A.W.G. Development Fund Ltd. v. Woodroe Ltd. t/a Century Homes [2001] IEHC 10 (25th January, 2001)

1. In the late 1990’s a merger took place between Avonmore Foods plc and Waterford Foods plc. The new company which emerged became known initially as A.W.G. plc, and subsequently as Glanbia plc, by which name it is now known. As a result of this merger and the programme of rationalisation which followed from it, the Milk Processing Plant of Waterford Foods plc at Dungarvan, County Waterford, was gradually phased out of production resulting in considerable unemployment in that town and the surrounding area.

2. The Plaintiff in this action is a company entirely funded by Glanbia plc. It has three directors all nominees of Glanbia plc. Mr. Joseph Doddy is Secretary and Manager of the Company. One of the objects of the Plaintiff is to provide funds in the form of interest free loans or grant assistance to help create new employment opportunities for persons who became redundant as a result of the above mentioned merger.

3. As a result of negotiations between Mr. Matt Walsh and other senior managers of A.W.G. plc; Mr. Colm Hackett of Forbairt, and Mr. Donal Connelly, County Manager of the County of Waterford on the one side and Mr. Gerard McCaughey, Managing Director of Woodroe Limited of Monaghan, trading as Century Homes, his father, and Mr. Brian Keogh of Irish Productivity Centre who was advising Mr. McCaughy on the other part, Century Homes was persuaded with very considerable reluctance because of the very southerly location of Dungarvan to locate its new factory in that town.

4. Crucial to the establishment of this factory was the offer of employment grant assistance contained in a letter dated 2nd October, 1998 from A.W.D. Development Fund Limited to Woodroe Limited, trading as Century Homes, (the “Company”), and Woodroe, (Dungarvan) Limited, (“W.D.L.”), signed by Mr. Joseph Doddy and accepted on behalf of Woodroe Limited, trading as Century Homes by its duly authorised Director Mr. Gerard McCaughy, as appears endorsed on that letter.

“We are prepared to make available employment grant assistance (the “Grant”) to the Company or W.D.L. up to a maximum amount of IR£400,000 upon the terms and subject to the conditions of this letter. This Grant is to be used solely for the purposes of an employment subsidy on the basis of permanent full time positions created (each such position being hereinafter referred to as a “Job’”) in the business operations which the Company is setting up in Dungarvan in 1998”

6. Though nothing material appears to depend upon it, Mr. Doddy, as indicated by the penultimate paragraph of his letter dated 13th September, 1999 to Mr. Gerard McCaughey, appears to have considered that the relevant period for the purpose of subparagraph 2 (a) of the Agreement expired on the 1st September, 1999. As I pointed out during the course of the hearing of this case I do not believe this to be a correct interpretation of the subparagraph. Though no authorities in this respect were cited during the course of argument, I believe it to be well established that in the absence of some very clear indication to the contrary to be found in the terms of the Agreement read as a whole, - and in this case I find no such indication, - a requirement that something be achieved within a particular period after a designated date, as here, “within 8 months after the Commencement Date”, indicates that the Commencement Date is itself not to be included in calculating the relevant period and that the Defendant is entitled to the whole of the last day, which in these circumstances must be the 2nd September, 1999, within which to comply with the requirements of the subparagraph.

7. In his letter in reply dated the 21st September, 1999, Mr. McCaughey advised Mr. Doddy that as of that date Woodroe (Dungarvan) Limited had 36 people in its employment. It was not suggested at any time during the course of the hearing before me that this statement was incorrect and in the words of Mr. Doddy, “the Defendant is well within” the requirements of subparagraph 2 (b) of the Agreement.

25. I accept the contention of the Plaintiff that even if the positions taken up by Messrs. Cullinan, Drummy, Hyslop and Hickey for 5 days or less were permanent and full time positions created by the Defendant, one could not reasonably conclude that these persons were, “employed” in such positions for the purpose of entitling the Defendant to employment grant assistance whatever about other purposes.

26. I accept the evidence of Mr. Joseph Doddy that there must be some reasonable indication of what he described as, “longevity”, in the employment, some evidence that the individual would probably remain employed in the position as part of the long term workforce of the Defendant. This was the obvious purpose of making the employment grant assistance available: to get as many redundant A.W.G., plc, workers in the Dungarvan Area as possible back into long term full time employment. Under subparagraph 1(b) of the Agreement payment of the second sum of IR£200,000 had to be made, if made at all, within 12 months after the 1st January, 1999. Accordingly, the indications that the position was likely to be occupied by the individual in the long term had to be manifest before that date.

27. Mr. Doddy, whom I accept is a person who has very considerable experience in dealing with Grant Aid Schemes, says that an important indicator is the length of time spent by an individual in the position even if on probation. In my judgment this is sound common sense as the individual is not concerned as to whether or not the prospective employer does or does not qualify for grant assistance and is not likely, certainly on that ground, to waste weeks or months of his or her life in work which has no appeal and in which the individual can see no future.

28. While his expression as to, “imprisoning persons in jobs”, might be somewhat dramatic I accept what is clearly implicit in Mr. McCaughy’s submission, that it was not the intention of the parties as commercial men to require the Defendant to somehow ensure that every former A.W.G., plc, employee employed by the Defendant would remain in that employment for some unspecified but considerable period of time or until he or she had reached the normal age of retirement. This was accepted by Mr. Doddy while at the same time insisting that what the Defendant could do and should reasonably be expected to do was to make the terms and conditions of the employment offered as attractive as commercially possible so as to induce such workers to take up positions with the Defendant and to remain on in those positions. There was no evidence led nor was it put directly to any of the witnesses for the Defendant on behalf of the Plaintiff that the Defendant’s terms and conditions of employment were not such as would induce former employees of A.W.G., plc to join its workforce.

29. It was accepted by the Plaintiff that Messrs. Cullinan, Drummy, Hyslop and Hickey all left the employment of the Defendant of their own volition. I accept the evidence of Mr. Doddy that in the context of an employment grant assistance scheme these individuals could be regarded as having in his own words done no more than, “tried out the employment with Century Homes and found it did not really suit them and left very very quickly”. This situation is obviously different to and distinguishable from that of an individual who by reference to the time spent by him or her in the position, if even on probation, is as a matter of probability indicating an intention of remaining on in that position for the foreseeable future.

30. In these circumstances in my judgment the Defendant is not correct in contending that Messrs. Cullinan, Drummy, Hyslop and Hickey or any of them were employed by the Defendant in permanent full time positions for the purpose of due compliance with the provisions of subparagraph 2(a) of the Agreement. I accept the submission of the Plaintiff that these four individuals must be regarded as being in the same category as those who turned down offers of employment with the Defendant.

31. As regards satisfying the provisions of subparagraph 2(a) of the Agreement, Mr. Doddy was prepared to concede that Mr. John Lynch was in what he described as a “grey area”. In my judgment it is abundantly clear from the evidence of Mr. Doddy that he would have been prepared to accept Mr. Lynch as being employed in a permanent full time position with the Defendant, notwithstanding a 6 month probationary period and so meeting the requirements of the subparagraph were it not for the fact that he was not still holding this position on the 2nd September, 1999. He conceded that a person under probation could be included in the pool of eligible candidates provided he maintained his job for a reasonable length of time and he further conceded that Mr. Lynch was in the job for quite a long period.

33. Mr. Doddy told the Court that he was wholly unaware of this requirement by the Defendant until he examined the documents furnished by the Defendant on Discovery of Documents. The Agreement itself is silent as to the terms and conditions of employment which the Defendant might see fit to impose. Mr. Doddy did however accept in giving evidence that he would have expected any company to have stipulated for a probationary period of some time. It was his view that while a person might not legally enjoy the benefit of permanent employment until such person had successfully completed the probationary period, nonetheless in the context of an employment grant assistance scheme, such as in the present case, such a person even while on probation was employed in a permanent full time position.

34. The Agreement at sub paragraph 2 (a) required the creation of not less than 10 jobs in Dungarvan employing staff who on the 31st July, 1998 were staff of (being employed by) an AWG Company. Earlier in the Agreement, “jobs” are defined as, “permanent full time positions”. In my judgment, “permanent” in this context does not imply jobs for life or until the normal age of retirement but is used to distinguish casual, seasonal and other forms of discontinuous and periodic employment. In the same phrase, “full time” is in my judgment used to distinguish part time, relief work and other forms of short hour working. It was not disputed during the presentation of the evidence in this case that the positions offered by the Defendant to Mr. John Lynch and the other former A.W.G., plc, employees were, “permanent full time positions” .

35. In my judgment Mr. Doddy is incorrect when he construes the Agreement as requiring that on the final day of the stipulated period of 8 months after the 1st of January, 1999 at least 10 persons who on the 31st July, 1998 were employed by an A.W.G. Company had to be in actual full time permanent employment with the Defendant. The evidence given to the Court was that this paragraph and indeed the remainder of the Agreement, apart from paragraph 5 was drafted by Mr. Doddy on behalf of the Plaintiff with some assistance from a Firm of Solicitors, at the end of the negotiations.

36. No authorities were referred to in argument on this issue but in my judgment the use of the word, “within” in the absence of a clear indication to the contrary signifies a time frame inside of which the specified jobs were to be created but without any requirement as to the duration of any particular job thereafter. I find no indication to the contrary on reading the Agreement as a whole and the Agreement was accepted by both parties at the hearing as accurately and completely expressing their intentions. In my judgment had it been the intention of the Plaintiff that jobs created within the 8 month period would not be considered for the purpose of this employment grant assistance scheme unless held by a qualifying person on a particular date or for not less than a particular continuous period the Agreement could and would have so provided.

37. This was an Agreement negotiated between commercial men and designed to solve an employment crisis in the Dungarvan Area resulting from the downgrading by A.W.G., plc, of an enterprise providing much needed jobs. The solution was to encourage the setting up by the Defendant of a factory in the area providing an alternative source of employment. The evidence offered by the Defendant, that apart from the attraction of this grant assistance scheme Dungarvan would not have been considered by them as a location for this factory was not shaken or seriously challenged during the course of evidence. In the absence of express and unambiguous provisions in the Agreement it could not, in my judgment, be reasonably considered to have been the intention of the parties in entering in to this Agreement which was of advantage to both and of particular advantage to the economy of the Dungarvan Area that one party should be exposed to a risk of serious financial disadvantage as a consequence of events over which it had practically and legally almost no control, - namely the length of time which persons once genuinely employed in such full time permanent positions would choose or were able to remain in such positions.

38. Should I accept Mr. Doddy’s contention that unless at least 10 persons previously employed by an A.W.G., plc, Company on the 31st July, 1998 were not only within the period of 8 months prior to, but also on the 2nd September, 1999 in the full time permanent employment of the Defendant the second sum of IR £200,000 would not become payable, then by way of an example, if one of those 10 persons so employed should suffer the misfortune of being fatally injured or dying of some natural cause on the previous day the Defendant through absolutely no fault of its own would be deprived of the entire benefit of that sum. Similar circumstances would appertain if any one or more of the ten persons determined for whatever reason to quit the employment of the Defendant on or before the 2nd September, 1999 regardless of how long they had previously been in the employment of the Defendant during the course of the crucial period of 8 months.

39. In the absence of an actual express and unambiguous provision in the Agreement I could not accept that it was the intention of the parties as commercial men in negotiating and entering into the Agreement, that the Defendant should suffer the loss of that which it contracted for by so arbitrary and uncontrollable an event. Instead of this Agreement providing an incentive to the Defendant, as Mr. Doddy claims, sub paragraph 2 (a) of the Agreement would, in my judgment, if so interpreted, become an actual disincentive because it would be apparent to the Defendant that no matter how much skill, time and expense was devoted to making a position in its factory attractive to such employees, its endeavours could be set at nought by an Act of God, the negligence of others, an ambitious or disgruntled employee or some other event over which it had minimal or no control. It would be to turn a commercial arrangement designed to be of benefit to both parties into something not much better than a mere lottery for the Defendant. In my judgment, even though he was not employed by the Defendant on the 2nd September, 1999 the job taken up by Mr. John Lynch on the 8th February, 1999 and held by him until he left on the 31st July, 1999 complied with the provisions of sub paragraph 2 (a) of the Agreement and should have been taken in to account by the Plaintiff.

40. Mr. Martin O’Sullivan gave evidence that he had been employed by Waterfood Foods plc and by A.W.G., plc, for a total of 22 years. Initially he was employed as a plant operator monitoring the control panel of the machinery in the Skim Milk Plant. This was prior to October, 1998, and after that date he held a similar position in the Provender Mill, until being made redundant on the 30th of June, 1999. In March, 1999 he had been contacted by Century Homes through Ms. Shalloe and having looked at their Dungarvan operation was interested in taking up a position with the Defendant. He took a holiday abroad for two weeks starting on the 3rd of July, 1999 and one or two days after his return he approached Mr. Dominic Bryan and started work with the Defendant more or less immediately afterwards. He was directed to work as a member of a team making up parts for the external walls of houses. This was just about two weeks before the Factory closed down for the customary two week holiday period. He was paid for this period. Mr. O’Sullivan gave evidence that he was very unsettled at this time having lost the job which he had been in for 22 years and he decided to leave the employment of the Defendant at the start of this Factory holiday period. He was promised a job with a building company and when this did not eventuate he remained unemployed until he resumed employment with Century Homes. Someone on behalf of Century Homes contacted him and he spoke to Mr. Bryan and on the 18th October, 1999 resumed work with the Defendant, this time as part of a two man team making parts for and assembling internal walls for houses. He had not, he told me, been happy as part of a large production team and preferred the greater degree of independence afforded by this new type of work.

42. He told me that the difference for him was that he was no longer working in an assembly line situation: that he was working for himself and probably had more freedom than in a factory situation. He gave evidence that his first job after leaving school was with Ericsson installing telephone exchanges and he remained in that job for about seven years. He then had one or two jobs driving and soforth before joining Waterford Foods plc. He said that he was aged 47 years and was living in Dungarvan.

43. While prepared to accept that Mr. O’Sullivan was “employed” by the Defendant as respects the period 18th October, 1999 to May 2000 Mr. Doddy stated that because Mr. O’Sullivan had left the employment of the Defendant initially after such a short period of time it could not be contended that his was an eligible job for the purpose of sub paragraph 2 (a) of the Agreement and in addition Mr. O’Sullivan did not still hold that job on the 2nd September, 1999.

44. It cannot be denied that the job, “taken up”, to use the terminology of paragraph 3 of the Agreement, by Mr. O’Sullivan was created within the stipulated 8 month period. I have already ruled that it was not necessary in order to comply with the provisions of sub paragraph 2 (a) of the Agreement that Mr. O’Sullivan should have been employed in that job on the 2nd September, 1999.

45. The job in question was a permanent full time position as a General Operative. The evidence to the Court by Mr. McCaughey and Mr. Bryan, and which I accept, was that all job offers on the Production side as distinct from the Sales and Administration side of the business were positions as General Operatives. Within this designation the individual employees had to be prepared to move between different tasks as required. Though Mr. O’Sullivan was doing a different type of work after his return to the Defendant on the 18th October, 1999 from that which he had been doing prior to his departure he continued to be employed as a General Operative.

46. Mr. Doddy accepted, notoriously in the case of Mr. Pat Scanlon, who had taken up employment with the Defendant only on the 30 August, 1999, three days before the end of the stipulated 8 month period, that regard must be had to job service not alone within but also after the end of that period and prior to the 1st January, 2000, in considering whether or not an otherwise qualifying person was employed by the Defendant for the purpose of sub paragraph 2 (a) of the Agreement. However, Mr. Doddy was emphatic that because Mr. O’Sullivan had left his employment with the Defendant after only 12 days or 2 weeks his could not be considered an eligible job for the purpose of sub paragraph 2 (a) of the Agreement. He conceded that Mr. O’Sullivan’s employment with the Defendant from the 16th October, 1999 to May, 2000 was a reasonable period of employment sufficient to satisfy the requirements of sub paragraph 2 (a) of the Agreement. However, he stated that one could not consider Mr. O’Sullivan’s two periods of employment together for the purpose of determining whether there was a compliance with sub paragraph 2 (a) of the Agreement.

47. Apart from what Mr. Doddy saw as the crucial importance of Mr. O’Sullivan not holding on the 2nd September, 1999 the job which he had taken up with the Defendant within the stipulated 8 period, it was his opinion that the period of 12 days or 2 weeks served by Mr. O’Sullivan during the currency of the 8 month period had to be regarded in isolation and accordingly did not amount to eligible employment for the purpose of sub paragraph 2 (a) of the Agreement.

48. In considering this Agreement in my judgment it is essential that one remains at all times conscious of the origin and purpose of the Agreement. The purpose was to get employees being made redundant by A.W.G., plc, back into permanent full-time employment by encouraging the Defendant to provide substitute jobs for those persons. A large number of these persons, including Mr. O’Sullivan himself, had been in the same type of job for more than two decades. After so long a period in one type of employment the transition to another type of employment with different methods of working was bound to present serious problems for some people, including, on his own evidence, Mr. O’Sullivan. Matters of temperament and deep rooted habit were involved and these were something which terms and conditions of employment alone could not overcome. This was clearly understood by the Defendant as appears from the evidence of Mr. Dominic Bryan. I am satisfied from the evidence that the Defendant was prepared to exercise very considerable perseverance and flexibility in endeavouring to procure and retain the services of former A.W.G., plc, employees such as Mr. O’Sullivan.

49. Mr. Doddy might well be correct in his belief that a target of ten jobs within 8 months employing qualifying former A.W.G., plc, employees was an eminently achievable objective and that there could be no relaxation of our departure from this requirement in any circumstances. However, it appears to me that Mr. O’Sullivan was so employed unless there was evidence which established or from which the Court could draw a clear inference that the job taken up by him on 18th October, 1999 was an altogether new and different job from that which he took up in July of that year as considered in the context of an employment grant assistance scheme. In my judgment there is no such evidence to be found in this case. Undoubtedly Mr. O’Sullivan left the employment of the Defendant just before the commencement of the summer holiday in 1999 with the intention of starting work in the building industry. However, within 8 weeks approximately after that vacation he was back at work with the Defendant without having obtained other employment and as on the first occasion having been contacted by the Defendant. Mr. Bryan, Operations Director of the Dungarvan Company, Woodroe (Dungarvan) Limited, (W.D.L.), gave evidence that the Defendant was very anxious to procure and retain the services of persons such as Mr. O’Sullivan and Mr. Lynch who had a long proven record of time keeping and commitment to work and that consequently his job with the Defendant remained open for Mr. O’Sullivan if things did not work out for him, which turned out in fact to be the case.

50. In my judgment, mindful of the purpose of the Agreement, once one disregards the purported necessity of Mr. O’Sullivan being employed by the Defendant in a permanent full-time position on 2nd September, 1999, in the absence of some express provision in the Agreement there is no rational or logical reason why the break in Mr. O’Sullivan’s service should not be disregarded for the purpose of determining whether there could be found in his service with the Defendant prior to the date on which the second sum of IR£200,000 would become payable, an indication of a likely intention on his part of becoming a long term employee of the Defendant. In my judgment this is particularly so having regard to the background to and the duration of the break in his employment with the Defendant. In my judgment one cannot loose sight of the fact that Mr. O’Sullivan was employed by the Defendant for an overall period of 3 months and after the 18th October, 1999 was employed by the Defendant for almost 2½ months before the Plaintiff could be required under the terms of the Agreement to pay the second sum of £200,000. In my judgment the position held by Mr. O’Sullivan was a qualifying job within the provisions of sub paragraph 2 (a) of the Agreement.

51. In the circumstances the Defendant had, as required by sub paragraph 2 (a) of the Agreement, within 8 months after the Commencement Date created not less than 10 jobs in Dungarvan employing staff who on the 31st July, 1998 were staff of (being employed by) an A.W.G. Company. This being so the Defendant was entitled to be paid by the Plaintiff the second sum of IR£200,000 on or before the 2nd January, 2000.

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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> A.W.G. Development Fund Ltd. v. Woodroe Ltd. t/a Century Homes [2001] IEHC 10 (25th January, 2001) URL: http://www.bailii.org/ie/cases/IEHC/2001/10.html Cite as: [2001] IEHC 10

High Court of Ireland Decisions

A.W.G. Development Fund Ltd. v. Woodroe Ltd. t/a Century Homes [2001] IEHC 10 (25th January, 2001)