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All is not lost for retired Airport worker – Part II

High Court judge Justice Raulston Glasgow – handed down the judgment in the case

A former longstanding worker with the Grenada Airports Authority (GAA) who felt aggrieved with her compensation package is leaving the high court with mixed feelings based on a ruling from Justice Raulston Glasgow.

Roselyn Charles took legal action after complaining that the formula used to calculate her financial benefits was the wrong one and was seeking a package in the region of just over EC$125, 000.00.

The retired female employee had approached the court seeking various reliefs for alleged breaches of a contract of employment made between herself and the Airports Authority which entitled her to certain emoluments.

On 1st August 1984, Charles began employment with the Authority in the office of Air Traffic Control (ATC) Officer and prior to that date, she was employed as a civil servant appointed by the Public Service Commission of Grenada (PSC).

Her engagement with the Authority came about after she was seconded to the Authority by the PSC.

Charles continued working with GAA on the basis of several contracts from the time of her secondment until 5th May 2016 when she retired.

Attorney-at-law Nazim Burke, the former Minister of Finance in the 2008-13 Congress government appeared for the Claimant while Kristopher Ross Fields represented GAA in the matter.

In his ruling, Justice Glasgow said the claims for the relief sought by Charles are dismissed except to say that –

(1)   The Authority is to pay Ms. Charles any difference in the sum paid to her pension at the rate of 3% per annum as opposed to 4.2%.

(2) The Authority is to recalculate the retroactive salary payments to take account of the income tax rates existing between 2011 to 2016.

(3) The Authority must pay Ms. Charles any sums that may be due to her further to the terms of paragraphs (1) and (2) within 30 days of this judgment. Ms. Charles has been partially successful on her claim. She is awarded costs of $3000.00.

(4) As a public service, THE NEW TODAY reproduces in full the Raulston Glasgow ruling in the case:-

[26] Ms. Charles claims that she should have been paid the sum of $8,271.50 per month along with all increases in salary based on that figure. She asks the court to find that she is entitled to –

“recover from the Defendant by way of unpaid salaries, the difference between the salary amount she was paid and what she should have been paid between April 1st 2011 and May 5th 2016) (when she was retired from the Public Service) had she been paid the correct starting salary in April 2011.”

[27] Equally, Ms. Charles charges, at paragraph 50 et seq of her written submissions filed on 30th June 2023, that clause 14 of the agreement letter which asserted that it contained the entire agreement between the parties and supersedes all other agreements, should be deemed void. Ms. Charles opines that to hold that clause 14 is valid would render nugatory all previous agreements entered between the parties. These would necessarily include, among other things, other agreements on the Authority’s duty to pay pension and retirement benefits and to pay her the same salary increases paid to other employees. Ms. Charles submits that the court must find that there was, “… of necessity, some collateral agreement, oral or written, that would have made provisions for other obligations of the Authority to the Defendant [sic], not set out in the April 11th 2011 Agreement.”

[28] Ms. Charles calculates her lost income over the years due to this illegality in the sum of $126,341.12.

[29] Further on the question of salaries, Ms. Charles addresses the question of her “back pay”. On this score, Ms. Charles asks the court to construe the terms of the agreement to mean that that the parties intended that she would have been paid upon attaining the confirmed post of Manager, ATS in April 2011, a one off payment of a sum equal to one half the difference between the amount that she would have earned in her substantive post of Assistant Manager ATS and what she would have earned acting in the post of Manager, ATS during that period.

[30] In this regard, counsel for Ms. Charles makes the following legal arguments –

(1) The court is required to consider what the agreement would reasonably have been understood to mean when its commercial purpose along with its background is considered. The case of Arnold v Britton 11is presented as support for this submission.

(2) While the court will not make a contract for the parties, it will imply a term if there arises an implication from the contract itself and the circumstances in which it was made that the parties intended such a term to be implied. Hamlyn & Co. v Wood and Co 12is presented as authority for this view.

(3) In all cases where a term is to be implied, the “question for the court is whether such a provision would spell out in express words what the instrument, read against the relevant background, would necessarily be understood to mean.”

[31] Counsel makes the further point that –

“it is not necessary that the need for the implied term should be obvious in the sense of being immediately apparent, even upon a superficial consideration of the terms of the contract and relevant background. The need for an implied term not infrequently arises when the draftsman of a complicated instrument has omitted to make express provision for some event because he has not fully thought through the contingencies which might arise, even though it is obvious after a careful consideration of the express terms and the background that only one answer would be consistent with the rest of the instrument. In such circumstances, the fact that the actual parties might have said to the officious bystander, “could you please explain that again? Does that matter?”

[32] Counsel concludes that the fact that Ms. Charles and other officers benefitted from the claimed practice in the past confirms that such a term was applicable, by implication, to her contract on the question of a “back pay”.

Pensions and other retirement benefits
[33] Ms. Charles’ opening salvo on this issue is that the 5 percent pension contributions from her employer to her pension fund should have been based on the salary of $8271.50 that she should have been paid and any applicable increases thereto over the years rather than the contracted sum of $6800.00 paid to her. In addition, the employer paid her a sum for her pension that was calculated at the interest rate of 3 percent per annum when the agreement contemplated that she would be paid at whatever interest rate the pension fund account attracted at the bank. Ms. Charles submits that she should be paid the interest rate of 4.2 per cent, which she claims was the average of the various rates applied by the bank to the pension fund.

Taxation of the retirement benefits
[34] Ms. Charles relies on section 8 of the Grenada Airports Authority Act, Cap. 12 of the laws of Grenada (the Airports Authority Act) to argue that she remained, at all times, an employee of the government of Grenada on secondment to the Authority. Section 8 of the Grenada Airports Authority Act provides that –

“The Public Service Commission may, subject to such conditions as it thinks fit and with the consent of the Minister, approve the transfer of any public officer to the service of the Authority and any officer so transferred shall, in relation to pension, gratuity or other allowance, and concerning any rights as a public officer, be treated as continuing in the service of the Government.”

[35] Ms. Charles claims that the Authority had no legal basis to tax her retirement benefits since, by section 25 (1) (i) of the Income Tax Act, her retirement benefits are exempt from taxes. Section 25 (1) (i) of the Income Tax Act reads as follows –

“25. Exemption of income: general

(1) There shall be exempt from income tax—

(i) any gratuity payable to a public officer on his or her retirement from service or to his or her legal personal representative on his or her death…”

[36] Mr. Charles argues that any lump sum payable to her should be considered a gratuity, to which section 25(1) (i) of the Income Tax applies. The argument made is that Ms. Charles would have foregone any gratuity or pension that she may have received if she was not seconded to the Authority. In this regard, the court is asked to note that besides the retirement payments made by the Authority to her, Ms. Charles does not receive a pension from the government of Grenada. Counsel argues that where an employer is found to have wrongfully deducted taxes from an employee’s salary, the employer is required to reimburse the employee those sums illegally deducted and remitted to the taxing officials.

[37] Ms. Charles further contends that even if the Airports Authority had a right to deduct taxes from her retirement benefits, “it ought not to have deducted any more than 10% tax on 25 percent of the Claimant’s benefits and any amounts deducted in excess thereof were improperly deducted and ought to be returned to the Claimant.” For this argument, Ms. Charles relies on sections 25 (1) (m) and 48 (1) of the Income Tax Act. She states that –

“[B]y Section 48(1) of the said Act, the Comptroller of Inland Revenue may approve a pension fund established for the provision of retirement benefits for employees and their dependents as an approved pension fund in accordance with this section, the primary object of which shall be the provision of benefits by way of a pension to its members upon retirement. Under section 48 (1), an approved pension fund may provide for the computation of pension benefits to the extent of 25% of the pension. It follows that had the Defendant sought and obtained such approval from the Comptroller the Claimant would have been able to commute up to 25% of her retirement benefits without tax consequence. In that event, the Claimant only 75% of her benefits would have been taxable.”

[38] Ms. Charles says that by failing to apply for section 48 approval of a pension fund, the Authority deprived her of the benefit of a section 25 (1) (m) reduction in taxes on her retirement benefits. She is claiming this sum as damages.

[39] In addition, Ms. Charles claims that her former employer had no legal basis to deduct taxes from the interest earned by her on her PSB and pension. Section 25 (1) (aa) of the Income Tax Act is presented as the basis for this claim. Section 25(1)(aa) exempts from income tax “interest accruing from deposits to an individual who is resident or ordinarily resident in Grenada with effect from 31st March, 1995”. Having been ordinarily resident in Grenada since 1995, interest earned on the sums deposited to the pension fund should not have been taxed since the income used to make said deposits would have already been taxed as income.

[40] Finally, Ms. Charles claims that incorrect rates of tax were applied to her retroactive salary. She explains that further to an email received from her former employer, she was paid the sum of $27,199.12 as “retroactive pay.” Ms. Charles explains that this sum was taxed at a 2016 tax rate of 30%, “…being 15% on the first $24,000.00 and 30% on all income over $24,000.00.”

[41] The incorrect payment on the retroactive salary occurred because –

(1) Until December 2013, no taxes were deducted on the first $60,000.00 of income earned.

(2) The threshold was lowered to $36,000.00 in January 2014 and as such, income tax was payable on all income earned above 36,0000.00.

(3) The retroactive pay made to Ms. Charles covered the period 2010 to 2015 and was taxed as a lump sum earned in 2016.

(4) The rate of 15% on all income earned in excess of $60,000 was not in place in the period 2010 to 2013 and thus the rate utilized by the Airports Authority in 2016 was illegally applied.

(5) The sum paid as retroactive pay for the period 2014 to 2015 was double taxed at 15% as this rate was already deducted when the income was earned during that period.

[42] Under this head of loss, Ms. Charles claims the sum of $41,681.37.

Submissions made by the Airports Authority
[43] The Authority’s position is that the letter concluded an agreement binding on both sides as to the terms and conditions contained therein. In this context, the Authority points to the final paragraph of the letter which reads –

“The Authority trusts that you find the above in order, and require [sic] that you sign and return to the Human Resources Department the attached copy of this letter within seven (7) days as your acceptance to the terms and conditions set out therein.”19 (Authority’s bold emphasis)

[44] The Authority also adverts to clause 14 of the agreement to make the further point that the agreement set out duties, responsibilities, hours of employment, place of employment, medical benefits, holidays, sick days, requirement for continuing education, remuneration, periods of notice, requirements of confidentiality, and the circumstances under which Ms. Charles could be terminated. These provisions all together, the Authority claims, constituted a complete and enforceable agreement between the parties.

[45] The Authority therefore rejects Ms. Charles’ complaint that –

(1) Her signature on the document only represented her acceptance of the letter and was not meant to signal her acceptance of its contents.

(2) She would not have signed an agreement to accept a salary that is less than the amount that she received while she was acting in the same position.

(3) The fact that she was paid several increases in salary over the years means that the salary stated in her agreement with the Authority was not fixed or binding.

[46] The Authority further assails Ms. Charles’ position by pointing out that at paragraph 20 of her witness statement, she states that “In the letter of confirmation regarding my promotion to the position of Manager, ATS, which I accepted…” (Authority’s bold emphasis).” This statement, the Authority posits, indicates Ms. Charles’ understanding that her appointment to the post of Manager, ATS, was subject to the terms and conditions recited in the agreement. The argument is that Ms. Charles cannot at the same time accept that the letter confirmed her appointment in the post of Manager ATS and also reject the terms and conditions set out in the same letter regarding her appointment. Hyde v Wrench is presented as support for the view that the offer was unequivocally accepted by Ms. Charles.

[47] The Authority also rejects the view that Ms. Charles can single out salary from the rest of the agreement and argue for a more favorable term on the issue. The question is, the Authority says, whether Ms. Charles accepted the agreement as signed or whether she rejected it. Once it is concluded that she accepted the express terms on salary, then a term cannot be implied to contradict the express term. Irish Bank Resolution Corp Ltd (in Special Liquidation) v Camden Market Holdings Corp is presented as support for this submission.

[48] Interestingly, the Authority submits, if Ms. Charles is now saying that she is not bound by the terms of the agreement, then she was never properly appointed to the post of Manager, ATS. She would have continued to hold the post of acting Manager, ATS. Her salary would have been paid at the salary paid to her as acting Manager, ATS and her retirement benefits should have been quantified as such.

[49] All in all, the Authority says, when Ms. Charles placed her signature on the agreement, it was not merely an acknowledgement of the receipt of the same. There were any number of ways in which she could have acknowledged receipt of the agreement. But rather, her signature signaled that she agreed with the contents of the document. It is of no moment that she did not tick a box on or underline a part of the document to say whether she agreed to the terms or otherwise.

[50] The Authority argues that the presumption in law is that one who signs a contract is said to have understood its terms and is therefore bound by its terms. The foregoing is excepted in clearly defined instances in the law, none of which are present in Ms. Charles’ case. The authority presents Lux Locations v Yida Zhang as support for this argument.

[51] Ms. Charles, the Authority says, was free to contract with the Authority in any manner in which she so chose. Having done so, she is bound by the choices borne of her free will. See Photo Production Ltd v Securicor Transport Ltd and Reniston Limited v Nedlands Overseas Inc for the Authority’s posture that parties to a contract are free to determine what are the primary obligations of the same. Also, for the view that the court will not easily interfere with the clear terms of an agreement except in limited cases such as where some illegality, incapacity on the part of a party, mistake, duress, misrepresentation and/ or frustration is demonstrated.

Authority’s arguments on “back pay”
[52] The Authority’s short answer to the claimed “back pay” is that the implied term asserted by Ms. Charles does not exist. The Authority states its position thusly –

“The Defendant’s position is that the proper interpretation of the alleged implied term to which the Claimant makes reference, if one does exist, is that the backpay is actually calculated by reference to the new salary of the employee who has just been promoted to the substantive position. It just so happens that in most cases … the new salary of the freshly promoted employee is the same salary as the salary of the predecessor in the post.”

[53] The Authority notes that the court will normally imply terms into a contract in a number of circumstances. The Authority cites a few examples such as where –

(1) Where there is a general custom in contracts of that nature to include certain terms.

(2) Where statute dictates that contracts of a certain nature should include such terms.

(3) The term is necessary to give business efficacy to the agreement.

(4) The term is so obvious that an officious bystander would concur that its inclusion goes without saying.

[54] In any event, says the Authority, the claimed implied clause must be capable of precise formulation. See Shell UK v Lostock Garage Limited for this view. The Authority disputes that the allegedly implied clause is capable of precise formulation. The Authority explains the rationale for paying a “back pay” in some instances. It is said that –

“for all intents and purposes, the employee has held the substantive post which they have now been promoted to in all but name since the commencement of their period of acting in the position, and thus they ought not to be deprived of any moneys they would have been paid if they had simply been conformed in the position from the start instead of having had to act in the position.”

[55] It is for this reason, the Authority explains, a person is paid the difference between the salary that they were paid when they were acting and their new salary when they were confirmed, if that new salary is higher than the salary that they were paid when they were acting. If the new salary is less, then they would not have lost anything while acting and as such a “back pay” is not required. The Authority posits that both the formulation that it proposes and the one relied on by Ms. Charles are both reasonable articulations of the clause. In such a case, the court must find that the clause in question is too imprecise to be accepted as one to be implied into the contract.

[56] The Authority relies on dicta in the cases of Southern Foundries (1926) Ltd v Shirlaw and AG of Belize v Belize Telecoms Ltd to make the point that the term that Ms. Charles seeks to import into the contract is not one that is necessary to give business efficacy to the agreement and is not one that one can say that is so plainly obvious that it can be said that the parties intended it to be a term of the agreement. The Authority accuses Ms. Charles of seeking to improve the terms of the agreement on the question of salary.

The discrimination point
[57] On the 10th August 2023, the Authority filed further submissions addressing Ms. Charles’ submissions on the Employment Act. In short, the Authority’s position is that Ms. Charles is bound by her pleadings and that nowhere in her pleadings did she raise the question of a breach of the Employment Act. Rather, the issue of the Employment Act seems to have made its first appearance in her submissions filed on 30th June 2023. The Authority insists that the pleaded case was one that focused on a purportedly “established practice”, a legitimate expectation based on that practice, implied terms and signing the contract by mistake. The Authority casts Ms. Charles’ reliance on the Employment Act as an abuse of the court’s process. The Authority presents George W. Bennett Bryson’s and Co. v George Purcell and Charmaine Bernard v Ramesh Seebalack in support of the argument that Ms. Charles is bound by her pleadings.

[58] In any event, the Authority continues, even if the court permits the late addition of the claimed relief, the arguments on the Employment Act do not assist Ms. Charles for the following reasons –

(1) Section 28(1) of the Employment Act requires that a person aggrieved by an alleged breach of the provisions of the Employment Act may seek redress in the courts if the breach cannot be resolved by way of the industrial relations framework. The Authority says that Ms. Charles has not pursued a resolution of her assertion of breach of the Employment Act by way of an industrial relations dispute resolution mechanism. Equally, she has not shown why her choice of the court is more suitable than the industrial relations dispute resolution mechanism.

(2) Ms. Charles is required to show on allegations of discrimination based on sex, that the only relevant or material differences between herself and alleged comparators are that of sex or sex specific characteristics. Cordell v Foreign and Commonwealth Office is cited as support for this submission. Indeed, the point is stressed by the Authority that two employees of varying skills, experience, qualifications, tenure, seniority and other factors may be able to negotiate differing salaries with their employers. If it turns out that they are of the same gender, the provisions of the Employment Act do not automatically apply to give them the same salary since different factors besides sex may have informed the basis on which the parties arrived at the salary to be paid to each employee. More fundamentally, having not pleaded or set out a case on the pleadings or in her witness statement to show that the only or only material difference between her and her predecessor in office is gender, the Authority argues that this contention must fail.

(3) Even the comparators presented by Ms. Charles in her submissions in the persons of Maureen Japal, Hernel Pancho and Alana Paul, all prove that there was no sex-based discrimination in the Authority’s practices since these persons, all women, were all paid the same salary as their predecessors in office.

Further submissions made by Ms. Charles on discrimination
[59] On 18th August 2023, Ms. Charles filed further submissions in response to the Authority’s submissions on her discrimination claims. In this regard, Ms. Charles’ response is that she has sufficiently pleaded her case about discrimination on grounds of sex. For the first time, she makes the point that if the court does not find that she sufficiently canvassed a claim of discrimination on grounds of sex, the court can, in any event, consider whether she was discriminated “against in respect of the terms and conditions of her employment or in relation to any other matter arising out of the employment relationship.” (Ms. Charles’ emphasis). Ms. Charles says that the latter finding is permissible by the terms of section 26(1) of the Employment Act. On this score, she explains that the evidence shows that she was treated differently than her former colleague in the office of ATC, Manager.

[60] Finally, Ms. Charles says that she was not paid equal pay for equal work.

Analysis and discussion
[61] The myriad contentions back and forth on this claim can be subsumed into the following issues –

(1) Was there a concluded contract?

(2) If there was a concluded contract, was there, in any event, a term or terms to be implied on salaries?

(3) If there was a concluded contract, whether the provisions on salaries could be set aside on the allegations of discrimination?

(4) Were rates of interest and taxes properly applied in all the circumstances?

TO BE CONTINUED

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