[2011] UKPC 42
Privy Council Appeal No 0003 of 2011
JUDGMENT
Saint
Aubin Limitée (Appellant)
v
Alain Jean François Doger de Spéville (Respondent)
From the Supreme Court of Mauritius
before
Lord Phillips
Lord Brown
Lord Mance
Lord Kerr
Lord Wilson
JUDGMENT DELIVERED BY
LORD MANCE
ON
23 NOVEMBER 2011
Heard on 31 October 2011
Appellant
Herve
Duval
(Instructed
by M A Law Solicitors LLP)
Respondent
Maxime
Sauzier SC
(Instructed
by Blake Lapthorn Solicitors)
LORD MANCE:
Introduction
1. The
production of sugar has for long been a staple industry in Mauritius, and it
constituted the traditional focus of the business of the appellant, Saint Aubin
Limitée. The respondent, Mr de Spéville, is an engineer with expertise in the
fields of automobile and agricultural technology, and was by letter dated 23
December 1998 appointed as the appellant’s transport and workshop (or garage)
manager at an initial salary of Rs 38,000 with a thirteenth month in December.
It was agreed that his previous years of employment in the sugar industry with
other employers, commencing in 1975, would be recognised by the appellant (i.e.
for purposes such as the calculation of any severance allowance).
2. Concern
about the prospects for the sugar industry led the appellant to diversify into
the production of rum. From 2002 Mr de Spéville helped to set up a small
distillery, which opened on 3 December 2003 and thereafter he spent part of his
time as the distillery’s effective manager, signing himself as such in correspondence.
He attended to the transport and workshop division from 0530 to 0900, and,
unless there was any further duty to be performed there, he went to the
distillery for the rest of the day, until about 1530.
3. In May
2005, in circumstances to which the Board will return in greater detail, the
appellant told Mr de Spéville that he was to devote himself full time to the
distillery, that its business was to be substantially expanded, and that Mr
Pierre Seneque has been informed that he would be taking over as transport and
workshop manager in Mr de Spéville’s place. Mr de Spéville treated this as a
constructive dismissal of him as transport and workshop manager with effect
from 16 May 2005, and claimed accordingly. He further claimed that there was no
justification for any termination of his employment. These claims were accepted
by the Vice-President of the Industrial Court, Mr Magistrate B. Marie Joseph,
in a judgment dated 14 October 2008 and by the Supreme Court which dismissed an
appeal on 19 May 2010.
4. The
Vice-President awarded an indemnity of three months salary in lieu of notice
and, on the basis that termination was unjustified, a severance allowance at
the punitive rate prescribed by s.36(7) of the Labour Act RL 3/315 of 30
December 1975 as amended. The indemnity amounted to Rs 285,020.13. The punitive
rate of severance allowance fell under s.36(7) to be calculated as a sum equal
to six times of the ordinary severance allowance, which was itself specified by
s.36(3) as half a month’s remuneration for every period of 12 months served.
Taking his previous employment in the sugar industry into account, Mr de
Spéville had served 30 years by May 2005, and so the punitive rate would give
90 (i.e. 6 x ½ x 30) times one month’s remuneration. On this basis severance
allowance at the punitive rate was in fact assessed in the very substantial
amount of Rs 8,550,603.90. The Board need not engage with the detail of the
calculations, which were unchallenged before it, though it notes in passing
that the calculation of average monthly salary in the Industrial Court’s
judgment contains an obvious mathematical error, to Mr de Spéville’s advantage,
and the relationship between that calculation and the monthly figures used to
calculate the indemnity and severance allowance is also unclear.
5. The
present appeal is brought as of right pursuant to formal leave given by the
Supreme Court on 7 June 2010. The grounds of appeal raise, firstly,
jurisdictional and constitutional points relating to the circumstances in which
Mr Magistrate Joseph delivered judgment as Vice-President of the Industrial
Court and, secondly, challenges to the conclusions of both courts below that
the appellant constructively dismissed Mr de Spéville and that termination of
his employment was unjustified within the meaning of s.36(7).
The first set of grounds: jurisdictional and
constitutional points
6. The
jurisdictional and constitutional points can be taken briefly. Mr Duval for the
appellant conceded at the outset of the oral hearing before the Board that the
Board was in a position to re-determine all the issues arising between the
parties on the basis of the transcripts before the Board and the facts found,
and that no advantage would be gained in that respect by a successful
submission that the judgments below should be set aside and the case remitted
for rehearing. He did not press any argument that different facts might be
found, and on that basis he proceeded directly to the second set of grounds
identified in the preceding paragraph. Nevertheless, the Board will take a
little time to indicate why in its view the concession made in relation to the
first set of grounds was appropriate.
7. The
argument on these grounds before the Supreme Court relied upon two provisions:
s.10(8) of the Constitution, whereby any case instituted before a court
determining any civil right or obligation “shall be given a fair hearing within
a reasonable time”, and s.11(1) of the Industrial Court Act 1973, requiring the
VicePresident to “explain to a person against whom judgment has been given that
he has a right to appeal, and the conditions under which the right may be
exercised”. Under s.10(8) it was claimed that the Vice-President was away from
the jurisdiction and had delayed unduly in delivering judgment: the hearing of
the evidence in fact started on 21 February 2007, and the last sitting was on
25 February 2008, when the VicePresident reserved judgment; on 6 June 2008 he
announced that judgment would be given on 21 August 2008, but this was then
postponed four times, in one case with the court clerk noting internally that
the judgment was further reserved because the VicePresident “will not be able
to travel to Mauritius” on the date previously fixed. The parties were
eventually informed by circular of the filing in the registry for their
inspection of a judgment stated to have been “delivered on 14 October 2008” in
their absence. The last matter is the basis of the complaint that s.11(1) of
the Industrial Court Act was not complied with.
8. The
Supreme Court disposed of these points by saying as to the first that there was
“nothing on record to suggest that the Vice-President was away from the
jurisdiction” and that in any event the delay in delivering judgment was “not
uncommonly long”. As to this, the Board observes that the court clerk’s note
itself showed some degree of absence from the jurisdiction, but, more
importantly, that judicial notice might have been taken of the fact that the
Vice-President had been seconded for a period to lead Rwanda’s newly established
Commercial Court, returning to Mauritius only in April 2009 to take up the
Presidency of the Industrial Court. As to the second point, the Supreme Court
noted that, although the judgment was delivered in the absence of the parties,
they were notified promptly of it by circulars and in any event no prejudice
was caused, since both parties lodged appeals well within the prescribed time.
(Mr de Spéville’s appeal was on account of the VicePresident’s failure to award
interest, and was resolved by agreement before the Supreme Court.)
9. Before
the Board, the appellant sought in its case to expand the scope of the first
set of grounds. It pointed to the Courts Act, ss.120 and 124. S.120 provides:
“Except with the permission of the Chief Justice, no
Magistrate shall, with or without remuneration, hold any office other than that
of the Magistrate and perform any duties other than those relating to his
office.”
S.124 provides that the Chief Justice may direct
another Magistrate to replace any Magistrate incapable of acting for any
reason. In the light of these sections and Mr Joseph’s Rwandan appointment, the
appellant’s case suggests that “these conditions went to the root of [the
Vice-President’s] jurisdiction”, and that the Supreme Court’s failure to enquire
into them resulted in the appellant “entertaining doubts” as to whether the
Vice-President was empowered by law to deliver judgment as he did on 14 October
2008.
10. Since
no points on ss.120 and 124 were taken before the Supreme Court, it is not surprising
that that court did not enquire into them. But, in any event, the points are
self-evidently bad. The assumption, in the absence of any other evidence, must
be that every step necessary was taken for the proper secondment of the
Vice-President to sit in Rwanda: omnia rita acta esse praesumuntur. The
respondent’s case in fact states that the Vice-President was on leave without
pay and that he had had, as one would expect, the Chief Justice’s express
authorisation to sit in Rwanda, as well as to return and deliver judgments in
cases he had heard before leaving for Rwanda. If the Supreme Court had taken
judicial notice of the Vice-President’s secondment abroad, it could have been
expected to take judicial notice of such facts.
11. The
appellant’s case under the Constitution has also expanded. Reference is now
made to s.10(9) of the Constitution, providing that:
“Except with the agreement of all the parties, all
proceedings of every court …., including the announcement of the decision of
the court …. shall be held in public.”
The appellant acknowledges that it is established law,
both in Mauritius and in the European Court of Human Rights in Pretto v Italy
(App. No. 7984/77) [1983] ECHR 7984/77, that a practice of informing the
parties by circular that judgment had been filed for inspection in the registry
does not offend such a provision. But it argues that this practice is excluded
by the special features of the s.11 of the Industrial Court Act, which requires
the magistrate to explain to the losing party its right of appeal. The
appellant states that the practice actually followed is to hold an oral
hearing, at which the magistrate draws attention not only to only s.11, but
also to ss.12 and 13 of the same Act (which permit an alternative method of challenge,
by way of review by the Chief Justice or a judge deputed by him – a process
said to offer a losing party the advantage of an unfettered review of both fact
and law).
12. It may
well be that the requirement in s.11 could be satisfied consistently with the
practice of filing judgments for inspection in the registry, by including with
the judgment a suitably worded explanation of the existence of and conditions
attaching to a right of appeal. Be that as it may, the Supreme Court was
clearly correct to regard any breach of s.11 as well as any (if any) breach of
s.10(8) of the Constitution as quite irrelevant, when each party knew of and
utilised its right of appeal in due time.
To set aside an otherwise unimpeachable judgment, merely because of such
a breach, would be wholly inappropriate.
13. As to
its second point, the appellant submitted, with justification, before the
Supreme Court that, if delay was undue, the fact that it regularly occurred was
and is no answer to a complaint of breach of s.10(8) of the Constitution. The
appellant sought to buttress this by suggesting that the Vice-President’s
judgment contained errors and was so drawn as to give cause to consider that
“the many other impressions to which Mr Magistrate Joseph must have been exposed
in his new functions in a foreign country have deprived him of the quietude he
required properly to analyse the facts”.
14. It is,
however, no basis for setting aside a judgment that too long has been taken to
deliver it. Before any question of disturbing it arises, the judgment needs, at
the least, to be examined on its merits to see whether there is a real prospect
that the delay has impaired the judge’s ability to arrive at a fair conclusion.
That is no doubt what the appellant appreciated by its imaginative references
to “other impressions” to which the Vice-President may have been exposed in
Rwanda. But these references too find no support in the Vice-President’s
judgment, which is impressively thorough and well-reasoned on both fact and
law. The only specific criticism which is made of it relates to a single
sentence in which the Vice-President stated that Mr de Spéville was “employed
continuously as Transport/Workshop Manager until 2/5/05 when he was formally
put in the position of Manager of the distillery”. This, it is suggested, overlooks the fact
that Mr de Spéville had helped set up the distillery and acted as its manager.
But it is clear that the Vice-President had not overlooked these matters. He
referred to them fully in his earlier account of the agreed facts and evidence
and said later that it was undisputed that Mr de Spéville was “originally
employed as Transport/Workshop Manager and was called upon to help in the
setting up of a distillery, which he agreed to do”, and that the fact that he
had “readily helped to set up the distillery” did not entitle the appellant to
remove him “from his substantive [job as] Transport/Workshop Manager”.
15. It
follows that there was nothing in the first set of grounds relating to
jurisdictional and constitutional points.
The second set of grounds: was there a constructive
and unjustified dismissal?
16. In
order to examine these grounds, the Board starts with some further facts.
First, no criticism was or has ever been made of Mr de Spéville’s stewardship
of the appellant’s transport and workshop division. On the contrary, an
independent report dated 18 February 2003 concluded that the “Workshop and
Transport division is clearly under control, and the technical and
Administrative aspect is well run” under his supervision. As from 1 April 2004,
he was given first a special monthly allowance and then a monthly salary
increase of Rs 7,225.
17. On 2
May 2005 Mr de Spéville returned from two weeks leave abroad, to be handed a
letter dated 27 April 2005 by the appellant’s director, Mr J M Patrick
Guimbeau. In the letter Mr Guimbeau announced that the appellant intended
substantially to expand its rum business, in volume and product type, and that
it had decided (nous avons décidé) to make Mr de Spéville responsible full time
for the distillery and to free him from responsibility (de te libérer de ta
responsibilité) for the garage. The letter concluded by saying that the
distillery was set to become an important department in the group, and that “il
y a beaucoup de travail en perspective et nous sommes confiants que tu peux
mener à bien ces défis”. In the same meeting Mr Guimbeau also said that Mr
Seneque had been told that he would be replacing Mr de Spéville as transport
and workshop manager.
18. Mr de
Spéville did not agree to the proposed change in his employment. A suggestion
that he agreed to it in the meeting was not accepted by the Vice-President, who
pointed out that the suggestion was only made at trial. Mr de Spéville was, on the contrary, very
upset by the proposed change, so much so that he saw a doctor on the next day,
complaining of extreme anxiety and sleeplessness due to the issue. He remained
off work, but wrote to the appellant on 6 May 2005, pointing out that he had
always been employed as transport and workshop manager, in an area in which his
expertise lay. He said that it was inconceivable “d’être d’un jour au lendemain
demis de mes fonctions premières”, asked what would become of his current
benefits and requested the appellant to review its decision. There was no
answer to this letter, but on 16 May 2005, after Mr de Spéville’s return to
work, Mr Chelin, the appellant’s operations manager to whom all the prior
correspondence had been copied, confirmed to him the contents of Mr Guimbeau’s letter
of 27 April 2005. Mr de Spéville wrote on the same day recording the course of
events and accepting the appellant’s stance as constructively dismissing him.
He duly returned the keys of his car, his cellphone and laptop.
19. The
principles governing constructive dismissal and unjustified termination are not
in dispute. A constructive dismissal occurs if an employer imposes on an
employee unilaterally, that is without the employee’s consent, a substantial
modification of the original contract conditions: Adamas Limited v Cheung
[2011] UKPC 32. The employee is entitled, though not bound, to treat such a
change so imposed as a constructive dismissal. If he does, as Mr de Spéville
did, he will be entitled to damages in lieu of notice and severance pay.
20. It is a
separate and different question whether severance pay should be calculated at
the ordinary or the punitive rate. Under s.36(7) this depends upon whether
termination of the employment was unjustified. That must be judged
independently of whether the employer went about it in the wrong way, for
example by constructively or summarily dismissing the employee without due
contractual cause. Termination may be “unjustified” in terms of the statute
even if due contractual notice is given. Conversely, it may be “justified” even
if due contractual notice is not given. The protection against unjustified
dismissal given by the statute is a type of protection against unfair
dismissal. As the Supreme Court said in Cayeux Ltd v de Maroussem 1974 MR 166,
170 under the predecessor legislation: “the former common law right of the
employer to terminate unilaterally and without cause the employment of his
worker has ceased to exist”.
21. In
Harel Frères Ltd v Veerasamy 1968 MR 218, in a passage quoted by the Board in
Mauvilac Industries Ltd v Mohit Ragoobeer [2007] UKPC 43, the Supreme Court
held under the predecessor legislation that termination would only be
unjustified “where the employer has no valid reason at all to discontinue
employing a worker”; and that, in circumstances where an employer had failed to
prove misconduct in the form of sabotage, the magistrate ought to have gone on
to consider whether the employees’ actions had been suspicious and had,
therefore, given the employer a valid reason for terminating their employment
(albeit subject to payment of ordinary severance allowance, and presumably also
due contractual notice). In Cayeux Ltd v de Maroussem 1974 MR 166, the Supreme
Court applied the approach indicated in Harel Frères Ltd v Veerasamy in a context
where the employer company had lost two of its three contracts with major
petrol companies for servicing, maintenance and repair work. As a result of
this loss, the company had no longer any work or need for one of the two
assistants who had previously worked on such contracts. The claimant, one of
such assistants, was retained on full pay, but was expected to sit in an empty
office without work and was, for good measure, rebuked for absenting himself
from work when he went to consult his legal adviser. With evident
justification, he treated this change in his conditions as a constructive
dismissal. However, the Supreme Court concluded that termination as such was
justified. The employer’s operational requirements had changed, and it had no
more work for the employee. It had a valid reason to put an end to the contract
of employment on notice and payment of severance allowance at the ordinary rate
(p.170). The employee was entitled (in effect) to no more than he would have
received had the employer taken that course.
22. In the
present case, the Vice-President held that what occurred involved “a blatant
modification of the essential conditions of [Mr de Spéville’s] employment”. The
positions of transport and workshop manager and distillery manager were “not
similar inasmuch as the nature of the work is different and they involve
different duties and responsibilities”.
The change had never been discussed beforehand with Mr de Spéville and
was a unilateral decision imposed on him overnight, which he was entitled to
treat as a constructive dismissal, as he did (in fact after the decision had
been reiterated) by his letter dated 16 May 2005.
23. As to
whether termination was unjustified, the appellant argued, in reliance on the
case of Cayeux Ltd v de Maroussem, that, in view of its need to diversify and
to develop the rum side of its business, it would be better and more efficient
if Mr de Spéville worked full time in the distillery. But, the Vice-President
held:
“the fact remains that all these reasons do not
pertain to the reorganisation of the particular garage of which [Mr de
Spéville] was in charge or the whole enterprise of which it formed part. In
fact, the distillery was a new enterprise which the defendant believed, as it
was entitled to, it could engage in view of the difficulties of the sugar
industries that were looming ahead.”
24. In the
Supreme Court, it was conceded that there had been “a major modification of [Mr
de Spéville’s] contract of employment”, but reliance was again placed on Cayeux
v de Maroussem, to argue that the modification was “in the context of a
reorganisation of the activities of the sugar industry and of Saint Aubin Ltée
and is therefore justified”. The Supreme Court accepted the principles stated
in Cayeux v de Maroussem, but it too rejected the argument on the facts. It
noted that
“the post of transport and workshop manager and for
that matter the garage did not cease to be part of the activities of Saint
Aubin Ltée.”
However, it added:
“Further, apart from the assertions of Mr Guimbeau,
all the evidence pointed to the fact that the distillery was still at a very
preliminary stage. It can therefore be hardly said that the better interests of
Saint Aubin Ltée required that the contract of employment of Mr de Spéville be
substantially modified.”
25. Before
the Board, Mr Duval sought to revive the appellant’s case that the proposed
change did not involve any or any substantial modification or justify Mr de
Spéville in treating himself as constructively dismissed. In the light of the
findings of fact made by the Vice-President, and for the reasons he gave and
which the Supreme Court endorsed, the Board cannot accept this submission. The
change clearly constituted a substantial modification, and it was announced
without prior warning or discussion on 2 May 2005 and reiterated on 16 May 2005
in a manner which made it clear that it was a fait accompli as far as the
appellant was concerned. Mr de Spéville was under no obligation to give the
appellant any further opportunity to rethink its position, and was entitled to
treat himself as having been constructively dismissed, as he did by his letter
dated 16 May 2005.
26. As to
the issue of justification for termination, the Board considers that the
Supreme Court went too far in the second limb to its reasoning, set out in the
second passage quoted in paragraph 24 above. If the appellant had determined to
do away with its transport and workshop division (e.g. by contracting out the
relevant activities) or if the position of manager of that division had for
some other reason been made or become redundant, the court should not second
guess the wisdom of the relevant commercial decisions or course of events
leading to that result. Equally, here, it was not for the court to judge
whether the appellant was right to consider that its economic interests would
be better served overall if it could arrange for Mr de Spéville to become
distillery manager full time. The appellant may well have been right in its
judgment that it (and indeed Mr de Spéville) would have flourished, if only Mr
de Spéville had taken over full time as distillery manager. But that is not the
point.
27. The
appellant had engaged Mr de Spéville contractually as its transport and workshop
manager. The relevant question is whether it had any valid reason to terminate
that employment. The post remained unchanged, with as far as appears precisely
the same needs, and Mr de Spéville was to be replaced in it. There is also no
suggestion that Mr de Spéville’s ability or suitability to occupy the post had
in any way changed.
28. The
appellant’s broader economic interests and wishes are irrelevant to the
question whether there was any valid reason to terminate Mr de Spéville’s
employment and to replace him as transport and workshop manager. Even if the
benefits and conditions attaching to the full-time post of distillery manager
would have been as good as, or the long-term prospects even better than, those
as transport and workshop manager, no-one is obliged to have glory thrust upon
them, and Mr de Spéville was entitled to prefer to retain his familiar
contractual post. The appellant had no
right to assume that he would give up, still less to insist upon him giving up,
that post, and, once he declined that option, no reason has been shown for
replacing him in it - except that Mr Guimbeau may already have foreclosed that
possibility by nominating Mr Seneque to replace Mr de Spéville even before
speaking to Mr de Spéville on 2 May 2005.
29. For
these reasons, the Board considers that the Vice-President and the Supreme
Court reached the correct conclusions on the facts of this case as found by the
former. This appeal will therefore be dismissed. The appellant will pay the
respondent’s costs, unless good cause to the contrary is shown to the Board in
writing by submissions lodged within 14 days of the issue of this judgment.
