Michael Browne v Iarnród Éireann - Irish Rail (No.2)

• Jurisdiction: Ireland
• Judge: Mr. Justice Hogan
• Judgment Date: 05 March 2014
• Neutral Citation: [2014] IEHC 117
• Docket Number: [2008 No. 379 S]
• Court: High Court
• Date: 05 March 2014

[2014] IEHC 117

THE HIGH COURT

[No. 379 S/2008]

Browne v Iarnrod Eireann - Irish Rail (No 2)

BETWEEN

MICHAEL BROWNE

PLAINTIFF

AND

IARNRÓD ÉIREANN - IRISH RAIL (No.2)

DEFENDANTS

BROWNE v IARNROD EIREANN UNREP HOGAN 11.12.2013 2013 IEHC 620

CHITTY & ORS CHITTY ON CONTRACTS 29ED 2004 PARA 26.009

WHITE & CARTER (COUNCILS) LTD v MCGREGOR 1961 3 AER 1178 1962 AC 413 1962 2 WLR 17

CHESHIRE & ORS CHESHIRE FIFOOT & FURMSTON'S LAW OF CONTRACT 16ED 2012 758

JARVIS v SWAN TOURS LTD 1973 1 AER 71 1973 QB 233 1972 3 WLR 954

JOHNSON v LONGLEAT PROPERTIES (DUBLIN) LTD 1976-77 ILRM 93

QUINN v QUALITY HOMES LTD 1976-77 ILRM 314

LEAHY v RAWSON & ORS 2004 3 IR 1 2003/30/7110

MITCHELL & ORS v MULVEY DEVELOPMENTS LTD & ORS UNREP HOGAN 6.2.2014 2014 IEHC 37

Employment - Early retirement package - Severance - Breach of contract - Voluntary severance payment - Monthly annuity - Damages - Contract debt - Appropriate remedy - Compulsory retirement age - Loss of expectation and inconvenience - Tangible award of damages - Financial loss

Facts: In the case of Browne v. Iarnród Éireann [2013] IEHC 620, it was found that the defendant was guilty of a breach of contract in failing to honour an early retirement package that had been offered to the plaintiff, a longstanding employee of the company. The plaintiff was 62 years old when the package was offered, and he had to work until he was 65 when payment was not made. It was also found that this package was comprised of a voluntary severance payment of €148,157 and a monthly annuity of €2,174. This judgment related to the plaintiff"s claim for the latter sum plus the voluntary severance payment for a period of three years up to retirement (this being €78,249), together with interest as a contract debt.

The defendant argued that the plaintiff should not be permitted to recover the contract debt because the extra three years of work undertaken by the plaintiff had been so productive that it resulted in his capital sum being increased by €10,000 and his annual annuity being increased by a figure of €2,800. He had, therefore, not suffered any financial loss.

Held by Hogan J. that the plaintiff had forfeited his right to sue for the contract debt because he had effectively accepted the repudiation of the early retirement package offer by continuing to work for three years after it was made. It was said that the plaintiff could have sued for the contract debt if he had refused to work after the offer of severance was accepted, but declined to do so because of his financial circumstances. His remedy was, therefore, confined to damages for breach of contract.

In assessing the amount of damages to be awarded, it was noted that the plaintiff had not suffered any direct financial loss from the defendant"s failure to honour the early retirement package because he had continued to work until the compulsory retirement age, which actually increased his capital sum and final retirement pension. He was, however, deprived of his right to take early retirement after working for the defendant for many years and forced to work for a further three years. There was no doubt that the plaintiff would have suffered lost expectation and inconvenience as a result of this development, and so was entitled to an award of damages. It was said that whilst it was difficult to measure this loss in monetary terms, the damages award should be tangible and significant without being excessive. As a result, the plaintiff was awarded €20,000 for each of the three years he was obliged to work.

Award of €60,000 made to the plaintiff.

1 1. In my first judgment in this matter, Browne v. Iarnród Éireann [2013] IEHC 620, I held that the defendant, Iarnród Éireann, was guilty of a breach of contract inasmuch as it had wrongfully refused to honour an early retirement package which it had offered to the plaintiff, Mr. Browne, a long standing employee of the company, in September, 2006 and which he had then accepted. In that judgment I pointed out that the plaintiff (who was then aged 62) found himself compelled by economic circumstances to return to work. He continued in that position until September, 2009 when he retired having reached the compulsory retirement age.

2 2. Had Mr. Browne retired in September, 2006 as part of the early retirement package he would have received a voluntary severance offer of €148,157, together with a monthly annuity of €2,174 per month. The plaintiff now claims that latter sum plus the voluntary severance payment for a period of three years up to retirement (this being €78,249), together with interest as a contract debt.

3 3. It is important to stress that the plaintiff did well financially during the final three years of employment, as he earned just over €300,000 in total over these three years. His capital sum was increased by €10,000 and his annual annuity was increased by a figure of €2,800

4 4. The fundamental question now is whether the plaintiff should be permitted to recover the contract debt to which he says he is entitled as the full measure of his compensation. The defendants object on the basis that this would amount to a form of double recovery, given that the plaintiff did in fact work for a further three years and his retirement package was, in fact, enhanced by reason of the fact that he worked these extra years. The issue thus presented is a difficult one in terms of the assessment of damages for breach of contract.

5 5. It is true that the literature is in entire agreement that debt is to be treated differently from the question of damages for breach of contract. Thus, for example, the editors of Chitty on Contracts (29 ^th ed.), Vol. 1 at para. 26-009 summarise the distinction thus:

"There is an important distinction between a claim for payment of a debt and a claim for damages for breach of contract. A debt is a definite sum of money fixed by the agreement of the parties as payable by one party in return for the performance of a specified obligation by the other party or upon the occurrence of some specified event or condition; damages may be claimed from a party who has broken his contractual obligation in some way other than failure to pay such a debt."

6 6. While the distinction thus drawn between a debt on the one hand and an action for damages for breach of contract on the other is well established - this is, after all, at the heart of the distinction between liquidated and unliquidated claims - yet it would not seem right that the plaintiff should nonetheless be entitled to any element of windfall damages, even if (as I have already found) Mr. Browne was the innocent...