+353 (0) 1 211 8434 - info@aocsolicitors.ie -
AOC Solicitors COVID-19 Hub - Read More

AOC
- News

AOC
- News

High Court Grants Injunction To Employee Owing To Employer’s “Predetermination” Of Investigation

Rory Mason -v- ILTB Limited T/A Gillen Markets and Dermot Browne [2021] IEHC 477

The Plaintiff, Mr Rory Mason, made an application for an interlocutory injunction to restrain his employer, ILTB Limited (“the First Named Defendant/Company”), from terminating his employment. The Second Defendant is a Director of the Company and closely connected to the case.  

Factual Background: The Plaintiff has been employed as the Managing Director and the Company Secretary from January 2016. He is also a Director of the Company because of his shareholding – he invested €235,000 when he joined the Company. He accepted the role of Managing Director for a lesser pay than his expectation because he envisaged that his principal reward was the shareholding. He signed a Shareholders’ Agreement on 19th December 2017, which had provisions regarding good leaver and bad leaver, which directly impacted the transfer of shares held by him through Rorel Limited. The Agreement stipulated that if the Plaintiff was classified as a bad leaver, then the valuation of the shares would be significantly lower than if he was a good leaver.

The Second Defendant, Mr Browne, joined the Company as a Director and Chairman of the Board in Summer of 2020. He is not a shareholder of the Company.

At the hearing, there appeared to be blatant disagreement in relation to the relationship between Board members immediately before the events that gave rise to the Plaintiff’s termination. The Plaintiff alleged that despite his work in the Company being very successful, his work was under threat in the months preceding April 2021 as Mr Gillen and Mr Browne wished to remove him. On 12th March 2021, Mr Browne informed the Plaintiff over a telephone call that the Board felt that the Plaintiff was not the right person to lead the business although there was no evidence produced during the hearing that the decision was made by the Board.

The Court noted that the parties disagreed to the events that occurred between 23rd and 28th April and that it was not for the Court to resolve the areas of dispute in the interlocutory application. It simply had to ensure that the Plaintiff had met the threshold to obtain an injunction.

The Court noted that Mr Browne had a concern arising from a circulated document which showed payment of €14,000 bonus to the Plaintiff. The Plaintiff’s position was that this payment was agreed by the Board and Mr Browne approved the payment which he organised for this to be processed in March 2021. Mr Browne, without discussing this with the Plaintiff or affording him an opportunity to explain, accused the Plaintiff of fraud and theft and indicated that this must be notified to the Central Bank and the Gardai. He further intimated the Plaintiff that his shareholding may be adversely affected as he would be a “bad leaver”.

The Plaintiff sought legal advice and sent a solicitor’s letter by email claiming that the actions amounted to purported summary dismissal. The Defendants’ solicitor on 26th April 2021 replied to this letter stating that the payment made to the Plaintiff was “improper, irregular, unauthorised and unlawful” and that it must be dealt with in a formal manner. The Plaintiff contended that as of the date of the letter, the Defendants had already decided that the Plaintiff’s action was unlawful and that the proposed investigation was not for ascertaining the facts but to validate the decision that was already made by the Company.

Mr Browne circulated the papers to the Board, including the Plaintiff, regarding the meeting scheduled with the proposed agenda to discuss the payment to the Plaintiff. The Plaintiff did not attend the meeting and his lawyers made an ex parte application for interim relief.  It was decided at this meeting that an investigation be conducted into the matter and that the Plaintiff be suspended with pay while such investigation is ongoing. The meeting concluded at 12.18pm and at the very moment the Plaintiff’s solicitor messaged the Defendants’ solicitor advising that an interim order had been granted by the High Court restraining the Board from passing any resolutions about the Plaintiff. This was followed by a phone call to the Defendants’ solicitor and a formal letter from Plaintiff’s solicitor’s office to the Directors of the Company directly, on the direction of the High Court. The Defendants’ solicitors subsequently confirmed that the Defendants had not taken any steps to appoint an investigator or to suspend the Plaintiff, in light of the Court Order. The Court noted that since the Defendants were not under the notice, they cannot be criticised about proceeding with the meeting.

On 4th May, the Defendants’ solicitor wrote to the Plaintiff’s solicitor indicating that an application will be made to the Court on 5th May pursuant to the “liberty to apply” for variation of the interim order to allow the appointment of an external investigator to proceed; allow for Plaintiff’s suspension; allow the Defendant to notify the Central Bank and to allow any neutral investigation into the matter. The Plaintiff’s solicitor opposed, and no application was made on 5th May.

Interlocutory Application: Orderswere sought facilitating the Plaintiff’s return to work and directing the first Defendant to continue to pay the Plaintiff’s salary.  

Discussion and Decision:

Threshold for Interlocutory Injunction – “Strong Case” – The Court referred to Maha Lingham v HSE [2006] 17 ELR 137 and Earley v HSE [2015] IEHC 520 and noted that given that the Plaintiff was seeking a mandatory injunction (to enforce the contract of employment pending the determination of the proceedings), the Plaintiff is required to demonstrate that he has a ‘strong case’ and is likely to be successful at trial but not necessarily that he would be granted an injunction as a remedy at the trial. Ms Justice Butler further indicated that where the central elements of the Plaintiff’s case met the Maha Lingham test, it would not be necessary for the other elements to be subject to the same level of scrutiny.  

The Court referred to the evidence the Plaintiff had adduced and the legal arguments needed to meet the Strong Case threshold and that both are connected to the overall complaint i.e., denial of fair procedures. The Court noted that the Defendants’ Solicitor’s letter of 26th April clearly indicated that the decision in respect of Plaintiff’s actions were already made and that it was clear that the Company was proposing to go through the formality of an investigation only to support a decision which it had already reached. This raised a substantial issue both as to the legality and the purpose of what is now proposed. Secondly, the Court noted that the Defendant had already decided to suspend the Plaintiff as opposed to the Defendant’s legal submission that stated that the decision had not been taken.

Continuance of Investigation pending proceedings – The Defendants relied on the decision of the Supreme Court in Rowland v An Post [2017] 1 IR 355 in this regard and Ms Justice Butler noted this is not a challenge to an ongoing process as in Rowland but to the very legality of establishment of the process in the first place and predetermination of the outcome of the investigation process.  

Ms Justice Butler concluded that the Defendants had not complied with fair procedure. It was also observed that serious concerns about legality of steps taken by the employer cannot be disregarded just because an employer has an entitlement to investigate a matter of legitimate concern and has agreed to follow a “gold standard” investigation in the future. Although Ms Justice Butler agreed that an employer must be able to inquire into the conduct of its employee, the issue would be whether the employer has already reached definitive conclusions and taken definitive decisions on the matter.

Balance of Justice – Ms Justice Butler referred to the Supreme Court’s assessment of the balance of justice in Merck, Sharp and Dohme v. Clonmel Healthcare Limited [2019] IESC 65 and noted that the principal focus of the Court should be to consider how best matters should be arranged as between the parties pending the trial. The Plaintiff’s argument focused on not only the financial loss he would sustain if he was wrongfully dismissed but also the reputational damage of the investigation and notification to the Central Bank. Given the circumstances and the fact that the purported dismissal and the proposed investigation related to a single issue, Ms Justice Butler noted that it would not be possible for the Court to simultaneously restrain the Defendants from the proposed investigation and permit them to pursue another into the same issues.

In relation to the Plaintiff’s return to work, Ms Justice Butler noted that the Defendants highly emphasised the fact that the Plaintiff was not actually suspended. Referring to Halpin v Natural Museum of Ireland [2019] IECA 57, it was held that as an “unsuspended employee” the Plaintiff was entitled to attend his workplace to carry out his duties and the Court ordered that the Company facilitate this return to work.

Takeaway for the Employers: Employers and their solicitors should be very careful not to make any communication indicating an opinion or conclusion about an alleged wrongdoing before an investigation and/or disciplinary process has been conducted. There was a huge emphasis on the fact that the employer’s solicitor’s letter determined that the actions of the plaintiff were at the outset, improper, irregular, unauthorised and unlawful giving a clear indication that the company had come to conclusions without affording the employee a fair chance to put forth his case. It seems that it was this expression of predetermination that resulted in the Plaintiff being able to meet this high threshold of a “strong case”. It also prevented the Company from being able to conduct an investigation into the incident and an order was granted returning the Plaintiff to work pending the trial.

Link  – https://www.courts.ie/acc/alfresco/03296a58-188d-4d83-80b7-57f743db27a6/2021_IEHC_477.pdf/pdf#view=fitH

Authors – Chaitra Girish Mallya & Anne O’Connell

23rd July 2021

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2

www.aocsolicitors.ie

Related Articles