Tiana Sterling

Tiana Sterling
WJC
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Introduction To Legal Research and Writing

Case: 
Bay trust Corporate Services Limited v Karen Acosta Longsworth [2020] CCJ 8 (AJ) BZ

Citation:
CCJ Civil Appeal No. BZCV2019/001 BZ Civil Appeal No. 12 of 2013

Facts: 
On 1 February 2002, Bay Trust International Limited (“BTIL”) was incorporated in Belize
to carry on business as an international financial services provider. By a contract of
employment dated 28 January 2002, the plaintiff was employed to manage BTIL. In keeping
with the terms of the contract, she was appointed Director of BTIL in 2002. In or around
2008, the defendant moved to Belize and transferred his trust business which he had
operated in Geneva to BTIL. In addition, a significant number of background events
extending from 2010 to 2011. the plaintiff had alleged before the trial judge that she had a
fine working relationship with the defendant up until March 2010 when she announced to
him, she was pregnant; after that the working relationship deteriorated.

Background:
The trial of this matter proceeded before Arana J in the Supreme Court of Belize. She
found that the defendant’s plan of action was designed to strip the plaintiff of her
management of the Company and went to the root of her contract. She nevertheless held
that, in the absence of a resolution of the Board of Directors of the Company, the
defendant’s plan of action was merely a proposal for a re-designation from a majority
shareholder (the defendant) and could not be attributed to the Company. The trial judge
therefore felt constrained to find that the plaintiff had abandoned her employment and
breached her contract. The company therefore succeeded in its counterclaim.

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Issue:  

the plaintiff proceeded on maternity leave in October 2010, and on 3 January 2011, she
signed a supplemental written agreement with BTCSL to continue in its employment as
Managing Director for an additional period of five years. In addition, evidence revealed
that around March to July 2011, disagreements erupted continuously between the defendant
and the plaintiff over various issues. Their relationship disintegrated to the point where
there were shouting matches between them in the workplace and in front of staff.
Furthermore, the plaintiff emails the defendant on the 27 June 2011, before she proceeded on
vacation, and complained that he had repeatedly embarrassed and belittled her in front of
staff which she supervised and called upon him to desist from obstructing her management
of the Company. The defendant emailed his response to her on 9 July 2011, on her return
from vacation. He replied that he had every right to involve himself in company matters
and that she should stop complaining and get on with preparing a business plan for
approval of the Board of Directors of BTCSL.
It is to be noted that the plaintiff’s list of duties as Managing Director, as contained in the
2011 contract, had included her management of ‘BITL and BTCSL in its entirety’ and her
supervision of the Accounts Department, the Trust Department, and the Companies
Department, as well as several other duties. the defendant and the plaintiff met on 18 July
2011. She told him that she felt that this was a breach of her contract because all her duties
as Managing Director had been taken away. The defendant responded that her position of
Managing Director had not been confirmed at the recent annual general meeting, that his
action was not in breach of contract, and that he was entitled to make the changes. The
disagreement was not resolved.
Following the meeting on 18 July 2011, the plaintiff wrote to the defendant indicating that
she had sought legal advice and was advised that the actions described in ‘The Way
Forward’ amounted to a breach of her contract. She also indicated that she was not
interested in the offer to be General Manager of Trusts. the defendant replied stating that it
was not an offer, but rather a ‘re-assignment/re-designation’. The plaintiff never returned
to work, and the next day commenced her claim in the Supreme Court.
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Decision:

She found that the defendant’s plan of action was designed to strip the plaintiff of her
management of the Company and went to the root of her contract. She nevertheless held
that, in the absence of a resolution of the Board of Directors of the Company, the
defendant’s plan of action was merely a proposal for a re-designation from a majority
shareholder (the defendant) and could not be attributed to the Company. The trial judge
therefore felt constrained to find that the plaintiff had abandoned her employment and
breached her contract. The Company therefore succeeded in its counterclaim.
The judgment of the trial judge was overturned in the Court of Appeal. Awich JA, with
whom Sosa P and Morrison JA agreed, delivered the judgment of the Court of Appeal. The
Court of Appeal held that the trial judge was correct to find that the acts of the defendant
amounted to acts of constructive dismissal, but that she was wrong to find that the acts of
the defendant could not be attributed to the Company. Morrison JA, delivering a
concurring judgment, concluded that the defendant always acted in his capacity as a
director and chairman of the Company, and that in re-designating the plaintiff’s position,
he was acting within the scope of his authority. Morrison JA was therefore of the view that,
by operation of the principles of agency, the defendant’s actions would ordinarily be taken
to be the actions of the Company.

Holding: 
On 9 October 2019, the Company in its written submissions to the Court submitted: It is to
be noted that there was no cross-appeal by the company nor any demur in its submission
that the actions of the defendant, if attributable to the company, was sufficient to ground a
claim of constructive dismissal. It was then accepted that constructive dismissal would stand
if the actions of the defendant were those of the company. In the Court of Appeal, AJA
noted3 that the Company’s reply to the plaintiff’s grounds of appeal did not include a
contention that the trial judge erred when she held that the acts of the defendant would have
amounted to acts of constructive dismissal. Awich JA further noted that the Company had
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simply contested the appeal on the footing that the acts of the defendant were not the acts of
the Company and, therefore, the Company could not be held liable for the acts of the
defendant. Accordingly, Awich 3 of 8

JA concluded that the Company must be taken to have accepted the conclusion by the trial
judge that the acts of the defendant would have amounted to acts of constructive dismissal.

Lord Denning noted that paragraph 5(2)(c) had given rise to a vast body of case law on
constructive dismissal. Lord Denning accepted that the proper test to be invoked was the
contract test. He said: If the employer is guilty of conduct which is a significant breach
going to the root of the contract of employment, or which shows that the employer no
longer intends to be bound by one or more of the essential terms of the contract, then the
employee is entitled to treat himself as discharged from any further performance. If he
does so, then he terminates the contract by reason of the employer's conduct. He is
constructively dismissed.

Majority Opinion Reasoning:  

We note that the testators in Belize, by enacting section 42A (1) of the Act, has adopted the
unreasonableness test; that is, conduct by the employer which has made it unreasonable to
expect the worker to continue in the employment relationship. There can be no doubt that
in the context of section 42A (1) a court will apply an objective test to such conduct. The
trial judge found, and the Court of Appeal agreed, that the defendant’s conduct in re-
assigning/re-designating the plaintiff to the position of Manager of the Trust Department
stripped her of her managerial role as Managing Director of the Company and went to the
root of her contract. We entirely agree. In the circumstances set out by the trial judge and
accepted by the Court of Appeal, the defendant’s conduct made it unreasonable to expect
the plaintiff to continue the employment relationship. The question therefore remains
whether the defendant’s conduct can be attributed to the Company. The undisputed facts
are that it was the defendant’s conduct on 16 July 2011, in re-assigning/re-designating the
plaintiff from Managing Director of the Company to Manager, Trust Department, that
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constituted constructive dismissal. Consequently, BTCSL can only be held liable for
constructive dismissal if the defendant’s conduct can be considered attributable to that
company.

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Rule: 
It is elementary learning that, as a company incorporated under the laws of Belize, BTCSL
has its own separate legal personality. But there is the problem that, as a persona ficta, (or
what Lord Mance called “an artificial construct”12), it can only act through natural
persons. In the leading decision of the Judicial Committee of the Privy Council in Meridian
Global Funds Management Asia Ltd. Securities Commission, Lord Hoffmann explained
the problem as follows: A company exists because there is a rule (usually in a statute)
which says that a persona ficta shall be deemed to exist and to have certain of the powers,
rights, and duties of a natural person. But there would be little sense in deeming such a
persona ficta to exist unless there were also rules to tell one what acts were to count as the
acts of the company. It is therefore a necessary part of corporate personality that there
should be rules by which acts are attributed to the company.

As mentioned earlier in this judgment, the Court of Appeal was unanimous in holding that
the conduct of the defendant was attributable to BTCSL. However, the court was divided on
the appropriate rule of attribution to be applied in reaching that conclusion. Morrison JA
held that the applicable rule was the general rule of attribution whereas Awich JA, with
whom Sir Manuel Sosa P agreed, held in effect that it was the primary rule of attribution.
Mr. Williams submitted that both Awich and Morrison JJA erred in their application of
the principles of attribution. He argued that the Court of Appeal incorrectly re-ordered the
facts by ignoring the clear provisions of the Company’s articles of association and the trial
judge’s findings that the express and implied powers and authority to dismiss the plaintiff
reposed in the Company, and not in the defendant. In addition, Mr. Williams submitted that
Morrison JA came to the wrong conclusion since there was no evidence of express or
ostensible agency, and the plaintiff was, in any event, not a true third party as she was an
insider. It was therefore submitted that the plaintiff must be taken as having accepted that
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the defendant’s actions could only be construed within the parameters of the Company’s
articles of association and not otherwise.

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Concurring Opinion(s) Reasoning:

Morrison JA founded his decision on the view that the general rule of attribution,
and more particularly agency principles, was the applicable rule of attribution. Of the
judgment of the Court of Appeal, per Morrison JA Morrison JA’s reasoning is
encapsulated in the following paragraph of his judgment:
In this case, there can be no question that the defendant always acted in his capacity as a
director and chairman of the respondent. Nor is there any issue that, in acting as he did
towards the appellant (that is, in re-designating her position), he was acting within the
scope of his authority. Accordingly, by the operation of the principles of agency, his actions
would ordinarily
be taken to be the actions of the respondent. We agree with Morrison JA that Mr Wilson
was indeed an agent of the Company and that liability for his actions may in certain
circumstances be imputed to BTCSL. However, regarding the defendant as the Company’s
agent is very different from saying that the defendant’s conduct can be identified as, or
treated as, the conduct of BTCSL for the purpose of section 42A (1) of the Act, which
makes the relevant conduct the conduct of the company. For this reason, we agree with Mr.
Williams that the general rules of attribution are therefore insufficient to attribute the
defendant’s conduct to BTCSL for the purposes of section 42A (1).
We also agree with Mr. Williams that Awich JA, in effect, invoked the primary rule of
attribution as the basis of his holding the conduct of the defendant to be the conduct of
BTCSL. Awich JA reasoned at as follows: The deeming of an act of an official to be the act
of the corporation has been described as “attribution”. The rule regarding attribution
operates apart from the rules regarding agency and regarding vicarious liability. It is
aimed at the proper identification of the official who may be accepted as acting in a way
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that shows he is the directing and controlling mind of the corporation, “the directing mind
and will” for the matter at issue, and at the identification of the act, including wrongful act,
in various circumstances...Notable cases in which the rule of attribution of an act to a
company is considered to have developed are: Lennard’s Carrying Co Ltd v Asiatic
Petroleum Co Ltd [1915] A.C. 705 (HL); H.L. Bolton & Co Ltd v TJ Graham; El Ajou v
Dollar Land Holdings Plc [1994] 2 All E.R 685CA; and in Meridian Global Funds
Management Asia Ltd v Securities Commission [1995] 2 A.C 500 PC.23 of the judgment of
the Court of Appeal, per Morrison JA
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Dissenting Opinion(s) Reasoning:
We agree with Mr. Courtenay that the case before us is the paradigmatic case for
deploying Lord Hoffmann’s special rule of attribution. The key question then comes, given
that section 42A (1) of the Act was expressly intended to apply to a company, how was it
intended to apply and whose conduct was for the purposes of that section intended to count
as the conduct of the company. Following the opinion of Lord Hoffmann in Meridian
Global, the answer to this question is to be found by applying the usual cannons of
interpretation to section 42A (1), taking account of the language of that section and its
context and policy. To be sure, as with any question of attribution, the key to attribution
under the special rule of attribution in this case is ultimately always to be found in
considerations of context and purpose of section 42A (1). [49] In our judgment, the context
and purpose of the Act and of section 42A (1) are clear. Recognizing that in Belize, as in
most other modern market economies, a substantial proportion of the work force is
employed under contracts with companies incorporated under the Companies Act29, the
section seeks to make such companies directly liable for constructive dismissal. In our view,
further recognizing that such companies are no longer characterized by vertical corporate
structures but are characterized by the diffusion of responsibility and delegation of
important corporate tasks, the unmistakable purpose of section 42A (1) is to merge the
liability of a company with an identifiable official of the company. Thus, contrary to the
assumption of Awich JA, there is no need to determine whether such an official is or is not
“the controlling mind and will” of the com. The facts of this case make it plain that the
defendant was undoubtedly an identifiable official of BTCSL whose conduct may be merged
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with BTCSL. Consideration of the emails referred to earlier32 and the dealings of the
Company going back to its inception, make clear that the defendant acted for and on behalf
of the Company.

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This includes the Company’s dealings with the plaintiff. In this regard, we note that the
defendant was the sole signatory for BTIL in the first written contract of employment
between BTIL and the plaintiff which was made on 28 January 2002. Mr Wilson was also
one of the directors who signed on the Company’s behalf the supplemental written
agreement made with the plaintiff on the 3 January 2011. the defendant did not shy away
from the fact of his control of BTCSL in his correspondence with the plaintiff. Repeatedly,
he identified himself as majority shareholder and Chairman of the board/President of
BTCSL and claimed that it was his ‘prerogative’ to take over the management of the
Company and to re- designate the plaintiff to the management of the Trust Department.
Indeed, in communicating this decision to the plaintiff, the defendant stated that he was
doing so, ‘in [his] capacity of majority shareholder and Chairman/President of both
BTCSL and BTIL’33 In our judgment, the special rules of attribution are applicable in this
case. Considering all the circumstances, the conduct of the defendant is to be taken to be the
conduct of BTCSL for purposes of section 42A (1). Accordingly, we are satisfied that the
plaintiff must succeed in her claim for constructive dismissal from Baclaran for the
purposes of section 42A (1).
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