Naujoks v National Institution of Bioprocessing Research & Training Ltd

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 14 November 2006
• Neutral Citation: [2006] IEHC 358
• Docket Number: No. 4977 P/2006
• Court: High Court
• Date: 14 November 2006

NAUJOKS v NATIONAL INSTITUTION OF BIOPROCESSING RESEARCH & TRAINING LTD

BETWEEN/

KURT NAUJOKS

PLAINTIFF

AND

NATIONAL INSTITUTION OF BIOPROCESSING RESEARCH AND TRAINING LIMITED

DEFENDANT

[2006] IEHC 358

No. 4977 P/2006

THE HIGH COURT

EMPLOYMENT: termination

restrain defendant from removing him as CEO of defendant

: The plaintiff sought an injunction inter alia restraining the defendant from removing him as CEO of the defendant

bioprocessing company for research, training and education. The plaintiff contended that the term of his contract was for

five years and that it could only be terminated in accordance with the contract, that he had not been accorded fair procedures and that the termination was not properly carried out pursuant to the articles of association of the defendant.

Held by Laffoy J., that it was more probable than not that the decision was not validly made and that it appeared that the

plaintiff had not received prior notice. As damages would not be an adequate remedy, the balance of convenience lay in

favour of granting the injunctive relief sought, other than an order restoring the plaintiff to his position as CEO.

Reporter: E.F.

CAMPUS OIL v MIN FOR INDUSTRY & ENERGY (NO 2) 1983 IR 88

MAHA LINGAM (ORSE MAHALINGHAM) v HEALTH SERVICE EXECUTIVE (HSE) 2005 36 7565 2005 IESC 89

SHORTT v DATA PACKAGING LTD 1994 ELR 251

PHELAN v BIC (IRL) LTD 1997 ELR 208

CARROLL v BUS ATHA CLIATH / DUBLIN BUS 2005 ELR 192

AMERICAN CYANAMID CO v ETHICON LTD 1975 AC 396

KEANE COMPANY LAW 3ED 2000 PARA 6.08

KEANE COMPANY LAW 3ED 2000 PARA 6.12

USHER COMPANY LAW IN IRELAND 246

1 Judgment of Miss Justice Laffoy delivered on 14th November, 2006 .

The application

2 These proceedings were commenced by plenary summons which issued on 24th October, 2006 . On this application the plaintiff seeks interlocutory injunctions in the following terms:

3 (a) restraining the defendant from removing the plaintiff from his post as Chief Executive Officer (CEO) of the defendant and, if necessary, directing his restoration to that post forthwith;

4 (b) restraining the defendant from dismissing the plaintiff from his employment as CEO and/or from giving effect to any purported termination and/or any purported resignation;

5 (c) ordering that the defendant pay to the plaintiff all salary to include arrears of salary and all other emoluments as same fall due; and

6 (d) restraining the defendant from appointing any other person other than the plaintiff to the position of CEO of the defendant.

The factual background

7 The defendant is a company limited by guarantee which was incorporated on 12th January, 2006, with the primary object of establishing and operating a national institute of international excellence of bioprocessing for research, training and education to be located at Belfield in Dublin. The Institute, which came into existence at the beginning of this year, is the result of a process started by IDA Ireland in 2004 when it invited proposals from academic institutes in relation to the establishment and management of a research and training institute that would work with the biopharmaceutical industry in Ireland in overcoming skill shortages and bioprocessing technology challenges. The successful tenderer was a consortium led by University College Dublin (UCD).

8 The articles of association of the defendant provide that its affairs shall be managed by a board (the Board) consisting of eleven members, to be appointed as follows:

9 (a) one nominee each of the founding institutions (Dublin City University, Dublin University, Institute of Technology, Sligo and UCD);

10 (b) five nominees of the Minister for Enterprise, Trade and Employment;

11 (c) one nominee of the Minister for Education and Science; and

12 (d) the CEO.

13 The defendant is a German national, who was appointed CEO of the defendant in January, 2006 . His first involvement with the project goes back to September, 2004 when he was retained as a consultant to UCD to produce a tender on behalf of the UCD-led consortium in response to the invitation from IDA Ireland, which tender was ultimately successful. Thereafter he was involved in negotiating the agreement entered into between the UCD consortium and IDA Ireland for the purposes of establishing the Institute.

14 The terms of the plaintiff's employment as CEO of the defendant were set out in a written agreement dated 10th February, 2006 made between the defendant and the plaintiff (the Service Agreement). The provisions of the Service Agreement which have been referred to on this application are the following:

15 • Clause 2.3, which provided that the Service Agreement should continue in force for a term of five years, unless terminated earlier by either party in accordance with the provisions of Clause 13 or unless extended by mutual agreement in writing of the parties.

16 • Clause 13, which provided for both termination on notice and summary termination. In relation to termination on notice, Clause 13.1 provided that either party might terminate by giving to the other no less then six months" prior written notice in accordance with the provisions of Clause 15.6 Clause 15.6 dealt with the mode of service of notices. Clause 13.2 provided that the Service Agreement might be terminated forthwith by the defendant by written notice to the CEO in the event of any of the nine circumstances outlined having arisen. Those circumstances encompassed breach of the plaintiff's obligations under the Agreement, failure to discharge his duties properly, incapacity, dishonesty and so forth.

17 • Clause 2.5, which provided that on notice being served for any reason by any party to terminate, the defendant should be entitled to make payment to the plaintiff in lieu of notice, in which case the plaintiff's employment would terminate with immediate effect.

18 • Clause 5.2, which provided that during the continuance of the plaintiff's employment, including any period after notice of termination had been served by either party, there should be no obligation on the defendant to require the plaintiff to work or perform any duties and that, if the defendant should give written notice to the plaintiff that it required the plaintiff not to work or perform any duties for any given period, then during that period the plaintiff should not, without written permission, be entitled to access to the defendant's premises, but should continue to receive his full remuneration and other benefits.

19 • Clause 15.8, which provided that the Service Agreement contained whole agreement between the parties, superseded all previous agreements (if any) and that each party acknowledged that no representation or warranty was being relied on except those contained therein.

20 • Clause 15.12 in which the plaintiff acknowledged that he had taken legal advice on the Service Agreement and understood the effect and implications thereof.

21 In September of this year certain issues arose between the plaintiff, as CEO of the defendant, and the head of a research team employed by the defendant. It is the plaintiff's case that these issues arose out of his commitment to ensure compliance with the best standards of corporate governance. The defendant attributes these issues to the plaintiff's management style, which, it has been asserted, created difficulties in the workplace to the extent that the plaintiff ultimately lost the confidence of the Board of the defendant. It is not necessary, for the purposes of determining this application, to make any determination as to what has given rise to those issues, but they are the context for what happened on 12th October, 2006 and subsequently.

22 It is common case that a meeting of the Board of the defendant took place on 12th October, 2006 and that the plaintiff was in attendance, as was the Chairman of the Board, Joseph Gantly. The termination of the plaintiff's employment was not an agenda item for that meeting and notice was not given that it was business to be transacted at the meeting in accordance with regulation 50 of the articles of association. The defendant's version of what took place at that meeting, which is material to this application, is set out in the affidavit of Mr. Gantly sworn on 1st November, 2006 . He averred that at a particular stage he asked the plaintiff to leave the meeting and wait for him in the next room while the meeting continued with the non-executive directors. A unanimous decision was then made to terminate the plaintiff's employment with the defendant as a result of the Board's loss of confidence in him as the CEO. There is no other evidence of the Board's deliberations and there is no evidence that they considered the terms of the Service Agreement. Mr. Gantly was requested by his fellow Board members to communicate the Board's decision immediately to the plaintiff. He stepped out of the meeting and informed the plaintiff, who was waiting in the next room, of the decision.

23 Mr. Gantly averred that he informed the plaintiff that the Board had decided to terminate his employment and that his services were no longer required because the Board had lost confidence in him. If he was prepared to resign, the Board was prepared to pay him six months" salary in lieu of notice and to make a further ex gratia payment of six months" salary. Mr. Gantly further averred that when he put this proposal to the plaintiff, the plaintiff replied "O.K.", but stated that he had some relationships which he needed to "close off" prior to any final termination date being agreed. Mr. Gantly emphasised in his affidavit that he made it clear to the plaintiff that the termination would be with immediate effect, subject to him being facilitated if he chose to resign, in terms of contacting colleagues or other third parties. Mr....