Appeal No. EAT/387/96

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 30 October 1996

Before
HIS HONOUR JUDGE H J BYRT QC
MR J D DALY
MRS D M PALMER

MR M BARRACLOUGH	APPELLANT

PAPACHRISTIDIS LTD
	RESPONDENT

Transcript of Proceedings

JUDGMENT

PRELIMINARY HEARING
Revised

	APPEARANCES

For the Appellant	APPELLANT IN PERSON	

	JUDGE BYRT QC:  This is a preliminary hearing in the course of an appeal from a decision of an Industrial Tribunal sitting at London  South, promulgated on 23 February 1996.  In that decision, the Tribunal held that the Applicant, now the Appellant, had not been unfairly dismissed.

	The factual background is as follows:  the Respondents are a company owned by a Mr Papachristidis.  There are or were a number of subsidiary companies, one of which was the Victoria Oilfield Development Ltd (hereinafter called VODL).  The Appellant was its managing director.  In 1992, the parent company and its subsidiaries fell into financial difficulties because of the recession.  In consequence, because of budgetary restraints, relationships between Mr Papachristidis and the Appellant became strained.  The latter thought that Mr Papachristidis was not doing enough to support his company.

	In the Summer of 1994, another of the subsidiaries, Victoria Oilfield Developments (UK) Ltd (referred to as VODL (UK)) was engaged in negotiation with BP for what was potentially a lucrative contract.  The Appellant became involved in those negotiations.  He was at that time anticipating his own contract of employment with the Respondents would soon be coming to an end, its termination date being 24 September 1994.  He therefore had begun to look to his future and do what he could to secure it.

	His employment contract had no clause prohibiting him from competing for the clients of the Respondent company or of any other Company within the Group.  So that summer, he decided together with a Mr Priest, the managing director of another subsidiary, to set up a new enterprise of their own with a view to exploiting their combined management talents.  The pair of them then began to canvas covertly the new BP contract and the alliance of financial investors backing the venture in order to secure that contract for themselves.  This only became apparent to Mr Papachristidis on 19 August.  He was reluctant to break his ties with the Appellant or Mr Priest though he was determined to retain the chance of winning the new BP contract for his subsidiary if he could.  So he arranged for his lawyers to draft a letter of agreement which would establish what was expected of the two managing directors, pending the termination of their employment.  The draft included a term which would prohibit them soliciting the clients of his Group.  The Appellant sought legal advice and took the view that the proposed agreement was to be onerous.  He refused to sign.  Mr Papachristidis told the Appellant and Mr Priest that if they did not sign the letter they would be summarily dismissed.  They declined to do so and were accordingly summarily dismissed though salary was paid to each of them up and until 30 September.  The Appellant responded by lodging a claim within the Industrial Tribunal, alleging unfair dismissal.

	The Tribunal found that Mr Papachristidis had a reasonable belief that his  Appellant had acted in a way which was contrary to the fiduciary duties he owed the Respondents.  Further, they found he had a reasonable belief that, by seeking covertly to set up in competition with his employer whilst still employed by him, he had unilaterally breached the fundamental term implied in his contract that his actions would not be calculated to destroy the relationship of trust and confidence which should exist between an employer and employee.  Further, they found that dismissal fell within a range of responses reasonably open to the Respondents on 19 August and so was not unfair.

	The Appellant in argument before us has taken three points raised in his notice of appeal and a fourth which has been suggested to him by an ELLAS adviser.  The latter point was that he was entitled to secure his future in view of the impending end of his current employment.  Accordingly, he submits that nothing he did in his attempt to win the BP contract for himself and Mr Priest could be a breach of his contract of employment.  Despite the fact that that point was not one which was taken before the Industrial Tribunal, we have considered it on its merits.  Whilst it would be legitimate, in the absence of a clause prohibiting him from competing with his employers, for him to canvas his employers’ clients after leaving their employment, we think it unarguable to suggest it was not a breach of a fundamental term to do so whilst still in their employment, particularly when he knew full well that if he had had his way he would have caused his employers critical financial loss.  We do not accept this is an arguable point.

	The next point alleges that the Industrial Tribunal misunderstood the facts of the case.  The Appellant claims that Mr Papachristidis was trying to impose upon him more onerous terms by threatening to dismiss him if he did not accept them.  We do not accept that that is a properly arguable way of addressing the facts.  The Industrial Tribunal had taken the view that Mr Papachristidis had already acquired a right to dismiss the Appellant on 19 August as a result of the latter’s repudiatory breach of contract at an earlier date.  When he had learned all the facts, he was prepared to waive that breach if the Appellant was prepared to sign the letter of agreement.  In making that offer, Mr Papachristidis in no way prejudiced his right to dismiss for his earlier repudiatory breaches if the Appellant rejected it.  The Appellant did reject it, and so Mr Papachristidis remained free to dismiss.  We are satisfied that the Tribunal set the facts into the correct legal framework and accordingly see point of law in this ground which would enable us to allow this appeal to proceed.

	The third ground:  the Appellant contended that Mr Papachristidis and his company had themselves been in fundamental breach of the contract two years earlier when, unilaterally, they halved his salary.  We do not know from the Tribunal’s findings whether, and if so why, this came about but the Appellant has told us it was due to the Respondents’ financial difficulties.  He said that despite this unilateral cut in salary, he remained loyal to the Company and had continues to work for its financial recovery ever since.  He said that whilst this might be so, he maintained throughout the two-year period his entitlement to the unpaid half of his salary;  he even suggested he should take a share in the equity in exchange for the indebtedness which was gradually accumulating.  The fact is that the Appellant did continue to work for the Respondent Company, notwithstanding he regarded the reduction in salary to be a repudiatory breach.  His conduct over the last two years could only be regarded as an affirmation of his contract of employment and a waiver of any such breach.  In the circumstances, we are not satisfied that a point of law arises on this issue which would be arguable before a full tribunal.

	The Appellant’s last point is that the Industrial Tribunal failed to appreciate that the Company which was to benefit from the new BP contract was a sister subsidiary named Victoria Oilfield Development (UK) Ltd and not the Company of which the Appellant was the managing director, namely Victoria Oilfield Development Ltd.  In our judgment, no relevant point of law arises from this apparent oversight of the Tribunal.  The Appellant’s breach for which he was ultimately dismissed was his disloyalty to the Respondents who employed him.  It matters not that the potential damage with which the latter was threatened was to be brought about by the loss of the BP contract to VODL as its sister company.  Again, we are not satisfied that there is a point of law arising which merits consideration of a full hearing.

	Whilst we have considered this matter with considerable care, we are satisfied that the Tribunal substantially directed themselves accurately and properly on all issues of fact and law, and there remains over no arguable point of law which would justify this appeal going further.
	We therefore dismiss this appeal.