Injunction refused where applicant failed to show strong case for remaining employed after termination.

Neutral Citation: [2014] IEHC 335

THE HIGH COURT

CHANCERY

[2014 No. 4440 P]

BETWEEN

OWEN HUGHES

APPLICANT

AND

MONGODB LIMITED

RESPONDENT

JUDGMENT of Mr. Justice Keane delivered on the 6th June 2014

Introduction

1. This is an application for a number of injunctions arising from the termination of the plaintiff’s employment by the defendant on the

8th May 2014. The applicant issued proceedings on the 14th May 2014 in which he seeks a declaration that he remains employed by

the defendant; various injunctions requiring the respondent to acknowledge and maintain the position as such; and damages for

breach of contract, breach of duty, breach of the plaintiff’s constitutional right to fair procedures, and the intentional infliction of

emotional suffering. The relevant injunctions are now sought as interlocutory relief in an application brought by notice of motion also

issued on the 14th May 2014. The Court heard the application on the 28th May 2014.

Background

2. The applicant commenced employment with the respondent in September 2013, pursuant to the terms of a letter of offer dated the

3rd July 2013, to which the applicant signed his acceptance on the 6th July 2013. His position was that of technical director for the

respondent’s operations in Europe, the Middle East and Africa (“EMEA”) in the company’s Ireland office. The respondent is a start-up

technology company based in California with 30 employees in its Ireland office and a total of 55 employees based in offices

throughout the EMEA.

3. The letter of offer stated that a full contract of employment would be presented to the applicant on acceptance of the offer, but

that did not occur. The letter itself was quite detailed. It set out various terms of the employment contract between the parties,

including a term that the applicant’s employment would be subject to a six-month probationary period, and another term that the

notice period related to that employment would be one month for either party, with the respondent reserving the right to furnish pay

in lieu of notice. The letter does not refer to, or describe, any disciplinary process applicable to the plaintiff in the course of his

employment.

4. On the 8th May 2014, as he was returning from a business trip, the plaintiff was informed on the telephone by his immediate

superior that a decision had been made to terminate his employment. On the same day, the defendant sent a letter to the plaintiff by

e-mail confirming that his employment was terminated and that the last day of his employment with the defendant was to be that

day, the 8th May 2014. The letter acknowledged the plaintiff’s entitlement to one month’s prior notice of termination under his

employment contract, for which one month’s salary was to be paid in lieu. The letter stated that the defendant would provide the

plaintiff with a standard reference.

5. On the 9th May 2014, the plaintiff’s solicitors wrote to the defendant asserting that the termination of the plaintiff’s contract of

employment was a serious breach of his employment law rights and, in particular, his right to fair procedures. It was further alleged to

have been seriously damaging to the plaintiff’s good name.

6. The defendant’s solicitors replied by letter dated the 12th May 2014. They asserted that the plaintiff’s employment was terminated

with notice paid in lieu on the 8th May 2014 in compliance with his terms and conditions of employment. The letter goes on to state

that the plaintiff’s employment had been terminated because the defendant felt that the plaintiff was not a good fit for the company.

It further states that the plaintiff had not been dismissed by reason of being found guilty of any misconduct or poor performance.

7. The plaintiff’s solicitors wrote in response on the 13th May 2014, disputing the defendant’s position that the termination of the

plaintiff’ s contract of employment was a no-fault dismissal. They referred to a number of matters that had been discussed in the

telephone call between the plaintiff and his immediate manager on the 8th May 2014, which they stated were clearly “performance

related issues.” They appeared to contrast this with the defendant’s assertion that the plaintiff was dismissed because he was not a

“good fit” for the company. The letter noted that the plaintiff had not been placed on a performance improvement plan; nor provided

with any support or mentoring to address the alleged performance issues; nor made subject to any disciplinary procedure in relation to

those issues. The claim was repeated that the manner of the plaintiff’s dismissal was hugely damaging to his good name and

reputation.

8. The defendant’s solicitors wrote once more on the 14th May 2014. They stated that they were at a loss to understand why the

plaintiff’s solicitors would wish to characterise the plaintiff’s dismissal as being by reason of poor performance. They continued that, if

the plaintiff’s concern was that any member of the senior management of the defendant was explaining that the plaintiff had been

dismissed for poor performance, they could assure him that that was not the case. They further stated that, in addition to a standard

written reference, the defendant was willing to provide the plaintiff with an undertaking to the effect that it would remind senior

management that the plaintiff was dismissed on a no-fault basis and not by reason of poor performance or misconduct and that no

one should state otherwise to any third party.

9. As already noted above, the plaintiff issued proceedings on the same date.

The test

10. The plaintiff accepts – correctly, in my view – that the test for an employment injunction of the kind at issue is that set out by

the Supreme Court (per Fennelly J.) in Maha Lingam v Health Service Executive [2006] 17 E.L.R. 137, whereby it is necessary for the

applicant to show at least that he has a strong case and that he is likely to succeed at the hearing of the action.

11. Quite apart from setting the bar for the present application, the decision of the Supreme Court in Maha Lingam also identifies

certain other discrete obstacles that a person in the position of the present plaintiff must surmount in order to succeed. Fennelly J.

described one of them in the following terms (at pp. 140-1):

“[I]n particular, the courts have been slow to grant interlocutory injunctions to enforce contracts of employment. None of

this is to deny that there had been developments in the law in recent years and it is necessary to refer very briefly to the

nature of these developments. The first is that, in this jurisdiction the development can be traced to the judgment of

Costello J. in a case of Fennelly v Assiuanazioni Generali (1985) 3 I.L.T.R. 73 in which an injunction was granted directing

an employer to continue payment to the plaintiff, in that case pending the hearing of the action, and that type of

jurisdiction was exercised in a number of subsequent cases. It is fair to say however, that there is a very strong trend in

those cases to the effect that where a person has a clear right to either a particular period of notice or a reasonable

notice or has a fixed period of employment, a summary dismissal or a dismissal without notice or without any adequate

notice is a first step in establishing the ground for an injunction in those sort of cases.”

12. Fennelly J. had already noted earlier in his judgment in Maha Lingam (at p. 140 of the report) that, according to the ordinary law

of employment, a contract of employment can be terminated by an employer on the giving of reasonable notice of termination and

that, according to the traditional law at any rate, though perhaps modified to some extent in light of modern developments, according

to the traditional interpretation, the employer was entitled to give notice so long as he complied with the contractual obligation of

reasonable notice whether he had good reason or bad for doing it.

13. Fennelly J. went on (at page 141 of the report):

“A second element in cases of that sort is that, where a dismissal is by reason of an allegation of misconduct by the

employee, the courts have in a number of cases at any rate imported an obligation to comply with the rules of natural

justice and give fair notice and a fair opportunity to reply. This does not apply in the present case either. The defendant

is not making any allegation of improper conduct so it is not the case and it is not contended that the results of natural

justice apply.”

14. In this case, the plaintiff received the payment in lieu of notice to which he was entitled under his contract of employment. That

provision is evidenced by the defendant’s letter of offer, dated the 3rd July 2013, which the plaintiff signed on the 6th July 2013. It is

perhaps important to emphasise, as Laffoy J. did in Burke v Independent Colleges Ltd [2010] IEHC 412, that I am endeavouring to

extrapolate the essential elements only of the plaintiff’s claim and of the defendant’s answer to it from the affidavits that have been

exchanged in the context of the present application and from the written and oral submissions made on behalf of the parties. It is

perhaps also prudent to follow the practice of Laffoy J. by entering a caveat at this stage by quoting the following passage from the

speech of Lord Diplock in American Cyanamid v Ethicon Ltd [1975] A.C. 396, which was quoted by the Supreme Court with approval

in Campus Oil v Minister for Industry (No. 2) [1983] I.R. 88:

“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to

facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for

detailed argument and mature considerations. These are matters to be dealt with at the trial.”

15. The plaintiff appears to be making the case that modern developments have modified the law to the extent that the defendant

here was not entitled to give notice in accordance with the relevant term of the contract between the parties if his reason for doing

so was bad. The next plank of the plaintiff’s case is that the “no fault” reason given for terminating the contract of employment – i.e.

bad fit between the plaintiff and defendant – must be rejected in favour of the plaintiff’s assertion that it was a “poor performance”,

and not a “no fault”, termination. Next, the plaintiff contends that “poor performance” was a bad reason for termination because a

term must be implied into the contract of employment at issue - in the absence of any such express term - to the effect that any

termination of the plaintiff’s contract of employment based on poor performance (quite apart from improper conduct) can only occur

subject to the operation of a disciplinary process that applies all of the relevant rules of fair procedures and of natural justice.

16. As a preliminary argument on behalf of the plaintiff, it appears to be suggested that the Court should consider a “diluted

approach” to the test in Maha Lingam based on the decision of Hogan J. in Wallace v Irish Aviation Authority [2012] IEHC 178. In that

case, the applicant sought an interlocutory injunction to restrain her suspension on full pay by her employer pending the

determination of her appeal against a decision to dismiss her. In dealing with the proposition that the court will but rarely grant

exceptional relief amounting to the specific performance of an employment contract, Hogan J stated:

“It is, however, also necessary to look at the matter from the standpoint of [the] plaintiff. If an injunction were to be

refused by reason of the special factors that have just been mentioned, it would mean that she was denied the benefit of

a key contractual protection just at the time when such protection was vitally necessary to protect her interests. Can it

be the case that under such circumstances the court must shut its eyes to the underlying merits of the claim and

helplessly wash its hands of the claim for interlocutory relief simply because to do so would involve the grant of

mandatory relief at the interlocutory stage or because this would involve the specific enforcement of a contract of

employment?”

17. A number of observations must be made concerning the passage just quoted. First, in Wallace, Hogan J. was presented with what

he described as a net issue of construction concerning the express use of the term “[d]isciplinary action will not be taken pending the

outcome of the appeal” in a collective agreement that it was agreed by the parties governed the employment relationship between

them. It was that particular net issue of construction to which Hogan J. felt it would be wrong for the court to shut its eyes, in

circumstances where the court was satisfied that the plaintiff had very strong grounds for the case that she was making on that

point. Second, in that context it is not at all clear to me that the effect of the decision in Wallace is to dilute the test in Maha

Lingam in any way, nor of course could it do so as a matter of stare decisis. I do not understand Maha Lingam as authority for the

proposition that the court should inflexibly refuse (or “wash its hands of”) any claim for a mandatory injunction to specifically enforce

a contract of employment. Rather, I view is as authority for the principle that such mandatory injunctions are exceptional and that

applicants must satisfy a strong or clear case test, instead of the prima facie case test normally applicable as part of the Campus Oil

principles.

18. It is submitted on behalf of the plaintiff that he has “a key contractual entitlement to a fair and bona fide consideration of any

performance issues the defendant may have had with him prior to any termination of his employment on grounds of performance.” It

seems to me that the Court would have to be satisfied that the plaintiff has a strong basis in fact or law for that proposition before

the interlocutory relief that he is now seeking could be granted.

19. A further fundamental plank of the plaintiff’s application is that the termination of his contract of employment was for reasons of

“poor performance”, rather than “bad fit”. The plaintiff has adduced evidence of matters raised with him in the context of a

performance review in February 2014 by his immediate superior and which were raised with him again in response to his request for

reasons for his dismissal during the telephone call on the 8th May 2014. The plaintiff argues that these matters establish that his

dismissal was based on some imputed fault or finding of poor performance rather than on “bad fit” or mutual incompatibility.

20. The proposition that his dismissal was fault based is important to the plaintiff’s case for several reasons. First, it gives him

standing to make the legal argument that the traditional common law position has been reversed such that an employer is no longer

entitled to terminate a contract of employment in accordance with the relevant notice provision if his reason for termination can be

established and can be shown to be bad. Second, it allows him to make the argument that the reason for the termination of his

employment contract was bad, when considered in conjunction with the assertion that there is an implied term in his contract of

employment that any fault based dismissal can only be effected in accordance with a disciplinary procedure conducted in accordance

with the requirements of natural and constitutional justice. Third, it allows him to claim reputational damage arising from his dismissal

(particularly in the context of the balance of convenience, should it arise).

21. The difficulty with the first of the arguments just described is that there does not appear to be any authority for it. Indeed, the

decision of Finlay Geoghegan J. in Bradshaw v Murphy [2014] IEHC 146 provides strong authority to the contrary. In that case, the

plaintiff claimed that he had been dismissed on grounds of misconduct in the face of a requirement for fair procedures. The

defendants opposed the plaintiff’s application for an injunction restraining his dismissal on the discrete ground that they could not be

inhibited, pending the trial of the action, from exercising their common law entitlement to terminate the plaintiff’s employment in

accordance with the applicable contractual provisions concerning reasonable notice, whatever might be the outcome of his claim that

his original dismissal was wrongful. Finlay Geoghegan J. accepted that argument and, having noted the defendants’ undertaking not to

dismiss the plaintiff on grounds of misconduct, refused the plaintiff’s application for an interlocutory injunction restraining his dismissal

pending trial.

22. A problem with the second argument, leaving aside for one moment the potentially vexed question of whether a fixed boundary

can ever be drawn between “mutual incompatibility” and “individual fault” in any area of unsuccessful human interaction, is that the

plaintiff faces the more fundamental difficulty that the defendant does not attempt to stand over the dismissal at issue as fault based

in the smallest degree. Apart from the plaintiff’s partially disputed evidence concerning the substance of his telephone conversation

with his immediate superior on the 8th May 2014, there is no evidence that the defendant, or any of its servants or agents, has

represented to the plaintiff or to any other person whosoever that the plaintiff’s dismissal was fault based. Indeed, the defendant has

adduced evidence that it is willing to provide the plaintiff with a written reference that confirms the defendant’s confidence in the

plaintiff’s abilities, and has confirmed that it will reiterate (in so far as the plaintiff feels it is necessary) to whom it may concern that

his termination did not arise from any fault, misconduct or poor performance on his part.

23. In this respect, the defendant relies on the following passage from the judgment of Clarke J. Carroll v Bus Atha Cliath/Dublin Bus

[2005] 4 I.R. 184 (at 209):

“If the stated reason for seeking to dismiss an employee is an allegation of misconduct then the courts have,

consistently, held that there is an obligation to afford that employee fair procedures in respect of any determination

leading to such a dismissal. That does not alter the fact that an employer may still, if he is contractually free to do so,

dismiss an employee for no reason. It simply means that where an employer is obliged to rely upon stated misconduct for

a dismissal or, where not so obliged chooses to rely upon stated misconduct, the employer concerned is obliged to

conduct the process leading to a determination as to whether there was such misconduct in accordance with many of the

principles of natural justice.”

24. In this case the defendant insists that it has relied on its contractual entitlement to dismiss the plaintiff subject to the

appropriate payment in lieu of notice and that it has not sought, and certainly is not now seeking, to rely on poor performance, much

less misconduct, as the reason for the termination of the plaintiff’s employment contract.

25. Even if it were assumed, for the purpose of argument, that the defendant is (as the plaintiff appears to suggest) being

disingenuous in the reason it gives for the termination of the plaintiff’s employment, I do not believe that there is any authority, and

certainly none has been produced to me, for the proposition that a bad reason that informs, but which is not relied upon to justify,

the termination of an employment contract in accordance with its terms, renders that dismissal wrong in law.

26. In evident reliance upon the proposition that a strong case can be established that the reason relied upon for the plaintiff’s

dismissal was his alleged poor performance, the plaintiff cites the following passage from the judgment of Geoghegan J. (nem. diss.) in

the Supreme Court decision of Sheehy v Ryan [2008] 4 I.R. 258 (at 265):

“The trial judge then said that the position at common law is that an employer is entitled to dismiss an employee for any

reason or no reason on giving reasonable notice. I would slightly qualify that by saying that it does depend on the

contract but in the absence of clear terms to the contrary which are unambiguous and unequivocal, that clearly is the

position.”

27. The plaintiff submits that, once it is accepted that the reason for the plaintiff’s dismissal was his perceived poor performance, a

strong and clear case is also made out that the plaintiff’s contract contains a clear, unambiguous and unequivocal term that he can

only be dismissed for that reason subject to a disciplinary process conducted in accordance with the requirements of natural and

constitutional justice. But there is no express term to that effect in the letter of offer that evidences the plaintiff’s contract of

employment with the defendant. That means that the Court would have to be satisfied that a provision in general terms to that

effect is to be implied, or read into, that contract.

28. In support of that argument, the plaintiff relies upon the decision of the High Court in Naujoks v Institute of Bioresearch [2007]

ELR 25, which, in effect, the plaintiff invokes as authority for the proposition that dismissals based on allegations of poor performance

attract the same requirement for disciplinary procedures conducted in accordance with natural and constitutional justice as dismissals

based on misconduct. However, it seems to me that Naujoks is a decision based very much upon its own facts. The case arose from

the termination of the plaintiff’s contract as Chief Executive Officer (“CEO”) of the defendant company. The terms of the relevant

contract provided for two forms of termination of employment: termination on notice and summary termination. The former could not

occur without six months prior notice in writing. The latter could occur with immediate effect by written notice but only in one of a

limited number of specified circumstances. Those circumstances included breach of the plaintiff’s obligations under the agreement;

failure to discharge his duties properly; incapacity; dishonesty, and so forth.

29. In other words, it was the specific terms of the contract of employment at issue in Naujoks that made “failure to properly

discharge duties” (or, arguably, “poor performance”) directly equivalent to dishonesty (i.e. “misconduct”) in that case, because, in

either event, the plaintiff was deprived of the six months notice in writing of termination of his employment to which he would

otherwise be entitled. Evidence was adduced on behalf of the defendant that the plaintiff’s management style and communications

with staff had led to “serious human resource issues” arising. Laffoy J. concluded (at pp. 33-4):

“It seems to me that it is not far removed from making a judgment that there was a failure on the part of the plaintiff to

properly discharge his duties as CEO, which would entitle the defendants to summarily dismiss the plaintiff, but subject to

affording him fair procedures. On this point, I could put the matter no further than that, having regard to the facts

disclosed in the affidavits before the court, it is not an answer to the plaintiff’s contention that he should have been, but

was not, afforded fair procedures that it is the defendant’s stated position that his contract was not terminated on the

grounds of misconduct.”

30. It seems to me that the decision of the High Court in Naujoks was based very firmly on the draughtsmanship of the contract at

issue whereby “failure to properly discharge duties” was treated with the same gravity – and made subject to the same procedural

consequences - as “dishonesty”, thereby leading to the conclusion that the invocation of the particular form of dismissal under the

relevant term of the employment contract applicable to both circumstances should attract the requirements of fair procedures in

either case. It does not seem to me that the case is authority for the much broader proposition that a dismissal on grounds of

performance is to be treated as equivalent to a dismissal on grounds of misconduct in every case thereby attracting an entitlement to

fair procedures in either case that is to be implied into every contract of employment.

Conclusion

31. For the reasons set out above, I have come to the conclusion that the plaintiff has not made out a case for the grant of an

interlocutory injunction because he has not met the first leg of the test by showing that he has a strong case and is likely to succeed

at the hearing of the action and, for that reason, it is not necessary for the court to go on to consider either the adequacy of

damages or the balance of convenience.

32. The application is refused.