalid and that he remains employed by the defendants; permanent injunctions requiring the defendants to acknowledge and maintain the position as such; and damages against the defendants for breach of contract, breach of duty, and breach of his constitutional right to fair procedures.

3 On 31 January, Mr O'Donovan sought, and was granted, leave ex parte to effect short service of the present motion. He filed and issued a notice of motion on 31 January, initially returnable to 6 February on the direction of Reynolds J. The principal interlocutory reliefs that Mr O'Donovan seeks are injunctions pending trial in terms of the permanent injunctions that he claims as substantive relief. The application is grounded on an affidavit sworn by Mr O'Donovan on 30 January. Michael Elliot, the chief executive officer (‘CEO’) of each of the defendants, swore an affidavit in reply on 14 February, supplemented by a short affidavit of John Boylan, a partner in the firm of solicitors representing the defendants, sworn on the same date. Mr O'Donovan swore a second affidavit on 18 February, as did Mr Elliot one week later. Still further affidavits sworn by Mr O'Donovan on 26 February and Mr Elliot on 10 March were later exchanged. Finally, Liam Wade, the general manager and company secretary of Over-C Technology, swore a short affidavit on its behalf on 25 May that I gave the defendants leave to file in court. I have considered the contents of each of those affidavits.

4 The defendants gave an undertaking to the court (O'Connor J) on 6 February that they would not appoint another person to the role of CFO pending the determination of the present application.

5 The application was argued before me on 25 May. The defendants had not yet delivered a formal defence.

Background

6 Mr O'Donovan is a chartered management accountant. By letter dated 30 May 2019 (‘the employment offer letter’), Mr Elliot offered him the position of chief financial officer (‘CFO’) of ‘our Irish company Over-C Technology and Over-C Ltd in the UK’.

7 On 31 May 2019, Mr O'Donovan signed a contract with Over-C Technology, headed ‘Statement of Main Terms of Employment’ (‘the contract’), which recites that it forms part, and sets out the main terms, of his ‘Contract of Employment’. The contract states that Mr O'Donovan's employment with Over-C Technology as CFO was to begin on 22 July 2019, and that the CEO was to be his line manager.

8 Among the other express terms of the contract, are the following:

‘PROBATIONARY PERIOD

An initial probationary period of six months applies to this position. During this period your work performance will be assessed and, if it is satisfactory, your employment will continue. However, if your performance is not up to the required standard, we may either take remedial action or terminate your employment.

TERMINATION TO BE GIVEN BY EMPLOYER: One month in the first year, [t]hree months thereafter.

DISCIPLINARY RULES AND PROCEDURES

The disciplinary rules and procedures that apply to your employment are shown in the Employee Handbook to which you should refer.

DISCIPLINARY APPEAL PROCEDURE

The disciplinary rules and procedures which form part of the Contract of Employment incorporate the right to lodge an appeal in respect of any disciplinary action taken against you. If you wish to exercise this right, you should apply either verbally or in writing to the General Manager or the CEO within five working days of the decision you are complaining against.’

9 Mr O'Donovan has exhibited the Employee Handbook that was furnished to him in conjunction with the contract. It contains little in the way of disciplinary rules and nothing on disciplinary procedures.

10 Mr O'Donovan began work as CFO of Over-C Technology in Cork on 6 August 2019. Between 13 December 2019 and 6 January 2020, he was on annual leave.

11 Upon his return from leave on 7 January, Mr O'Donovan was called to a meeting with the CEO, Mr Elliot. At that meeting, Mr Elliot informed Mr O'Donovan, that his employment with Over-C Technology was terminated with immediate effect and that he was to receive one month's pay in lieu of notice.

12 As CEO of Over-C Technology, Mr Elliot later wrote to Mr O'Donovan, confirming that decision. The letter (for ease of reference, ‘the letter of termination’) is dated 8 January, though Mr O'Donovan contends that post office records show it was sent by registered post on Friday, 10 January, and delivered on Monday, 13 January. The letter states that Mr O'Donovan's...