Nerney v Thomas Crosbie Holdings Ltd

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Laffoy
• Judgment Date: 22 March 2013
• Neutral Citation: [2013] IEHC 127
• Date: 22 March 2013

[2013] IEHC 127

THE HIGH COURT

[No. 7269P/2012]

Nerney v Thomas Crosbie Holdings Ltd

BETWEEN

BRIAN NERNEY

PLAINTIFF

AND

THOMAS CROSBIE HOLDINGS LIMITED

DEFENDANT

COURTS ACT 1981

REDUNDANCY PAYMENTS ACT 1967 S7(2)

EEC DIR 1999/70

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S9

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S12

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S9(4)

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S2

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S9(3)

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S9(1)

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S9(2)

PROTECTION OF EMPLOYEES (FIXED-TERM WORK) ACT 2003 S8(1)

HOLLAND v ATHLONE INSTITUTE OF TECHNOLOGY 2012 23 ELR 1 2011/25/6704 2011 IEHC 414

EEC DIR 1999/70 RECITAL 14

REDMOND DISMISSAL LAW IN IRELAND 2ED 2007 PARA 11.04

REDMOND DISMISSAL LAW IN IRELAND 2ED 2007 PARA 11.05

TAXES CONSOLIDATION ACT 1997 S123

CAREY v INDEPENDENT NEWSPAPERS (IRL) LTD 2004 3 IR 52 2004 15 ELR 45 2003/8/1650

TAXES CONSOLIDATION ACT 1997 S112

GLOVER v BLN LTD & ORS (NO 2) 1973 IR 432

BRITISH TRANSPORT CMSN v GOURLEY 1956 AC 185 1956 2 WLR 41 1955 3 AER 796

FINANCE ACT 1964 S8

FINANCE ACT 1964 S9

INCOME TAX ACT 1967 S114

INCOME TAX ACT 1967 S115

TAXES CONSOLIDATION ACT 1997 S201

TAXES CONSOLIDATION ACT 1997 S201(5)(A)

TAXES CONSOLIDATION ACT 1997 S201(1)(A)

SULLIVAN v SOUTHERN HEALTH BOARD 1997 3 IR 123 1998/32/12464

ALLEN v O'SUILLEABHAIN & MID WESTERN HEALTH BOARD UNREP SUPREME 11.3.1997 1997/7/2516

TAXES CONSOLIDATION ACT 1997 S123(4)(B)

TAXES CONSOLIDATION ACT 1997 S123(6)

TAXES CONSOLIDATION ACT 1997 S192A

BSKYB LTD & ANOR v HP ENTERPRISE SERVICES UK LTD & ANOR (NO 2) 131 CON LR 42 2010 EWHC 862 (TCC) 2010 AER (D) 05 (JUL)

MCGREGOR MCGREGOR ON DAMAGES 18ED 2009 SECOND SUPPLEMENT

REDMOND DISMISSAL LAW IN IRELAND 2ED 2007 PARA 11.46

SHARKEY v DUNNES STORES (IRL) LTD UNREP SMYTH 28.1.2004 2004/46/10572 2004 IEHC 163

TAXES CONSOLIDATION ACT 1997 S123(4)

ADDIS v GRAMOPHONE CO LTD 1909 AC 488

EMPLOYMENT LAW

Termination

Wrongful dismissal at common law - Taxation on damages - Redundancy - Employment contract - Term of employment - Lump sum payment in lieu of notice - Damages for breach of contract - Not permitted to return to place of work - Reputational damage - Calculation of special damages - Calculation of the effect of tax liability on damages for loss of earnings or earning capacity - Relevant charging provision - Compensation for loss of remuneration during an unexpired fixed period of contractual employment - Whether breach of contract - Whether term of employment was to continue in the absence of notice - Whether contract became contract of indefinite duration - Whether objective condition - Whether failure to mitigate loss - Whether special damages to be assessed gross or net of tax - Whether damages for loss of earnings were chargeable to tax - Whether damages for wrongful dismissal were taxable - Whether deduction of tax element from all or part of the award - Whether reputational damage - Addis v Gramophone Co Ltd [1909] AC 488; Allen v Ó Súilleabháin (Unrep, Murphy J, 11/3/1997); British Transport Commission v Gourley [1956] AC 185; BSkyB Ltd v HP Enterprises UK Ltd [2010] EWHC 862; Carey v Independent Newspapers (Ireland) Ltd [2003] IEHC 67, [2004] 3 IR 52; Holland v Athlone Institute of Technology [2012] 23 ELR 1; Sharkey v Dunnes Stores (Ireland) Ltd [2004] IEHC 163, (Unrep, Smyth J, 28/1/2004) and Sullivan v Southern Health Board [1997] 3 IR 123 considered - Glover v BLN Ltd (No 2) [1973] IR 432 followed - Finance Act 1964 (No 15), ss 8 and 9 - Redundancy Payments Act 1967(No 21), s 7(2) - Taxes Consolidation Act 1997 (No 39), ss 112, 123 and 201 - Protection of Employees (Fixed-Term Work) Act 2003 (No 29), ss 2, 9 and 12 - Directive 99/70/EC, art 14 - Damages for loss of remuneration awarded (2012/7269P - Laffoy J - 22/3/2013) [2013] IEHC 127Nerney v Thomas Crosbie Holdings Limited

Facts: The employment of the plaintiff as Chief Executive had been terminated and the plaintiff alleged that the defendant had not given him the requisite notice and had acted in breach of contract. Accordingly, he sought damages for breach of contract. A revised schedule of special damages was presented at the hearing. He sought damages including loss of remuneration and general damages for alleged reputational damage in consequence of the manner in which his employment was terminated. The Court considered the term of the plaintiff”s employment under the Executive Contract and whether the contractual entitlement was varied by the Protection of Employees (Fixed-Term Work) Act 2003.

Held by Laffoy J. that the defendant would be liable in damages for the loss which the plaintiff incurred as a consequence of the wrongful dismissal. the basis under which damages for loss of remuneration should be quantified was there would be no award of general damages and the Court would postpone making any order until the position as to the quantum of damages was re-assessed. The basis which damages for loss of remuneration should be quantified was what he would have received under the Executive Contract.

1 Judgment of Ms. Justice Laffoy delivered on 22nd day of March, 2013.

Factual Background

2 1. These proceedings arise out of the termination of the employment of the plaintiff as Chief Executive of the "Roscommon Herald", a regional newspaper, by his employer, the defendant. The plaintiff's employment had been created by an agreement dated 18 ^th June, 2004 made between the defendant of the one part and the plaintiff of the other part (the Executive Contract). The execution of the Executive Contract was preceded by the coming into effect of a share purchase agreement between the plaintiff, as vendor, and the defendant, as purchaser, whereby the defendant had acquired all of the issued share capital in Roscommon Herald Limited (the Company), the owner of the newspaper.

3 2. The plaintiff had worked with the Company from approximately 1986. After the death of his mother, who was the sole owner of the Company, in 1994 the plaintiff took over as the owner and managing director of the Company. The Company ran a successful business. The Roscommon Herald was one of the leading regional newspapers in the country with a circulation in the region of sixteen thousand. In 2003 and 2004, before the defendant expressed an interest in the Company, there had been approaches from two entities, which were not Irish companies, in relation to its acquisition. However, in 2004 the plaintiff entered into an agreement with the defendant, which, being an Irish company, was his preferred purchaser. The plaintiff wanted to stay on as Chief Executive of the newspaper and that became part of the deal. His evidence was that he wanted security in that position and that he was assured by Mr. Anthony Dinan, who was then Chief Executive Officer of the defendant, that he would be kept on as Chief Executive of the Roscommon Herald because the defendant was conscious of the importance of having somebody from the Roscommon locality in that position.

4 3. The plaintiff served as Chief Executive under the Executive Contract for eight years and one month until he ceased to act in that position on 17 ^th July, 2012 in circumstances which I will outline later. Before doing so, it is necessary to consider the terms of the Executive Contract which are relevant to the issues in these proceedings.

The Executive Contract

5 4. Solicitors for the defendant and solicitors for the plaintiff were involved in the drafting, approval and execution of the Executive Contract which, in my view, was well drafted and is devoid of lack of clarity or ambiguity.

6 5. Clause 2 set out the term of the plaintiff's employment and provided as follows:

"The employment of the Chief Executive shall commence on the [18 ^th day of June 2004] and shall be for a period of four years and shall continue for periods of four years unless notice of the [defendant's] intention not to renew the term is served at least 6 months before the expiration of any four year period, unless earlier determined in accordance with the terms hereof. Notwithstanding the foregoing the Chief Executive may terminate this Agreement on six month's notice in writing to the [defendant]. This Agreement shall supersede all other agreements between the parties and the provisions of the Unfair Dismissals Acts shall not apply to the termination of this Agreement solely out of the expiration of the fixed term."

7 In fact, in the Executive Contract as executed by the parties the date of commencement was left blank. However, it is common case that the date of commencement was 18 ^th June, 2004. The other terms contained in the Executive Contract providing for its determination were contained in Clause 14 which was headed "Summary termination of employment". That clause set out various events on the happening of which the employment of the plaintiff might be terminated without notice or payment in lieu of notice, for example, if the plaintiff should be guilty of gross default of misconduct in connection with the business, or become bankrupt, or become of unsound mind and so forth. None of the relevant events occurred. Moreover, the plaintiff did not exercise his power of terminating on six month's notice. What happened was that when the first period of four years expired without the defendant having given notice of its intention not to renew before 18 ^th December, 2007, the plaintiff's employment continued, and his understanding was that it was continuing for a further period of four years from 18 ^th June, 2008.

8 6. Remuneration was dealt with in Clause 4, which set out the starting salary and made provision for the salary being...