Bourne Rail Ltd & Anor v Ashton & Ors

In a wrongful-dismissal claim, an employer may generally justify dismissal by relying on employee misconduct discovered after termination. That principle remains subject to the procedural limits governing the pleaded and permitted case. Where the employer has agreed, or been permitted, to rely only on specified matters, it is unfair and disproportionate to reopen the case so that additional matters can be relied upon after trial. Finality and procedural fairness may therefore prevent a further hearing on a counterclaim, particularly where the matters originally relied upon have not been made out.

The first defendant, the managing director of the first claimant, was summarily dismissed without notice or payment in lieu. He brought a counterclaim for wrongful dismissal, claiming salary, car allowance and accrued holiday pay.

During the proceedings, the claimants obtained permission to amend their pleading and agreed that their case concerning the dismissal would be restricted to the facts and matters set out in the amended pleadings. The court subsequently made no adverse findings against the first defendant on those matters. The issue was whether the claimants could rely on additional misconduct findings made in the earlier judgment, or obtain a further hearing, to justify the dismissal.

1. The first defendant was entitled to judgment on the counterclaim. The claimants were not permitted to rely on additional matters to justify the summary dismissal.

2. An employer may ordinarily justify dismissal in a wrongful-dismissal action by relying on employee conduct of which it was unaware when the dismissal occurred. That principle did not permit the claimants to depart from the procedural basis on which the case had been pleaded and tried.

3. The first defendant held an important position as managing director and owed express contractual duties, including duties of faithful and diligent performance, best endeavours to promote the company’s interests, and prompt and full disclosure to the board. He also owed implied duties of loyalty, fidelity and diligence. The contract provided for immediate dismissal in specified circumstances, including gross misconduct, dishonesty and conduct which, in the reasonable opinion of the board, brought him into disrepute.

4. The court had confined the dismissal case to the matters pleaded in the amended particulars of claim. Those matters produced no adverse finding against the first defendant. It would therefore be unfair to permit reliance on further matters after trial, particularly where the serious allegation forming the foundation of the claim had not been established.

5. A further hearing or new trial was refused. The position had been clear at the beginning of the trial, and finality and proportionality required the proceedings to end.

6. Judgment was entered for the first defendant on the counterclaim, with costs subject to detailed assessment if not agreed.