Nigel Anthony Harden Gray Against Braid Logistics (uk) Ltd
| Jurisdiction | Scotland |
| Judge | Lord Bannatyne |
| Neutral Citation | [2017] CSOH 44 |
| Docket Number | CA230/15 |
| Published date | 15 March 2017 |
| Court | Court of Session |
| Date | 15 March 2017 |
OUTER HOUSE, COURT OF SESSION
[2017] CSOH 44
CA230/15
OPINION OF LORD BANNATYNE
In the cause
NIGEL ANTHONY HARDEN GRAY
Pursuer
against
BRAID LOGISTICS (UK) LTD
Defenders
Pursuer: Sandison QC; Brodies LLP
Defenders: R Dunlop QC; CMS Cameron McKenna LLP
15 March 2017
Introduction
[1] This matter came before the commercial court as a Debate at the instance of the defenders, in which the defenders sought dismissal of the action in terms of their first two pleas in law.
[2] In the action the pursuer sought declarator that a purported decision of a Mr Shane Watson dated 26 April 2013 to dismiss the pursuer as managing director of the defenders had no lawful effect in relation to the pursuer’s employment as managing director of the defenders and production and reduction of the said decision.
The Issues
[3] 1. Whether the action was competent, standing the contended failure of the pursuer to exercise rights of appeal said to be provided in his contract of employment?
2. Whether the action was relevant given the contended for implied and express ratification by the defenders of the decision to dismiss?
General Background
[4] By a written contract of employment dated 15 December 2006 between the pursuer and the defenders, the pursuer was employed as the managing director of the defenders. The defenders are a wholly owned subsidiary of a company now known as Braid Group (Holdings) Ltd (“the parent company”).
The Contract of Employment
[5] The terms of the contract of employment of the pursuer with the defenders, so far as material for the purposes of the present proceedings, are as follows:
[6] Clause 13.1 of the contract deals with termination by way of immediate dismissal. It provides that the employer (the defenders) may terminate the contract of employment without notice or pay in lieu of notice if the pursuer:
“(a) commits a material breach of the terms and conditions of this agreement or repeats or continues (after a written warning) any other breach of such terms and conditions;
(b) commits any act of gross misconduct or is guilty of any conduct which may, in the reasonable opinion of the Board, bring any Group Company into disrepute or which prejudicially affects the interests of any Group Company, whether or not the conduct occurs during or in the context of the Executive’s Employment…”
[7] The term “Board” is defined in the definition Clause 1.1 as meaning:
“The board of directors of the Parent Company from time to time and includes any committee of the Board duly appointed by it.”
[8] Clause 13.3 provides respecting suspension:
“In order to investigate a complaint against the Executive of misconduct the Company [the defenders] may suspend the Executive on full pay for as long as may be necessary to carry out a proper investigation and hold any appropriate disciplinary hearing.”
[9] Later in the contract, after a number of provisions relating to the obligations of the pursuer during and after employment one finds Clause 16. It is in these terms:
“16. Disciplinary and Grievance Procedure
16.1 There are no specific disciplinary rules or procedures applicable to the Executive. Any matters concerning the executive’s unsatisfactory conduct or performance will be dealt with by the Chairman of the Company. An appeal against any disciplinary decision should be made by the Executive in writing to the Board, whose decision will be final.
16.2 If the Executive has any grievance relating to his Employment (other than one relating to a disciplinary decision) he should refer such grievance to the Chairman of the Board and if the grievance is not resolved by discussion with him it will be referred for resolution to the Board, whose decision shall be final.”
[10] The chairman of the defenders at the time of the events averred in the Summons was the pursuer.
The Events Surround the Challenged Decision
[11] It appears that for some time the affairs of the group of companies including the defenders of which the parent company is the ultimate parent have become the subject of dispute amongst the shareholders and directors of the parent company. Three members of the board of directors of the parent company are: Allan Leddra, Shane Watson and Andrew Watson. The pursuer is also a director of the parent company: It is averred by the pursuer that:
“In terms of clause 13.7 of the contract between the parties, if the pursuer’s employment as Managing Director of the defender was terminated inter alia in circumstances where the Board of Group [the parent company] reasonably considered that he had committed an act of gross misconduct, he might (subject to compliance with various other provisions of the Articles of Association of Group and of the Shareholders’ Agreement) be requested by the defender inter alia to resign all and any offices which he might continue to hold as a director of any company within the group of companies of which Group is the parent, and further provision was made for effecting such resignation without his co-operation should he refuse to provide it. The significance of such forced resignation would be that, in terms of Article 6.8.1 of the Articles of Association of Group, the pursuer would be deemed to have served a Deemed Transfer Notice constituting the Board of Group his agent for the sale of all of the shares in Group in which he is interested, either to Group itself or to its other shareholders. Because of the circumstances in which such forced resignation would have occurred, he would further be liable to treated for the purposes of the said Articles of Association as a ‘Bad Leaver’, in consequence of which the price that would be paid for those shares would be substantially lower than the fair price of those shares.” (see: Article 5 of condescendence).
Against that background it is averred by the pursuer that:
“Mr Leddra and the Messrs. Watson conceived and attempted to implement a scheme to achieve the apparent termination of the pursuer’s employment as Managing Director of the defender in circumstances which would enable them, through their control of the Board of Group, to seek to characterise him as a ‘Bad Leaver’ within the meaning of the Articles of Association of Group, and to obtain for themselves the very substantial financial benefits of having the shares in Group in which the pursuer is interested acquired from him at a price far below their fair value.” (see: Article 6 of condescendence)
Thereafter it is averred this scheme was implemented by an allegation by Leddra and Andrew Watson against the pursuer in connection with the misuse of a customer’s expense account.
[12] At a meeting of the Board of Directors of the parent company on 25 January 2013, a majority of that Board resolved to appoint a committee of directors, namely: Mr Andrew Watson, Mr Shane Watson and Mr Leddra, to investigate said allegation of misconduct. The results of that committee’s enquiries were reported to a meeting of the parent company on 20 March 2013. The pursuer avers that at that meeting by their own votes and for the first time Messrs Watson and Mr Leddra appointed themselves as members of the Board of Directors of the defenders.
[13] It is thereafter averred by the pursuer that on 21 March 2013 Mr Shane Watson as a member of the Board of the defenders, wrote to the pursuer and stated: (a) that he was going to carry out an investigation into the pursuer’s conduct and decide in the light of such material as was gathered whether there was satisfactory evidence on which the matter should be taken further and, (b) that the pursuer was suspended from his position as managing director of the defenders forthwith. It is further averred that Messrs Watson further proposed that the conduct of any disciplinary proceedings which Mr Shane Watson deemed appropriate was to be placed in the hands of Mr Andrew Watson and that:
“None of those actions or proposals had been authorised by the Board of the defender.”
[14] The pursuer protested these actions. Thereafter it is averred that when another employee subject to the investigations claimed that Mr Leddra and Mr Andrew Watson were themselves complicit in the misuse of the customer’s account in question, the majority of the Board of the parent company decided, at a meeting on 4 April 2013 to deal with that situation by simply reversing the roles of Messrs Watson as originally envisaged, so that Mr Andrew Watson would consider the evidence, including a witness statement from himself, and decide whether and against whom to instigate any disciplinary processes, and Mr Shane Watson would conduct any first instance disciplinary hearings that might be required. Mr Andrew Watson then purported to decide that disciplinary proceedings should be instigated against the pursuer and others. Mr Shane Watson then purported to conduct the ensuing disciplinary hearings and by letter of 26 April his purported decision to dismiss the pursuer from his position as managing director of the defenders was intimated to the pursuer. All of these events took place under protest from the pursuer.
[15] Said letter of dismissal was written by Mr Shane Watson, as a director of the defenders and intimated what is described in the Summons as a purported decision that the pursuer was dismissed from his employment as managing director of the defenders, pursuant to Clause 13.1(a) of the contract of employment on the grounds of either or both of gross misconduct or conduct which might bring the defenders into disrepute or prejudicially affect its interests or the interests of any group company. The letter is long and detailed setting out the materials upon which that conclusion was reached and the reasons for reaching that conclusion. However, for present purposes it is unnecessary to rehearse that detail. In its penultimate paragraph the letter stated:
“You have the right to appeal my decision to summarily dismiss you. If you wish to invoke your...
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Tan Cheng Han, The Law of Agency
...the courts to look to English law for inspiration. The Scottish courts often do so, see, for example, Gray v Braid Logistics (UK) Ltd ([2017] CSOH 44), in which Lord Bannatyne developed the Scots law of ratification by reference to Owners of the Ship “Borvigilant” v Owners of the Ship “Romi......