Richard W. Ground OBE QC
The Supreme Court
Turks & Caicos Islands
Tel: 649 946 2114; Fax: 649 946 2720
To: Mr. Ariel Misick, Misick & Stanbrook
Mr. Carlos Simons, Miller Simons O’Sullivan
Date: 7th October 2002 No. of pages (incl. this one): 6
IN THE SUPREME COURT CL 62/01
TURKS & CAICOS ISLANDS
- and -
BARCLAYS BANK PLC
CIRCULATION OF DRAFT JUDGMENT BY FAX
I attach (in a compressed format) a draft of my Judgment in this matter. I propose to deliver this Judgment in open court on a date to be fixed by the Registrar. You will see that I have required the parties to recalculate the plaintiffs entitlement on the basis indicated in the Judgment. If that and the question of the costs can be agreed prior to delivery of the Judgment. I would be prepared to dispense with the attendance of counsel. Until the ruling has been formally delivered it should be treated as confidential to counsel and their clients.
IN THE SUPREME COURT CL 62/01
TURKS & CAICOS ISLANDS
- and -
BARCLAYS BANK PLC
Mr. Ariel Misick for the Plaintiff: and
Mr. Carlos Simons for the Defendant.
1. In this matter the plaintiff claims $37,894 for an alleged breach of his contract of employment by the defendant ('the Bank'). It is the plaintiffs case that it was a term of his contract of employment that -
”. . . if he was assigned abroad at the request of the Defendant he would receive disposable income in real terms not less than that which he received at his Home Base.’’ (see Statemem of Claim, paragraph 6)
2. In September 1996 the plaintiff was assigned by the Bank to St. Maarten in the Netherlands Antilles, and his case is that his disposable income there was in fact $2,334 per month lower than it was in Grand Turk, where he had previously been employed as manager of the local branch of the Bank. He therefore claims that sum for part of the period of his assignment, being October 1996 to January 1998 (16 x 2,334 =$37,344). For the balance of the period of his assignment in St. Maarten (1st February 1998 to 30th June 1999) he received that sum in circumstances which I have dealt with further below.
3. By paragraph 5 of the Amended Defence and Counterclaim, the Bank admits the contractual term contended for by the plaintiff. The dispute is about its application, and in particular about the method of ascertaining his disposable income at Home Base. Moreover, it is the Bank's case that, due to a mistake on its part, the plaintiff was overpaid tor the period 1st February 1998 to 30th June 1999. Indeed, there is a pleaded Counterclaim in respect of that overpayment. However, that was abandoned al trial, it being accepted that any misrake by the Bank was not known to the plaintiff.
4. There was no agreed bundle at trial, each side producing it own, However, all page references in this judgment are to the Bank’s bundle of documents. There was also an issue over the admissibility of the witness statement of the Bank’s witness. Judy Mayers. Witness statements were exchanged pursuant to a direction given by consent on 12th July. The exchange happened on or about I4th August. Immediately prior to the exchange the Bank gave notice, by letter of I4lh August 2002 (p. 106), that Ms. Mayers would not be able to attend trial as she lived overseas "and was unwilling to travel to Providenciales.'' However, they served a copy of her witness statement with an indication that they would seek to put it in under the provisions of Part IV of the Evidence Ordinance 2001. The trial began on 28th August, when the Bank applied to have the statement admitted without calling the maker. I reserved a final decision on that application, while looking at the document de bene esse in the interim. Having now considered the matter I admit Ms. Mayers’ statement under section 15 of the Evidence Ordinance 2.001.. In doing so I
the evince of 1° ïf * ^1-6 °f '* 'S c0,nc5ltíd' and thar il adds hitJe if anything to ,fknCL olthe Bank soinerwRne^s. who was called and was cross-examined.
5. I find the following background facts, none of which are contentious. The Plaintiff is a 58 car old belonger of the Turks & Caicos Islands (‘the TCI'). He was first employed by the Bank in Grand Turk, and remained with them for 28 years, until June 1999, when he left for another employer. The Bank has two branches in the TCI. one of which is the principal branch, and the other the subordinate. Grand Turk was originally the principal branch, and Providenciales the subordinate, but in or about November 1989, the demographic shift to Providenciales caused the Bank to reverse this. From 1st July 1987 onwards the plaintiff was manager of the subordinate branch, first in Providenciales, and after the reversal, in Grand Turk. In 1996, while he was manager of the Grand Turk branch, the Bank requested the plaintiff to act as its manager in St. Maarten, and he accepted that, with effect from 23rd September 1996.
6. Al all material times the following paragraph was contained in the Bank's Caribbean Area Staff Manual, in the chapter governing transfers (see. p. 56):
It will be appreciated that with six different currency units applicable to the territories under the control of the Caribbean Head Office, different levels of taxation and the absence of taxation in some territories, there will be disparities between the RPS and the local salary. With ibis in mind, a formula has been devised to ensure that the expatriate official receives a disposable income, in real terms, no less than would be available to him/her at home base and details are advised to the official in writing at the time of the transfer."
7. Both sides accept that that paragraph was incorporated in the plaintiff's contract of employment - it is the obvious source of the pleaded term, which, as noted above, is admitted.
8. However, the terms of the formula, which the Bank had devised to implement the contractual term, were not known to the plaintiff at or before the lime of his transfer, and the "details" advised to him at the time were as to the result of its application and not the way it was applied.
9. The expression ''RPS’’ in the manual means "Record Pension Salary," and essentially it i$ the salary he would have got had he remained at home. The expression '’home base" was, to a certain extent, a term of art. There is a dispute about what it means. Both sides accept that at one time it had meant the actual place of recruitment within a country, and that at that lime in certain regional jurisdictions there could be several places which were capable of constituting home bases. It is the Bank's case that this changed in 1992. by virtue of a circular letter of 12thNovember of that year (see p. 99). That letter was sent to each country which had differential regional conditions, and it essentially said that in view of modern communications the need for internal home bases had gone and that therefore:
.... with effect from 1 January 1993 home bases for all staff will be the country in which staff were/will be recruited."
10. It is the plaintiff's case that that circular only applied to internal displacement, and had no application to external transfers. However, I do not think that it was so limited and I accept the Bank's argument that from then on an employee’s home base was for all purposes his country of
recruitment. However, for the reasons given below, I do not find that that has the effect for which the Bank contends.
11. The undisclosed formula used by the Bank to implement the term contained in the manual was as follows. 40% of the employee’s home base salary was notionally set aside to cover commitments at home. The remaining 60% of his home base salary was regarded as disposable income, and was then adjusted up or down by a cost-of-living factor. The adjusted disposable income was then added back to the reserved 40%, and if the total was higher than the overseas (or 'work base’) salary the Bank paid the employee a compensatory “offshore payment’’ to lop up his overseas income.
12. The cost-of-living factor used to adjust the 60% notional disposable income was expressed as a multiplier which was the product of the monthly cost of living abroad divided by the monthly cost of living at home base. The monthly cost of living was ascertained by statistics gathered by the Bank through its branches in the various locales, based on a fixed 'shopping basket’ of items.
13. After his transfer the plaintiff says that he discovered that his income did not go so far in St. Maarten as it had in Grand Turk, and he took (he matter up with the Bank. Under cover of a letter of 6th December 1996 (p. 12) the Bank provided him with a copy of their calculation (p. 13). I find that this was the first time that the plaintiff saw the calculation or the formula used in it. At that lime his net salary is St Maarten was said to be NAF 87.241, and his RPS or home base salary was .$62,508, 60% of his home base salary was $37,504.80, and to that was applied a cost of living factor of 3766/5980, in which the $3766 was the monthly cost of living in St. Maarten and the $5980 was the cost of living in Providenciales. The application of that factor meant that his disposable income in the TCI was regarded as $23.619.02 in St. Maarten terms. When added back to the reserved 40%, that gave a total of $48,622, or (when converted at 1.79 Netherlands Antilles Florins to the US $)N’AF 87,033.77. On that calculation he was earning slightly more in St. Maarten than at home, and so was refused any adjustment. The plaintiff wrote back (p. 14) querying the cost of living factor, and arguing that prices in St. Maarten were the same as in Grand Turk, on which basis he argued he was $1100 per month worse off.
14. That initial correspondence throws into relief the point which, in my judgment, is the central issue in this case. The Bank were basing the calculation on the cost of living in Providenciales. while Mr. Lightbourne was referring to Grand Turk. In fact the Bank gathered data on both those places, and figures for the material years are at pp. 78 - 80. According to the Bank's figures, throughout the material period the cost of living was significantly higher in Providenciales than it was in Grand Turk. In particular, the Bank's figures show that in 1996 the monthly cost of living in Providenciales was $5,980. but in Grand Turk it was $4,052. Had the Grand Turk figures been applied in the above calculation the result would have been a shortfall of approximately NAP
19.910 or US $ 11.123 per annum.
15. The Bank argues that the Providenciales cost of living was the appropriate one, because the TCI has a unified salary scale, in the sense that salaries in Providenciales and in Grand Turk are on the same scale, notwithstanding any difference in the cost of living between the two place. Moreover, the Providenciales cost of living figures are the basis on which the TCI salary scale is based. They therefore considered that Mr. Lightbourne had had a lucky and gratuitous advantage when he was based in Grand Turk, for the loss of which on transfer he was not entitled to be compensated. This is set out in an internal E-mail of 4th December 1997 (p. 19), following which the Bank replied to the plaintiff on 6th December of that year setting out their calculation and the reasons for it (see pp, 20 - 21).
16. The position would have remained there, but for the fact that with effect from 1“ February 1998 the plaintiff's area of responsibility was enlarged, and he received a 5% salary increase. Thai took him into a higher tax bracket, which would have abrogated lhe benefit of the raise. As a result he asked the Bank's accountants. Coopers & Lybrand, to calculate his net salary after tax with a view to his eligibility for an offshore payment, and as a result of their analysis the Bank accepted that he was eligible for an offshore payment. However, that was based solely upon a recalculation of his net income after tax. The Coopers & Lybrand exercise did not address the applicable cost of living factor at all. It was a trigger for a recalculation by the Bank, but in doing that they continued to apply a cost of living factor based on Providenciales and not Grand Turk.
17. The Bank's new calculation is at p. 31. If expressed correctly, the result was that he was entitled to a top-up payment of NAF 28,012.81 p.a. (or US $15,650 at the then exchange rate of NAP 179 = $1). However, because of an internal error by the bank, the result was expressed in dollars, and from then on the plaintiff received a top-up payment based on $28,012.81 p.a. The actual amount received (which is admitted) was 17 monthly payments (1st Feb. 1998 to 30th June 1999) of $2,334, being $39,678. The evidence is that the Bank did not realise this mistake until these proceedings were well-advanced. Ms. Mayers' witness statement, at paragraph 23, says that it was drawn to her attention in May 2002, and I accept that.
18. It is common ground that the plaintiff did not see the re-calculation at the time, and the letter of notification of 11th May 1998 (p. 32) gave no hint of the error. The Bank's witnesses accept that the plaintiff was not aware of the mistake. The plaintiff says that he accepted the new figure as it gave him approximately what he thought he was entitled to. The error was the basis for the counterclaim, which sought to recover the difference between what the plaintiff was entitled to on their calculations, and what he was actually paid, However, in view of the abandonment of the counterclaim I do not need to go into that further.
19. The monthly figure of $2,334 under the erroneous calculation forms rhe basis of the plaintiff's calculation in his Statement of Claim - he claims that same sum for the period prior to the increase (the 16 months from October 1996 to January 1998). The actual product of 16 months at $2,334 is $37,344. and the discrepancy between that and the amount claimed is unexplained, but in any event, I do not think that that approach is the correct one. The plaintiff is plainly not entitled to the erroneous sum for the earlier months.
20. However, it is implicit in the Coopers & Lybrand exercise that tile plaintiff's earlier net income at his work base had been miscalculated, and should have been lower. He was, therefore, entitled to some degree of offshore payment from the outset, although that was refused at the time. The Bank now accept that that refusal was wrongful (although it is also their case that that refusal does not now entitle him to any compensation because, even on a recalculation, they assert that he has been overpaid due to the mistake in currencies): see paragraph 27 of both Ms. Mayers’ and Ms. Floro-Forde’s witness statement. The Bank pleads the amounts they admit m paragraph 4 of the Statement of Claim. Those figures are said to be bused upon the calculations at p. 45. However. I have not been taken through those calculation in detail in the evidence, and there are difficulties with them: e.g. the work base cost of living for 1996 docs not match that at p. 80; and the calculation for 1998 does not match that at p. 31, and seems to take no account of the plaintiffs 5% salary increase in February of that year.
21. One subsidiary point which arises from the Coopers & Lybrand exercise is that they made a suggestion that the Bank could pay the whole of certain premiums; see paragraph 3 of their report (p. 25). That was not agreed by the Bank, and I find that it forms no part of the plaintiff's entitlement.
22. It is not disputed that the plaintiff was entitled to compensatory payments to ensure that he received "a disposable income, in real terms, no less than would be available to him/her at home base." I think that that is to be interpreted literally, and it cannot be constrained by any internal practice of the bank which was not expressly made known to the employee and accepted by him.
23. The very clear wording of the contractual term makes it plain that the transferred employee is to get the equivalent of what he received at home “in real terms.” That requires a consideration of both what he in fact received at home, and its value to him there. That means looking at the cost of living at home. For these purposes it is quite irrelevant whether his "home base” is described as Grand Turk (as the plaintiff contends) or as the Turks & Caicos Islands (as the Bank contends). Even if his home base, properly considered, is the TCI. one still has to look at his cost of living in the TCI. and if there is an internal differential that has to be recognised.
24. Whether or not there is an internal differential is a question of fact. In some cases that might be impossible to establish, or difficult to quantify. In this case, however, there is really no argument that there is. because the Bank's own cost of living figures establish it.
25. Nor is it relevant that the salary scales in the TCI are based on the Providcnciales cost of living. That may give employees in Grand Turk a fortuitous advantage, but it is a real one which, under the express terms of their contract of employment, they were entitled to keep on transfer abroad. It does not matter that they could not keep it on an internal transfer, because we are not dealing with an internal transfer. Moreover, as the plaintiff says, and I accept, if he had known he was io loose (hat advantage, he would not have accepted the transfer to St. Maarten.
26. Apart from the question of which cost of living factor to apply, I accept the Bank’s formula for calculating the top up payments. While the formula is not strictly a term of the contract, because it was not made known to employees, it is a practical way of computing the contractual entitlement, and (subject to the applicable cost of living factor) it was not otherwise seriously challenged. I find, therefore, that the plaintiff was and is entitled to compensatory payments to be calculated on the Bank's formula, but using the Grand Turk monthly cost of living, as set out in the document at p. 78, for each applicable year.
27. I have not attempted this calculation, because I am not clear on the evidence what his adjusted net salary after tax was in St. Maarten during the earlier years. I understand the Bank to accept that it is not in fact that shown in their initial calculation (see p. 13), and that it should be adjusted following the Coopers & Lybrand exercise. I am therefore going to direct the parties to re-do the calculation for the earlier years based on the revised net income figures, and the Grand
Turk cost of living. If they arc unable to agree the final figure, then they can seek further directions on any point remaining in dispute, and I will take further evidence on it if necessary. As I am going to circulate a draft of this judgment before delivering, it may be convenient to hoar any further argument when it is delivered.
28. I will, therefore, give judgment for the plaintiff in a sum to be finalised as indicated above. I will hear the parties on costs.
Dated this day of October 2002