Butterworth v Pc's Ltd et Al

• Jurisdiction: Anguilla
• Judge: Saunders, J
• Judgment Date: 30 November 2000
• Neutral Citation: AI 2000 HC 10
• Docket Number: Civil Suit No. 70 of 2000
• Date: 30 November 2000
• Court: High Court (Saint Christopher, Nevis And Anguilla)

High Court

Saunders, J.

Civil Suit No. 70 of 2000

Butterworth

and

Pc's Ltd et al

Appearances:

Ms. P. Patterson for the plaintiff

Mr. E. Gaskin for the defendants

Contract - Illegality — Contract naming plaintiff company's representative and percentage of revenue so that he could obtain work permit — Whether plaintiff entitled to all the revenue — Finding by court that the arrangement was illegal — No relief granted.

Saunders, J

1 The facts in this case caused me to remember the children's fable about a goose and certain golden eggs. The first defendant is a limited liability company bearing the name PC's Limited. The company's registered address was the home of one of the directors. The company had no other place of business. It had no employees. It had no secretary. It kept no books. It kept no records. Not even of its alleged loans. The company did have a chequing account, a few customers, and two directors. The directors were both full time employees of Cable and Wireless. They are the second and third defendants to this action.

2 The directors led evidence before me. They testified that the company employed the plaintiff, Mr. Jason Butterworth, at a salary of $1500 monthly; that during his employment Mr. Butterworth was often broke; that he requested from the company divers loans; and that the company generously loaned him sums in excess of USC$11,000.00. I don't believe a single word of any of that. I preferred the evidence to the contrary given by Mr. Butterworth himself. The latter's demeanour and candour in the witness box impressed me. I believe that he testified truthfully. His version of events was consistent with other evidence given in the court. It was corroborated, expressly or by implication, by the documents tendered as exhibits. Conversely, those documents cast serious doubt on the story put forward by the defendants.

3 Mr. Butterworth's tale is an interesting one. He is a computer expert. He holds a Masters in Computer Science from a recognised university in England. He came to Anguilla and worked here on contract with Management Resources Limited. He was paid a salary of ECC$3,975. When that contract came to an end he desired to remain in Anguilla in gainful employment. That posed a problem. Anguilla has strict labour laws. Mr. Butterworth would require a work permit. By then he had become acquainted with the second defendant, Mr. Hunte. The latter is an engineer at Cable and Wireless and one of the directors of PC's Limited.

4 Mr. Hunte was sympathetic to the plight of the plaintiff. In an effort to assist, Mr. Hunte suggested that PC's Limited could apply for the plaintiff's work permit. It was expedient to have the application processed as though the company were employing Mr. Butterworth. The latter would thereby be saving money. To have applied for a self-employed work permit would cost him more.

5 Mr. Butterworth was therefore passed off to the Labour Authorities and the general public alike as an employee of PC's Limited. In his work permit application it was stated that his monthly salary was ECC$1,300.00. This was false. But the work permit was procured on that basis. After it was obtained, the plaintiff went about on his own soliciting clients, working as a computer expert, billing the clients and keeping the income for himself.

6 This arrangement did not last. The third defendant, Mr. Fleming, persuaded his fellow director that Mr. Butterworth should pay the company a percentage of his earnings. This seemed fair enough to all concerned. After all, the company was being used by the plaintiff as his personal vehicle for being able to work in Anguilla. The parties all agreed therefore that the company should thenceforth retain 10% of any income earned by Mr. Butterworth. Since the employer/employee pretense had to be kept up, it was further understood that the company would deduct a further sum to pay social security contributions on behalf of the plaintiff.

7 This revised arrangement continued for some time. Typically, what would happen is that Mr. Butterworth would bill his clients in the name of PC's Limited. He would then hand over to the company the cheques he received from his customers. In turn the company would give him cash, or issue him the company's cheque, representing roughly 90% of the revenue earned by him in the first place. When a customer paid him in cash, Mr. Butterworth would faithfully hand over 10% of the cash he received to the company. On some occasions, Mr. Hunte and Mr. Butterworth collaborated on certain jobs.

8 In 1997 the plaintiff received information about a large government project in the offing. The companies' Registry was being computerised. The plaintiff was excited about this project. He began negotiating with the relevant authorities. He indicated to them his background, his experience and his qualifications. In the context of Anguilla at that time, his curriculum vitae must have been impressive. They could not be matched by anyone else on the island at that time.

9 Ultimately, Mr. Butterworth was successful in landing the project. It was done under the aegis of PC's Limited. In other words, as far as they were concerned, the Government had thereby concluded an arrangement with PC's Limited. Not surprisingly though, all the correspondence from the Government officials was for the attention of Mr. Butterworth and all the correspondence from PC's Limited was signed by the plaintiff. It was Mr. Butterworth who was interviewed by the Deputy Project Manager. It was Mr. Butterworth who negotiated the contractual terms. Those terms included a clause specifically naming Mr. Butterworth as PC's Limited's representative who would be working with the project. Mr. Butterworth also negotiated his own remuneration on the project. There is some evidence that the second defendant was involved in some of these negotiations. If indeed he were, then I believe his input was marginal. One way or the other, in the context of this judgment, it hardly matters. The government contract was eventually signed. It was a lucrative one. Mr. Butterworth would be working at the Companies Registry for at least forty hours weekly at a rate of US$32.00 per hour. If in any one week his hours of work exceeded forty, then handsome overtime fees would be paid. The project was scheduled to run for at least several months.

10 In keeping with the extant charade between the company and Mr. Butterworth, the second defendant signed the contract with the Government as a Director of PC's Limited. But Mr. Butterworth was not of course obligated to report to the company on the progress of his work on the project. Nor did either of the directors of PC's Limited have any real input into the execution of the Companies project. Mr. Butterworth alone did the work and he prepared himself the invoices to be sent to the Government. The Government paid the monies earned by him directly into the account of PC's Limited. The company was then supposed to pay over roughly 90% of those sums to Mr. Butterworth.

11 Had this arrangement continued, each of the parties would have materially benefited and the existing sham would not have been uncovered. The arrangement did not last however. As the income from the project began pouring into the company's account, Mr. Fleming began to covet Mr. Butterworth's earnings....