Glegola v Minister for Social Protection
| Jurisdiction | Ireland |
| Judge | Ms. Justice Finlay Geoghegan |
| Judgment Date | 24 February 2017 |
| Neutral Citation | [2017] IECA 37 |
| Date | 24 February 2017 |
| Court | Court of Appeal (Ireland) |
| Docket Number | Neutral Citation Number: [2017] IECA 37 [2015 No. 474] |
AND
[2017] IECA 37
Neutral Citation Number: [2017] IECA 37
[2015 No. 474]
THE COURT OF APPEAL
Insolvency – Protection of employees – Damages – Appellant seeking to be paid from the Social Insurance Fund a debt due to her by her former employer – Whether the State failed to correctly transpose Article 2(1)(b) of Directive 2008/94/EC
Facts: The appellant, Ms Glegola, appealed to the Court of Appeal seeking to be paid from the Social Insurance Fund a debt due to her by her former employer, The Metro Spa Ltd, in the sum of €16,818.75, pursuant both to a recommendation of the Rights Commissioner dated 11th October, 2012, and to the State's obligations pursuant to Directive 2008/94/EC on the protection of employees in the event of the insolvency of their employer. The appellant submitted that the declaration granted by the High Court (Charleton J) on 28th April, 2014 in petition proceedings pursuant to s. 251 of the Companies Act 1990, satisfied the requirements of Article 2(1)(b) of Directive 2008/94/EC, and accordingly, the State was obliged to make the payment to the appellant out of the Social Insurance Fund in accordance with the principles of direct effect. The appellant's second submission, which only arose if the Court did not accept the first, was that the State had failed to transpose Article 2(1)(b) of Directive 2008/94/EC in failing to have in place a procedure where, as part of the statutory scheme applicable to a petition to wind up a company by the Court, an application could be made, in the alternative for an order of a type envisaged by Article 2(1)(b). Further, it was contended that in accordance with the principles in Joined Cases C-6/90 and C-9/90, Francovich and Bonifaci, of 19th November, 1991, the appellant was entitled to an award of damages against the State in the amount of the Rights Commissioner's recommendation.
Held by Finlay Geoghegan J that the State failed to correctly transpose Article 2(1) of Directive 2008/94/EC. Accordingly, in Finlay Geoghegan J's judgment, the appellant was entitled to recover damages in the sum of €16,818.75 against the State for its failure to correctly transpose Directive 2008/94/EC.
Finlay Geoghegan J held that the appeal should be allowed. The Court vacated the order of the High Court, granted a declaration that the State had failed to correctly transpose Directive 2008/94/EC by failing to provide in Irish law for the procedure required by Article 2(1)(b) of the Directive and made an award of damages against the State in the sum of €16,818.75.
Appeal allowed.
This appeal concerns the entitlement of the appellant to be paid from the Social Insurance Fund a debt due to her by her former employer, The Metro Spa Ltd. in the sum of €16,818.75, pursuant both to a recommendation of the Rights Commissioner dated 11th October, 2012, and to the State's obligations pursuant to Directive 2008/94/EC on the protection of employees in the event of the insolvency of their employer ('the Directive').
The appellant was employed by The Metro Spa Ltd. ('the Company'). She claims she was dismissed on 30th November 2011, having been informed that the Company was going into liquidation. The reason given for her dismissal was redundancy.
She subsequently formed the view that the Company had continued to trade, and she made a complaint to the Rights Commissioner in May 2012 under the Payment of Wages Act 1991, the Organisation of Working Time Act 1997 and the Unfair Dismissals Acts 1977 to 2001. Furthermore, her solicitor wrote to the Company alleging that the Company's designation in the Companies Registration Office was 'normal' rather than 'in liquidation', and that the 'undertaking' continued to trade. Reasons for the appellant's dismissal were sought. On 7th June, 2012, the solicitor for the Company responded and stated:
'Our client ceased trading in November 2011. This can be verified from an inspection of the premises at Clarendon Street from which it used to trade. The only reason the company has not entered into liquidation is because of the costs which would be attendant on same and the lack of any resource within the company to meet the same. In the circumstances, it is clear that a true redundancy situation did exist and is verifiable.'
The Rights Commissioner held a hearing in August 2012, which was not attended by the Company, and issued a recommendation on 11th October, 2012. The recommendation stated:
'As there was an unexplained absence of the Respondent, I accept the uncontested evidence presented on behalf of the Claimant. I find her claims well-founded and make the following awards:-
Unfair Dismissals Act - €10,000 in compensation
Organisation of Working Time Act - €5,000 in compensation
Payment of Wages Act - €1,818.75 in unpaid wages.'
The recommendation records a summary of the claimant's position as:
'The Claimant does not accept that a redundancy situation exists and further asserts that the procedures applied to her, culminating in her dismissal were unfair. The Respondent's company has not been placed in liquidation and continues to trade. There were plenty of opportunities for the Claimant to be re-engaged and retrain where appropriate.'
The total amount awarded was €16,818.75. It is accepted for the purposes of this appeal that the recommendation of the Rights Commissioner, not having been appealed by the Company, became binding and was subsequently a debt due by the Company to the appellant.
On 16th October, 2013, the Company was struck off the Register of Companies for failing to file accounts.
On 13th March 2014, the appellant issued a petition in which she sought an order restoring the Company to the Register pursuant to s. 12B of the Companies (Amendment) Act 1982; an order winding up the Company pursuant to the provisions of the Companies Acts and Article 3 of EU Regulation 1346/2000; an order pursuant to s. 251 of the Companies Act 1990 and liberty to bring applications under s. 297A of the Companies Act 1963 and s. 140 of the Companies Act 1990 by way of notice of motion. The petition was served, inter alia, on the Company but was not advertised in the ordinary way. The petition and grounding affidavit explains the purpose of the petition as being that the appellant was seeking to have her award from the Rights Commissioner paid from the Social Insurance Fund established pursuant to the Protection of Employees (Employers' Insolvency) Act 1984. Further, it was submitted that the petitioner was unable to afford the costs of a liquidator and therefore was seeking a determination under s. 251 of the Companies Act 1990 by reason of advice she had received that this would be sufficient to comply with the requirements of Article 2.1 of the Directive which, it was contended, had direct effect.
A motion was brought in the petition proceedings in the High Court [2014 149 COS] and ultimately heard by Charleton J. on 28th April, 2014. The Court dispensed with any advertisement; deemed the hearing of the motion to be hearing of the petition; made an order restoring the Company to the Register of Companies and other consequential orders and made the following declaration:
'... pursuant to s. 251 of the Companies Act 1990, that the company is unable to pay its debts and that the reason for it not being wound up is due to the insufficiency of its assets.'
Armed with this order, on the 10th June, 2014, the solicitor for the appellant wrote to the Secretary General of the Department of Social Protection seeking payment of the amount of the award recommended by the Rights Commissioner from the Social Insurance Fund. It was contended that the declaration pursuant to s. 251 of the Companies Act 1990 was sufficient to trigger Article 2(1)(b) of Directive 2008/94/EC, which it was submitted has direct effect in the State. It was intimated that in default of payment within 21 days, judicial review proceedings would issue, and it was further stated that the appellant was reserving her right to seek damages from the State for its failure to transpose European law in accordance with the decision of the European Court of Justice in Francovich v. Italy.
By order of the High Court (Barton J.) of 7th July, 2014, leave was granted for the judicial review proceedings. The statement of grounds was verified by an affidavit of the solicitor for the appellant, and subsequently a notice of opposition verified by affidavit was delivered.
Following a full hearing, the application for mandamus was dismissed for the reasons set out in the written judgment of Hedigan J., delivered on the 23rd June, 2015. In essence, the trial judge concluded that on the facts, and on the procedures up to that moment in time undertaken by or on behalf of the appellant, she had not satisfied the requirements of Article 2(1)(b) of the Directive and hence could not sustain a claim against the State in reliance upon the direct effect of Article 2(1)(b) of the Directive. The trial judge did not consider the alternative claim for damages pursuant to the Francovich principles.
On appeal, counsel for the appellant pursued two distinct submissions in the alternative.
First, he submitted that the declaration granted by the High Court (Charleton J.) on 28th April, 2014 in the petition proceedings pursuant to s. 251 of the Companies Act 1990, satisfied the requirements of Article 2(1)(b) of Directive 2008/94/EC, and accordingly, the State is obliged to make the payment to the appellant out of the Social Insurance Fund in accordance with the principles of direct effect.
The second submission, which only arises if the...
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Glegola v Minister for Social Protection
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