Stokes v Molana Ltd [EAT]

• Jurisdiction: Ireland
• Judgment Date: 16 May 2012
• Judgment citation (vLex): [2012] 5 JIEC 1601
• Date: 16 May 2012
• Docket Number: CASE NO. UD2185/2010 UD2186/2010
• Court: Employment Appeal Tribunal (Ireland)

EMPLOYMENT APPEALS TRIBUNAL

CASE NO. UD2185/2010

UD2186/2010

CLAIM(S) OF:

Christian Stokes, 11 Marino Park, The Elms, Mount Merrion Avenue, Blackrock, Co Dublin

claimant No 1

Simon Stokes, 6 Sycamore Road, Mount Merrion, Co Dublin

claimant No 2

and

Molana Limited, 39/40 Upper Mount Street, Dublin 2

respondent

Representation:

_____________

Claimant(s): Ms Imogen McGrath BL instructed by McKevitt & Company, Solicitors, 23 Mespil Road, Dublin 4

Respondent(s): Mr Paul Fogarty BL instructed by LK Shields, Solicitors, 39/40 Upper Mount Street, Dublin 2

Under

UNFAIR DISMISSALS ACTS, 1977 TO 2007

I certify that the Tribunal (Division of Tribunal)

Chairman: Ms F. Crawford B.L.

Members: Mr R. Murphy

Mr P. Trehy

heard this claim at Dublin on 21st March 2012 and 15 th May 2012 and 16th May 2012

Summary of Case:

1 The claimants were directors and employees of a company known as (M) Limited which traded as a private members club in the Dublin city centre area from mid-2008 onwards. At its peak the club had 1500 members and 60 employees. Following the downturn in the economy the company experienced trading difficulties and was placed in examinership and subsequently went into receivership in January 2010. The claimants continued to work for the company becoming employees of the court appointed Receiver and the business continued to operate smoothly. The claimants enjoyed a good working relationship with the Receiver.

2 The claimants had discussions with a number of prospective investors and in June 2010 (M) Limited was bought by the respondent company as a going concern. A consultancy agreement was drafted by the respondent's legal advisors and presented to the claimants' legal advisor. A final draft of the agreement was signed on 25 June 2010 with completion date intended for July 2010. The consultancy agreement was completed on 21 July 2010 and set out the conditions of the claimants' appointments as consultants. The term of the agreement was for a period of one year and the respondent took control of the business on 22 July 2010. The claimants resigned as directors and employees of (M) Limited prior to the completion of the agreement. The remainder of the employees of (M) limited transferred as employees to the respondent company on 21 July 2010 as part of the European Communities (Protection of Employees on Transfer of Undertakings) Regulations 2003 and accordingly their employment status was maintained.

3 (DP), director and shareholder of the respondent company gave evidence that he was part of the team that negotiated the acquisition of (M) Limited. Whilst he envisaged that the claimants would be an integral part of the new operation it would have been impossible to hire them as directors or employees. This was a joint decision by himself and another director of the respondent company known as (OGL). He told the Tribunal that three previous companies belonging to the claimants had gone bust and he did not know what was coming down the tracks in terms of adverse publicity. He gave further evidence of a meeting on 2 July 2010. Present at that meeting on behalf of the respondent company were himself, (OGL), her husband (BL) and two solicitors. The second named claimant was present at the meeting with his solicitor. At that meeting the witness explained the reasons as to why the consultancy agreement was being put in place. (BL) also outlined that the claimants would not have a shareholding entitlement in the new arrangement.

4 The Tribunal heard further evidence in relation to an asset sale agreement between (M) Limited (In Receivership) and the Receiver and the respondent company. The claimants were not party to this agreement. Specifically the Tribunal's attention was drawn to clause 6.1 of that agreement and a handwritten note of (DP) which suggested that the Receiver use his best effortsto seek the resignations of the claimants prior to the completion of the asset sale agreement, thenote stated as follows: "The Receiver shall use best efforts by means of persuasion but not toincur any liability in relation thereto or otherwise to obtain the resignations of SS, (a named third person) and CS prior to completion."

5 Discussions also took place at the...