Ali (Nazir) v Petroleum Company of Trinidad and Tobago
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hughes,Lord Neuberger,Lord Clarke,Lord Carnwath,Lord Kerr |
| Judgment Date | 13 February 2017 |
| Neutral Citation | [2017] UKPC 2 |
| Court | Privy Council |
| Docket Number | Appeal No 0109 of 2014 |
| Date | 13 February 2017 |
[2017] UKPC 2
Lord Neuberger
Lord Kerr
Lord Clarke
Lord Carnwath
Lord Hughes
Appeal No 0109 of 2014
Privy Council
From the Court of Appeal of the Republic of Trinidad and Tobago
Appellant
Jonathan Cohen QC
Ashley Cukier
(Instructed by Sheridans)
Respondent
Jonathan Crystal
(Instructed by Charles Russell Speechlys LLP)
Heard on 11 October 2016
( with whom Lord Neuberger, Lord Clarke and Lord Carnwath agree)
The appellant Mr Ali was employed by the respondent company (and its predecessors) from 1978. In 1989 he received a scholarship from the company to study for a degree at Louisiana State University. His fees for the course were met outright by the company. In addition, the company made him a monthly allowance of TT$ 3500 to help him continue to meet his commitments in Trinidad. The allowance, unlike the fees, was made in the form of a repayable loan. But, by the letter offering it, "Repayment of this loan will be waived if you return and work for the company for a period of five years". Subsequently there was a further loan of US$5000 for furniture, but this second loan was repayable without qualification and nothing now turns upon it. What remains in issue between the parties is whether the living allowance loan falls to be repaid when it has turned out that Mr Ali did not serve a further five years with the company after his return because he took voluntary redundancy.
After obtaining his degree, Mr Ali returned to the company with effect from 30 May 1994. A little under 18 months later, at the beginning of October 1995, he was one of a number of employees who received from the company notice that he was invited to consider taking redundancy under an extra-statutory scheme. In due course he elected to do so, and qualified for the payment of some TT$237,737 under the scheme. He took employment elsewhere. However, doing so meant that he had not served five years with the company after return from Louisiana. The company sought repayment of the loan, and set off the sum due against the redundancy scheme lump sum. When other debts owed by Mr Ali were also taken into account, the net result was that he received nothing in his hand. He claimed the redundancy money without deduction for the living allowance loan and other offsets. The judge ruled against him, as did the Court of Appeal in brief terms. His further appeal to the Board is limited to the issue whether the living allowance loan was, in the circumstances which had arisen, repayable by him or not.
The respondent company was, when Mr Ali joined it in 1978, known as Trinidad-Tesoro. He was then about 29 years of age and had previously worked for Amoco. Soon afterwards the company changed hands and became the Trinidad and Tobago Petroleum Company ("Trintopec"). It was that company which employed him when the scholarship offer was made and accepted in 1989. Whilst he was in Louisiana the company underwent a further merger with another enterprise called Trintoc and became the Petroleum Company of Trinidad and Tobago ("Petrotrin"). Mr Ali's employment was continuous through these various restructuring exercises, but it was well known that they resulted in the manpower needs of the company reducing. There had been previous voluntary redundancy schemes in both Trintopec in 1989 and Trintoc in 1990. According to the evidence of Mr Derrick, the industrial relations manager, which was accepted by the judge, these schemes were well known, as was the fact that no-one had been made redundant who had not volunteered to be.
Mr Ali had returned to the company in May 1994. He was disappointed in his hope to receive promotion as a result of his degree. On 27 November 1994 he wrote a long letter to his Divisional Manager protesting at this lack of promotion and other personal disappointments such as his separation from his wife. He did not conceal the fact that he felt that he had been let down by the company. He sought reassurance in particular because of what he termed the then "level of uncertainty" in the company and its "impending re-structure".
In early October 1995 the further restructuring resulted in the launch of a fresh voluntary redundancy scheme. A standard letter was sent to Mr Ali informing him that he, (a toolpusher in drilling operations) was included in the "target population which the company is seeking to reduce in its efforts to achieve viability through streamlining and a more direct focus on core business." Recipients were "invited to apply to participate" in the scheme, with the company reserving the right to refuse an application. An information booklet describing the scheme was attached. It began by saying that the company had inherited from its two predecessors "an extremely difficult set of financial circumstances" which made it necessary to manage costs. Elsewhere it stated that invitations to participate in the scheme would be sent only to those who had a minimum of five years' service and "whose jobs have become redundant as determined by the company". The total number of employees to whom this invitation was sent was not in evidence, but it was clearly fairly substantial, and it included Mr Derrick, then a senior toolpusher, who elected not to apply and remained in service. Employees receiving the letter were invited to consider the booklet carefully, to consult their managers, and to sign the letter if they wished to take advantage of the scheme. Mr Ali did sign it. The evidence was that no one who did not volunteer was made redundant, as had been the case with the previous schemes. The judge heard oral evidence at the trial. He did not accept Mr Ali's evidence that he was unaware, when he volunteered for this scheme, that his loan would have to be repaid. He found that he knew quite well that he was free either to apply or not to apply, and that he also knew that on the previous occasions no one who did not volunteer had been made redundant. The relevant part of the judge's conclusions is at para 34:
"The decision to terminate was a decision made at the option of the plaintiff, not the defendant, when he decided to apply under the Plan. 1t was the plaintiff's option to go or not. Indeed, Mr Derrick's evidence was that only those persons who accepted the invitation to apply were retrenched. The plaintiff also conceded under cross-examination that he was free to apply or not to. In my judgment, by voluntarily applying for and accepting voluntary separation, the plaintiff rejected the option of continued work for five years and was fully aware of the condition of waiver when he did so. The plaintiff's argument may have been a more realistic one if the plaintiff had refused to apply and the company had then chosen to send him home, or if the company had given him no choice at all."
As the case has now very cogently been argued for Mr Ali by Mr Jonathan Cohen QC the issues of law resolve into two:
(a) is there to be implied into the contract under which Mr Ali accepted the loan a term restricting the company in its freedom to terminate his employment or to demand repayment, and if so what are its terms?
(b) if yes, have the events which occurred triggered the operation of that term so that the obligation to repay no longer stands?
It is not necessary here to rehearse the extensive learning on when the court may properly imply a term into a contract, for it has only recently authoritatively been restated by the Supreme Court in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742. It is enough to reiterate that the process of implying a term into the contract must not become the re-writing of the contract in a way which the court believes to be reasonable, or which the court prefers to the agreement which the parties have negotiated. A term is to be implied only if it is necessary to make the contract work, and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesi, apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, "Oh, of course") and/or (ii) it is necessary to give the contract business efficacy. Usually the outcome of either approach will be the same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by the addition. The fairness or equity of a suggested implied term is an essential but not a sufficient pre-condition for inclusion. And if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement.
The essential implication for which Mr Ali contends is founded upon the fact that the agreement expressly made was for repayment to be waived if he worked for five years after return. Thus he stood to gain a significant benefit by five years further service. But the condition for achieving that benefit could only be accomplished with the co-operation of the company. He could not provide five years further service unless the company permitted him to work if he wished to do so. And this was always obvious, at the time of the making of the agreement. Such a situation is a common occasion for the necessary implication of a term into a contract in order to make it work. A general statement of this kind of situation of necessity was conveniently provided by Cockburn CJ in Stirling v Maitland and Boyd (1864) 5 Best & Smith 840, in terms which were subsequently repeated by Lord Atkin in Southern Foundries (1926) Ltd v...
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