Byron v Eastern Caribbean Amalgamated Bank

Contractual construction must precede implication. The court must first determine the meaning of the express words, then ask whether an unstated term is necessary to make the agreement work. Where an agreement deliberately allocates some assets and liabilities and retains others, it may be complete without an implied term extending the allocation. A statutory power to decide industrial disputes flexibly, with regard to equity and good conscience, may justify allowing a late point. It does not authorise a court to create a new cause of action or substantive liability, or to alter the effect of a valid assignment. Where the relevant contractual construction depends on evidence not considered below, the proper course is remittal for further consideration.

Byron was employed by the Bank of Antigua and was dismissed for redundancy after the Eastern Caribbean Central Bank intervened in the bank’s affairs. He was statutorily entitled to severance pay under the Antigua and Barbuda Labour Code 1992.

The Eastern Caribbean Amalgamated Bank later purchased specified assets and assumed specified liabilities under a Purchase and Assumption Agreement. The Industrial Court dismissed the claim against it, holding that it was not a successor-employer. The Court of Appeal accepted that a term should be implied into the agreement and held the two banks jointly and severally liable.

The Privy Council considered whether the severance liability was included in the express terms, whether it could be implied, and whether the Industrial Court Act 1992 authorised the remedial order.

Lady Hale delivered the judgment of the Board. The case was remitted to the Court of Appeal for further consideration.

1. Construction of the agreement. Clause 3(1) contained three elements: all debts and liabilities subsisting at the Transfer Date; those appearing on the final balance sheet and in the supporting books and documents; and the express exclusions in clause 3(2). The first element was comprehensive subject to those exclusions. The second could extend to liabilities apparent from the bank’s records, rather than only liabilities expressly entered in the balance sheet. The severance liability arose on termination for redundancy and might have been apparent from the bank’s records.
2. Implication of terms. The Board applied the distinction explained in Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72; [2016] AC 742. Construction determines what the parties meant by the words used. Implication asks whether they would have agreed an unstated term had the issue occurred to them. The express terms had to be construed first. If they did not cover the liability, implication was not justified because the agreement contemplated that some assets and liabilities would remain with the Bank and made complete commercial sense without the additional term.
3. Late argument. The Board normally would have been reluctant to permit the respondent to raise the express-construction argument for the first time on appeal. Sections 9(1) and 10(3)(b) of the Industrial Court Act 1992 required a flexible, non-technical approach. Exercising the same jurisdiction as the Industrial Court, the Board therefore permitted the point to be advanced.
4. Remedial power and disposition. Permission to raise the point did not establish liability. The necessary evidence about the supporting books and documents had not been directed to the issue, and the effect of clause 12 had not been properly argued. The case therefore had to be remitted. Section 10(3) permitted flexibility in remedies, but did not permit the court to devise a new cause of action or substantive ground of liability. It could not alter the effect of a valid legal assignment so as to impose joint and several liability on the Bank of Antigua.

The parties were directed to file submissions on costs within 21 days.

1. Privy Council—In [2019] UKPC 16, the Board remitted the case to the Court of Appeal for further consideration in accordance with its guidance.
2. Eastern Caribbean Court of Appeal—On 31 May 2017, the court allowed Byron’s appeal, set aside the Industrial Court’s judgment, implied a term into the Purchase and Assumption Agreement, and held the Bank of Antigua and the Eastern Caribbean Amalgamated Bank jointly and severally liable.
3. Industrial Court of Antigua and Barbuda—On 30 March 2012, the court held that the Eastern Caribbean Amalgamated Bank was not a successor-employer and dismissed the claim against it.