Clarke v American Life Insurance Company

• Jurisdiction: Barbados
• Court: Court of Appeal (Barbados)
• Judge: Simmons, C.J.
• Judgment Date: 02 July 2002
• Neutral Citation: BB 2002 CA 21
• Docket Number: Civil Appeal No.33 of 1998
• Date: 02 July 2002

Court of Appeal

Simmons, C.J.; Chase, J.A.; Williams, J.A.

Civil Appeal No.33 of 1998

Clarke

and

American Life Insurance Company

Appearances:

Mr. Alair Shepherd Q.C., Mr. Adrian King and Ms. Alicia Archer for the appellant.

Sir Harold St. John Q.C., Dr. Trevor Carmichael Q.C. and Mr. Therold Fields for the respondent.

Employment law - Notice — Redundancy under Severance Payments Act, Cap. 355A — Whether in the computation of a severance payment under the Act, the parties were limited to the minimum periods of notice provided for in section 20 of the Act — Whether it was permissible to enlarge the section 20 periods of notice by the application of common law principles of reasonable notice or other legal principles — Finding that owing to the elasticity of the statutory language, in a proper case the statutory minimum period of notice could be enlarged but an enlargement of the period of notice could not be achieved by the importation of common law principles — Finding that the appellant was entitled to more than the statutory minimum period of notice — Appeal allowed.

Simmons, C.J.

1 This appeal concerns the question of the appropriate period of notice to be given to an employee made redundant under the provisions of the Severance Payments Act, Cap. 355 A (“the Act”). The key issues for determination are these: in the computation of a severance payment under the Act are the parties limited to the minimum periods of notice provided for in section 20 of the Act? If the answer is in the negative, then is it permissible to enlarge those statutory periods by the importation of common law principles of reasonable notice applicable in cases of wrongful dismissal or, indeed, by reference to other legal principles.

2 It appears that these issues are coming for adjudication for the first time in this Court. They have come to us as a result of an action which was commenced by the appellant against the respondent (“the company”) in which the appellant claimed damages for wrongful dismissal. The claim was resisted by the company which denied wrongful dismissal and, on the contrary, contended that the appellant had been dismissed from her employment by reason of redundancy.

THE APPELLANT'S WORK HISTORY

3 In May 1962 at age 27, the appellant started her employment with the company. She began as the Secretary/Cashier in the company's small insurance agency. The company then had a staff of four full-time agents, one part-time agent and a General Manager. During the next 25 years, the appellant continued her employment with the company and moved steadily through the ranks of management to become the company's Administrative Manager by 1976.

4 The appellant's mobility within the corporate structure coincided with the company's own growth and development in Barbados and the Eastern Caribbean. For example, in 1966 she was designated “Branch Secretary” and managed the local office on behalf of the Head Office which was based outside of Barbados. The company is a corporation established under the laws of the State of Delaware in the United States of America but is registered in Barbados as an external company under the provisions of the Companies Act, Cap. 308.

5 By 1971 it had become necessary to change the managerial responsibilities because the company was growing and developing rapidly. The Barbados office, under the management of the appellant, assumed responsibility for servicing the company's business operations in the Eastern Caribbean. While maintaining her status as Branch Secretary, the appellant became responsible for six agents in Barbados, fifteen full-time agents in the Eastern Caribbean and sundry part-time agents.

6 Barbados had become the hub of the company's business in the sub-region. The local office dealt with the accounting business of all the offices in the sub-region, taxation, administrative and regulatory insurance matters. The appellant had responsibility for all of these functions. Moreover, she was the company's Principal Representative under the Insurance Act and held a Power of Attorney on its behalf. Budgets, investments and mortgages were also under her management.

7 Although the respondent pleaded that the company fell upon difficult financial times in the early nineteen eighties, by February 1985 it was able to construct an impressive headquarters building at Fontabelle.

8 Commensurate with her increased responsibilities and enhanced corporate status, the appellant's emoluments increased over the years and, in 1987, reflected a reasonable remuneration package.

9 At the behest of the company's Bahamian office in early 1987, changes in the personnel requirements of the Barbados office started to happen. Five employees were severed at first; later another eleven were dismissed for redundancy. It was to be the appellant's turn in November.

10 The regional Vice-President, Mr. Carroll, came to Barbados and met with the appellant. She was told then that there was no longer a need for an Administrative Manager in a re-organised and restructured Barbados office. Two options were put to her. Either she could take early retirement with a lump sum payment and a continuing consultancy with the company or she would be made redundant and paid her full severance pay. There were discussions about her pension but nothing firm was then decided.

DISMISSAL ON NOVEMBER 20, 1987

11 On November 20, 1987, matters came to a head. During the afternoon, the company's Attorney-at-Law handed the appellant a letter dated November 12, 1987 signed by Mr. Carroll. It informed her of her termination and requested that she vacate the premises immediately. She said goodbye to the staff and left with a cheque in the sum of $125,692.60. This comprised $117,692 (severance pay) and $8, 000.60 (salary for November and December 1987). There was no payment made as or towards pension.

12 The letter of termination was as follows:

“Dear Miss Clarke,

I am writing to advise that your position as Administration Manager with American Life Insurance Company will become redundant as from Friday November 20 ^th, 1987 and I should be grateful if you would vacate the premises on that date.

We are offering you your full entitlement to severance pay under law, as well as your legal entitlement to one month's pay in lieu of notice, as well as your accrued holiday pay. You will also be paid your full salary for the month of November, 1987.

You will recall that during our meeting at American Life on the 11th November, 1987 I indicated to you that the Company was prepared, in addition to your legal entitlement as just outlined, to also assign you as my special consultant in the Caribbean Region for a minimum period of two (2) years at a salary of $30,000.00 (Barbadian Dollars) per year, plus expenses, as well as an option to either purchase the company car which you presently use at book value, or to continue the use of the car at our expense.

Additionally, we offered to pay you the sum of $1,000.00 per month for the balance of your life as opposed to your current entitlement of the pension scheme which would only entitle you to approximately $30.00 per month at age sixty.

You considered this not ungenerous offer to be out of hand, indicated that you would not accept it and showed great hostility.

At the beginning of the meeting you had indicated that you wished to record the meeting and I acceded to your request as a means of showing my good faith. You will understand that at this stage, I would find it impossible to re-open this additional offer.

Notwithstanding the approach which you have taken, the Company is still prepared to offer you, in addition to your legal entitlement, a small ex gratia payment, but it must be understood that, as with the previous offer which we made, this is being done on the basis of corporate goodwill and because of your years of service with the organisation and not because the Company is legally required to do so.”

13 The appellant's attorney-at-law replied to that letter on January 11, 1988, challenging the computation of the severance payment, seeking compensation in lieu of notice (which he suggested was 36 months' emoluments), making a claim for loss of pension and seeking general damages including an amount for mental distress. He characterized the appellant's dismissal as “callous and arbitrary”.

14 In the absence of an out-of-court settlement, the appellant filed her action on February 19, 1988.

DECISION AT FIRST INSTANCE

15 At the High Court trial the company elected not to lead any evidence and relied upon the letter of November 20, 1987. The trial judge found that the appellant had been made redundant. He followed the case of Neville Grosvenor v. The Advocate Co. Ltd. (Civil Appeal No.29 of 1991), a decision on wrongful dismissal and held that “the same principles enunciated in that case should apply to a redundancy”. Those principles were that a wrongfully dismissed employee could not be awarded damages both at common law and under the provisions of section 45 of the Severance Payments Act. The awardee had to take the higher of the two calculations made respectively under common law and under the Act. The Grosvenor reasoning led the trial judge to conclude that “the plaintiff having been made redundant and having received 25 months' salary as her severance entitlement cannot claim the same amount again as damages for breach of contract. This would amount to double compensation.” The breach of contract to which the trial judge referred was the failure to give reasonable notice of dismissal or payment in lieu thereof.

16 His Lordship determined that reasonable notice in the appellant's case was 12 months and not 36 as pleaded. The severance payment of $117,692.00 was higher than the common law computation which yielded $65,400.00. In so far as the appellant had already received severance payment on the termination of her employment,...