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Injunctions and Entitlement to Terminate

at Common Law Without Cause

Injunctions and Entitlement to Terminate at Common Law Without Cause


In a judgement delivered by Ms Justice Finlay Geoghegan on 16th March 2014 in [Lee Bradshaw v William Murphy and Joseph Murphy and Claire Murphy and Copper Bar and Grill Limited [2014] IEHC 146] the plaintiff, a Chef and restaurateur was employed by the fourth named defendant “The Copper Bar and Grill and sought a number of reliefs in respect of his purported dismissal and a partnership arrangement he alleged was in place.

Background

The plaintiff contended that he was in partnership with the first named defendant and that the business of the partnership related to the Copper Bar and Grill. A meeting took place between the plaintiff and the first and second named defendants on 11th December, 2013. The plaintiff deposed that he understood that he was being placed on leave for a month, during which he would be paid, and whilst he acknowledged that the first named defendant stated he did not want to work with him any longer, he understood that everything would be looked in a month’s time. The first named defendant deposed that he told the plaintiff that he was being dismissed and that the Company would pay him for four weeks on certain conditions which are in dispute.The plaintiff understood from the meeting of 11th December, 2013 that the defendants did intend to effect a dismissal, and, as he contends, a dissolution of the partnership.

On 3rd February, 2014, the defendants gave undertakings to the Court pending the hearing and determination of the interlocutory application in which they undertook:

(i) Not to interfere with the plaintiff’s share in the partnership the subject matter of the proceedings, partnership assets and the business known as the Copper Bar and Grill; the plaintiff’s assets or those of the Company and the plaintiff’s shareholding the subject matter of the proceedings in the Company;
(ii) not to dismiss the plaintiff or to take any step to effect the dismissal of the plaintiff, and
(iii) to resume payment on a weekly basis of wages and to make other payments to the plaintiff in specified amounts.

Interlocutory Application

The interlocutory reliefs sought were orders restraining the defendants from terminating or purporting to terminate the employment of the plaintiff with the Company and injunctions restraining the defendants from terminating or purporting to terminate the partnership between the plaintiff and Mr. William Murphy. At the end of the interlocutory hearing, the defendants indicated that they were prepared to give the following undertakings to the Court pending the full hearing of the proceedings:

1. The Defendants and each of them undertake not to dissipate or dispose of (other than in the ordinary course of business) the assets or business of the fourth Defendant or to wind up the fourth Defendant save on the giving of seven days notice of any intended dissipation, disposal or winding up to the Plaintiff in which case the Plaintiff will have liberty to re-enter this application and to make such further or other application as he sees fit.
2. The Defendants and each of them undertake not to dismiss the Plaintiff or to cause the fourth Defendant to dismiss the Plaintiff on the ground of misconduct including the Facebook issue. For the avoidance of doubt, the Defendants concede for the purpose of the giving of this undertaking only, that misconduct includes the matters raised by the first Defendant during the course of a meeting between him and the Plaintiff that took place on the evening of 11 December 2013.
3. The Defendants and each of them undertake not to communicate to any third party that the Plaintiff’s employment has been terminated on the ground of misconduct including the Facebook issue or for the matters raised by the first Defendant during the course of a meeting between him and the Plaintiff that took place on the evening of 11 December 2013
.”

The plaintiff continued to seek an interlocutory injunction restraining the termination of his contract of employment with the Company and an injunction restraining the defendants from terminating or purporting to terminate the partnership of the plaintiff and the first named defendant.

Legal Argument

At the meetings on 11th December, 2013, and subsequent communications to third parties, it was indicated that the plaintiff was to be dismissed from his employment with the Company by reason of alleged misconduct. Counsel for the plaintiff submitted that due to an allegation of misconduct, any subsequent termination of the plaintiff’s employment invoked a requirement for fair procedures. Counsel contended that the plaintiff had not been accorded fair procedures by the defendants herein and relied upon the dicta of Clarke J. in Carroll v. Bus Átha Cliath [2005] 1 84, where it was stated:

If the stated reason for seeking to dismiss an employee is an allegation of misconduct, then the courts have, consistently, held that there is an obligation to afford that employee fair procedures in respect of any determination leading to such a dismissal.

Counsel for the defendants submitted that as the defendants had now given an undertaking to the Court pending the final determination of the plaintiff’s claim not to dismiss the plaintiff or cause the Company to dismiss the plaintiff on the ground of misconduct, that the above principles no longer apply in relation to the interlocutory application. They further submitted that the defendants, and in particular, the Company, may only terminate the employment of the plaintiff in accordance with the contractual terms, including any implied term of reasonable notice. Counsel for the defendants further submitted that there was no claim made by the plaintiff that the fourth named defendant was precluded from terminating the plaintiff’s employment in accordance with the express or implied contractual terms. Counsel submitted that there was, therefore, no serious issue to be tried in relation to the Company’s entitlement at common law to terminate the employment of the plaintiff in accordance with its contractual terms.

Judgement

Ms Justice Finlay Geoghegan observed that the submission appeared to be correct and whilst the plaintiff may have raised a serious issue to be tried as to whether the Company was entitled to give effect to a dismissal indicated in the meetings of 11th/12th December, 2013, it had not raised a serious issue to be tried as to the Company’s entitlement at common law to terminate the employment of the plaintiff, without cause, in accordance with the relevant contractual provisions. The court observed that the fact that the defendants previously threatened to dismiss, for the reasons stated on 11th December, 2013, did not preclude the defendants from terminating in accordance with the contractual provisions.

The High Court therefore refused the plaintiff’s application for an injunction restraining the termination of his employment by the Company in circumstances where the defendants had given the undertaking not to dismiss the plaintiff on the ground of misconduct (including matters raised by the first named defendant at the meeting of 11th December, 2013) and the Facebook issue.

Partnership

Prior to 2012, the plaintiff and the first named defendant had a business relationship in relation to a restaurant known as ‘The Station House’ in Tralee, County Kerry whereby the first named defendant was the landlord of the premises and the plaintiff the tenant. From 2010, the plaintiff stated that he expressed a wish to move back to Dublin and looked for opportunities to start a restaurant and bar business in Dublin. The plaintiff contended that in the summer of 2012, in Spain, he and the first named defendant reached agreement on partnership terms in accordance with a proposal set out in an email dated 12th May, 2012. The first named defendant disputed that there was any agreement with the plaintiff to form a partnership.

The plaintiff did not dispute that it was the Company which carried on the business of the Copper Bar and Grill and that this was the intention pursuant to the alleged partnership agreement. In August 2012, the plaintiff resigned as a director of the Company, and in January 2013, signed a transfer of the shares he held in the Company.

Counsel for the defendants submitted that the plaintiff had not made out on the facts deposed an arguable case and that there existed a partnership agreement between the plaintiff and the first named defendant in relation to the business known as the Copper Bar and Grill. He relied, in particular, upon s. 1 of the Partnership Act 1890, which provides:

1.-(1) Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
(2) But the relation between members of any company or association which is-

(a) Registered as a company under the Companies Act, 1862, or any other Act of Parliament for the time being in force and relating to the registration of joint stock companies; or

(b) . . .

(c) . . .

is not a partnership within the meaning of the Act.”

The court observed that the agreement between the plaintiff and the first named defendant included an agreement that a company be formed and that it was the company which was intended to carry on the proposed restaurant and bar business. Justice Geoghegan was not satisfied that the plaintiff and the first named defendant agreed that they would personally carry on a business with a view to profit although he had made out an arguable case that he was to receive certain financial payments for his contribution to the organisation and establishment of the business to be carried on by the Company.

The Court concluded that it was unnecessary to determine whether or not that agreement was arguably a partnership agreement having regard to the provisions of s. 1(1) and (2)(a) of the Partnership Act 1890, for the following reasons.

Even if it was arguable that the alleged agreement between the plaintiff and Mr. William Murphy constituted a partnership agreement, the court was not satisfied that the plaintiff had established that damages would not be an adequate remedy for the alleged breaches or purported termination which he is seeking to restrain. The terms alleged are terms relating to the financial reward due to the plaintiff. The plaintiff failed to establish that damages would not be an adequate remedy and the court also took into account the undertaking given by the defendants in relation to the non-dissipation or disposal of the assets and business of the fourth named defendant

The court concluded that as the plaintiff had not established that damages would not be an adequate remedy for breach of the alleged partnership agreement, “in accordance with the Campus Oil principles, the Court must refuse the interlocutory injunctions sought“.