Caribbean Commercial Bank (Anguilla) Ltd v Benjamin
| Jurisdiction | Anguilla |
| Judge | Pereira, CJ |
| Judgment Date | 23 July 2015 |
| Neutral Citation | AI 2015 CA 2,[2015] ECSC J0723-5 |
| Docket Number | AXAHCVAP 2014/0009 |
| Court | Court of Appeal (Anguilla) |
| Date | 23 July 2015 |
Court of Appeal
Pereira, C.J; Blenman, J.A.; Thom J.A.
AXAHCVAP 2014/0009
Mr. Emile Ferdinand QC, and with him, Ms. Kiesha Spence and Ms. Navine Fleming for the appellant
Ms. Tara Carter and Mr. Kerith Kentish for the respondent
Contract Law - Construction of contract — Natural and ordinary meaning — Whether article 5D of the Eastern Caribbean Central Bank Agreement Act is paramount to the contract of employment where on a plain reading of the article it gave the Bank the power to terminate an employee or a director — Whether the exercise of the power by the Central Bank to terminate pursuant to Article 5D had the effect of extinguishing the CCB's contractual obligations under the contract of employment where the retention or termination of employees had to accord with the terms of the employment contract — Whether a term was to be implied to this effect into the Contract of Employment where the effect would have been contrary to the Fair Labour Standards Act of Anguilla Cap F 15 and would run afoul of the contract itself — Officious bystander test — Whether the contract of employment would lack business efficacy where the term for termination without notice or contrary to the terms was not implied — Whether the phrase “term of the Agreement” as used in the Contract could be construed as meaning the period of notice set out in a clause in the Contract for the purpose of calculating the compensation payable under the Contract where the language was extremely careful and there was nothing commercially unwise about such provision — Whether clause operated as a penalty where the clause sought to compensate the employee for the loss an employee would have sustained due to earlier termination and nothing unconscionable about the clause which warranted it being treated as a penalty — Penalty said to be a payment of money stipulated as ‘in terrorem’ of the offending party — Whether the Contract was frustrated by the appointment of the Conservator by the Central Bank where the termination of the employee occurred prior to the appointment — Appeal dismissed.
The respondent Ms. Starry Benjamin was an employee of the respondent, the Caribbean Commercial Bank (Anguilla) Limited (CCB) until 12th August 2013. The appellant is a licensed banking institution operating in the Island of Anguilla under the supervision of the Eastern Caribbean Central Bank (“the Central Bank”) pursuant to the Eastern Caribbean Central Bank Agreement Act (ECCBA).
On 12th August 2013, the Central Bank took control of the CCB pursuant to emergency powers granted to the Central Bank under the provisions of the ECCBA. Those provisions allowed the Central Bank to assume control of the affairs of the CCB having determined it was in a distressed state.
The respondent's employment was terminated without reason or compensation and the respondent brought proceedings seeking compensation based on the terms of the contract of employment.
On 19th November 2013, the respondent filed a claim against CCB for a declaration that she was summarily dismissed without cause or notice and compensation.
The appellant, admitted that the respondent's employment was terminated but denied the appellant was entitled to any compensation as the contract was nullified or frustrated by the Central Bank's termination of the contract pursuant to Article 5D of the ECCBA. The appellant also contended that clause 16 of the contract was in any event a penalty. Judgment was granted in favor of the respondent. The court declared that;
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(a) The termination of Ms. Benjamin (the respondent) is a breach of her contract of employment
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(b) That termination under Article 5D of the Eastern Caribbean Central Bank Agreement Act does not supersede the provisions for termination under Ms. Benjamin's contract of employment with the CCB.
The court accordingly ordered the appellant to pay compensation and gratuity in accordance with the contract; interest at 5% per annum and costs of the claim.
The appellant appealed.
Held: dismissing the appeal and awarding costs to the respondent that:
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1. While Article 5D of the ECCBA gives to the Central Bank the power to terminate an employee, that power does not extend nor is it capable of being read to include a power to vitiate or render the terms of an employment contract, null and void upon such termination. The Central Bank, being creature of statute, is confined to the parameters of the statute and to go beyond such powers will be acting ultra vires.
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2. Article 5D could not be implied into the Contract so as to permit the termination of the Contract with the effect of releasing CCB from all obligations thereunder. Neither the officious bystander test nor the business efficacy test would result in such an implied term.
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3. When the Central Bank elected to terminate Ms. Benjamin the termination was in effect the action of the CCB and as such was a termination of the Contract. The Contract of employment was terminated pursuant to the power contained in article 16 of the Contract as the Central Bank, on exercise of its emergency powers assumed all rights and obligations of the CCB.
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4. The phrase ‘term of the agreement ‘contained in article 16 was to be construed as found in clause 1 of the contract; “This agreement shall be for a period of three (3) years…” and not three months.
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5. There was nothing unconscionable or disproportionate about clause 16 of the Contract to render it a penalty.
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6. The Contract was not frustrated as there was no period when it may be said that the tasks of the respondent and Mr. Dinning (appointed Conservator) overlapped. As a matter of law a subsequent event cannot amount to frustration where the termination of the contract had already occurred. Mr. Dinning was hired after Ms. Benjamin's employment was already terminated.
On 25th March 2015 the court heard arguments on this appeal. At the end of that hearing the court was of the unanimous view that the appeal should be dismissed and dismissed the appeal. The parties consented to a costs order in the following terms: that the costs on the appeal shall be paid to the respondent, such costs to be agreed within 21 days or, failing agreement, the respondent to have prescribed costs fixed at two thirds of the prescribed costs on the claim in the court below. The Court promised to provide written reasons for its decision. We now do so.
This appeal engages the construction of two instruments. One is the Eastern Caribbean Central Bank Agreement Act [Chapter E5, Revised Statutes of Anguilla] (“the ECCBA”) and the other is a contract of employment dated 29th August 2012 (“the Contract”) between the appellant (“CCB”) and the respondent (“Ms. Benjamin”). More specifically, it raises the issue as to whether Article 5D of the ECCBA which gives to the Eastern Caribbean Central Bank (“the Central Bank”) the power to terminate employees of a financial institution where the Central Bank takes over the control and management of a distressed financial institution, nullifies the contractual obligations between the financial institution and an employee of that institution on the exercise by the Central Bank of the power to terminate an employee. The issue arises against the following background.
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(a) CCB is a licensed banking institution operating in the island of Anguilla and comes under the supervision of the Central Bank pursuant to the ECCBA. CCB's Managing Director until 12th August 2013 was Ms. Benjamin pursuant to the Contract, being a contract in writing, and which was stated to be for a fixed term of three years commencing as from 1st May 2012 [Under the heading “Term” the Contract stated: “This Agreement shall be for a period of three (3) years with an effective date of 1 May, 2012”].
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(b) On 12th August 2013, the Central Bank assumed control of the affairs of CCB having determined that it was in a distressed state. This was done under the emergency powers granted to the Central Bank under the provisions of the ECCBA.
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(c) On the same day, representatives of the Central Bank summarily terminated Ms. Benjamin's employment with CCB. No reason was given for the termination although it was argued that by the appointment of one Mr. Dinning as Conservator, approximately some two weeks later, the role and functions of the Managing Director and that of the Conservator were incompatible with each other.
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(d) CCB failed to pay any compensation to Ms. Benjamin on the termination of her employment.
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(e) The Contract, among other clauses dealing with termination in various specified circumstances, stated in clause 16 as follows:
“The Bank [CCB] may terminate this Agreement without cause by giving the Managing Director three (3) months written notice. Upon termination, the Managing Director shall be entitled to all compensation and gratuity calculated for the term of the Agreement.”
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(f) Ms. Benjamin launched proceedings seeking, among various declarations, compensation to which she asserted she was entitled under the Contract. CCB contended that she was not so entitled having regard to the assumption of control of the bank (CCB) by the Central Bank who it says exercised the power of termination under Article 5D the ECCBA which, in effect, either nullified the Contract or frustrated it. Additionally, CCB argued that Clause 16 of the Contract was in any event a penalty.
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(g) Article 5D of the ECCBA states as follows:
“Where the Bank [the Central Bank] has under Article 5B assumed control of a financial institution, it may terminate or retain the services of any or all of the directors, officers, and employees of the institution and the directors so retained shall manage the affairs of the institution subject however to any directions of the Bank”.
The learned trial judge gave...
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