Societe Generale, London Branch v Geys [2011] EWCA Civ 307

Case No A3/2010/1028[2011] EWCA Civ 307
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2010] EWHC 648 (Ch)
ON APPEAL FROM HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr George Leggatt QC (sitting as a Deputy High Court Judge)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 30/03/2011
Before
LADY JUSTICE ARDENLORD JUSTICE RIMERLORD JUSTICE PITCHFORD
Between
SOCIETE GENERALE, LONDON BRANCHAppellantRAPHAEL GEYSRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Ian Gatt QC and Ms Rachel Bennett (of Herbert Smith LLP) for AppellantMr David Cavender QC (instructed by Fox Williams LLP) for RespondentHearing Hearing date: 29 November 2010
JudgmentLord Justice Rimer :Introduction
[1]This appeal by Société Générale, London Branch (‘the Bank’), is against the order dated 25 March 2010 made by Mr George Leggatt QC sitting as a Deputy High Court Judge in the Chancery Division. The Bank is the defendant to a claim brought by its former employee, Mr Raphael Geys. Mr Cavender QC represented Mr Geys, as he did below. Mr Gatt QC and Ms Bennett represented the Bank, as they also did below.[2]Following Mr Geys’s summary dismissal by the Bank on 29 November 2007, he asserted that more than €12.5m was contractually due to him on the termination of his contract (‘termination payments’), plus damages for breach of contract by the Bank on the bases that it(a) had breached an obligation under his contract to use all reasonable endeavours to make certain payments to him in a tax efficient manner in relation to the years 2005 and 2006, and(b) had wrongfully dismissed him.[3]The Bank’s position was that all that Mr Geys was entitled to following the termination of his contract was some €7.9m by way of contractual termination payments, which it offered him. Mr Geys refused that offer and commenced his claim in the Chancery Division, including his claims for damages under both heads (a) and (b) above. Both damages claims were, however, removed from his pleading following an interim hearing in June 2009 before Mr Kevin Prosser QC, sitting as a Deputy High Court Judge in the Chancery Division. By a re-amendment to its Defence in early 2010, the Bank pleaded however that the original making by Mr Geys of the two damages claims precluded him from recovering any termination payments. That is because it is said to have caused him to fail to satisfy a condition precedent of his entitlement to such payments.[4]The trial of Mr Geys’s claim on various liability issues before Mr Leggatt QC occupied four days in March 2010. During the trial, Mr Geys restored, by way of amendment to his pleading, his damages claim for wrongful dismissal. Mr Cavender told us that that damages claim is the only one still being pursued. I note, however, that Schedule 2 to the judge’s order appears to have given directions for the pursuit of the other damages claim referred to in paragraph [2] above and so precisely what the position is in relation to that head of claim is obscure. It is not, however, material to the disposition of the issues before us. By his order the judge otherwise, and so far as material, gave judgment for Mr Geys in a sum to be assessed, with a payment on account by 1 April 2010 of €11m (less tax and NI contributions), plus interest on all sums due from 3 February 2008 at 1% above base rate. He awarded Mr Geys his costs and ordered an interim payment of £200,000 on account by 30 April 2010.[5]The Bank’s appeal, for which I gave permission, is based on five grounds. The first two raise the question as to when Mr Geys’s employment contract terminated. The remaining three raise questions as to whether any (and, if yes, what) termination payments are due to him in consequence of its termination. If any payments are so due, the answer to the ‘when’ question is important in ascertaining what they amount to. The Bank claims that the date of termination was either 29 November or 18 December 2007 (it matters not which). By contrast, Mr Geys claims that it was either 6 January or 29 February 2008 (it again matters not which). Assuming that he is in principle entitled to any termination payments, the date difference in financial terms is about €2.5m. That is also the measure of his wrongful dismissal claim, although he cannot of course make double recovery.

The facts

[6]Mr Geys, a Belgian national, was employed by the Bank from 9 February 2005 as the Managing Director of its European Fixed Income Sales, Financial Institutions Division. He had a written contract of employment. It was offered to him by a letter of 28 January 2005 which also enclosed a copy of the ‘Staff Handbook of the SGUK Group’ (‘the Handbook’).[7]The contract includes complicated remuneration provisions, to which I will later come, but at this stage I need to refer only to two of its clauses. Clause 13, headed ‘Notice’, provided that:
‘Your employment can be terminated on the expiry of 3 months’ written notice of termination given by you to [the Bank] or by [the Bank] to you.’
Clause 17, headed ‘General Information’, provided that:
‘This contract is in conjunction with the offer letter, [the Handbook] (as amended from time to time) and the SGUK Compliance Manual which, together with this letter [meaning the contract], form the written particulars of employment as required by law. However, in the event of any conflict of any terms set out in this Contract and those contained in the Handbook the terms of this contract shall prevail.’
[8]The Handbook is in five sections, of which the first is headed ‘Terms and Conditions of Employment’. The version provided to us is that in force from 1 January 2006 and so it post-dated the contract, but clause 17 of the contract referred to the Handbook ‘as amended from time to time’. Paragraph 8.3 of the Handbook, in section 1 and headed ‘Termination by [the Bank] and Payment in Lieu of Notice’, provided:
‘[The Bank] reserves the right to terminate your employment at any time with immediate effect by making a payment to you in lieu of notice (or, if notice has already been given, the balance of your notice period) based upon the value of your: • Basic annual salary; and • Flexible benefits allowance; for your notice period (or, if notice has already been given, the balance of your notice period).’
[9]On 29 November 2007 the Bank called Mr Geys to a meeting at which he was told, and was handed a letter stating, that the Bank ‘has decided to terminate your employment with immediate effect.’ He was escorted from the building and did not return to it.[10]Correspondence then passed between Mr Geys’s solicitors and the Bank. On 7 December 2007 his solicitors wrote asking for further information as to the sums the Bank was offering to pay him following the termination of his employment and for termination documentation, but also saying that in the meantime he reserved all his rights. On 10 December 2007 Mr Adams, of the Bank’s legal department, sent Mr Geys his ‘Severance Agreement’, said to have been prepared in line with his contract. The letter enclosed a summary of the payments proposed to be made to him and said that the Human Resources department would contact him separately ‘regarding your leaver details (notice pay, holiday pay etc).’ The enclosure was another letter dated 10 December 2007, setting out ‘the terms of the termination agreement between [the Bank] and you in relation to the termination of your employment on 29th November 2007’, thereafter referred to as ‘the Termination Date’. Paragraph 1 stated that:
‘You have received your normal salary and benefits up to the Termination Date, together with any accrued but untaken holiday pay, subject of course, to normal deductions in respect of income tax and national insurance contributions. You will be informed separately of the salary and the deductions which have been made.’
Paragraph 2 listed various payments that the Bank proposed to pay Mr Geys as his entitlement under his contract. The letter then set out the Bank’s proposed contractual terms for a clean break. Mr Geys was invited to agree to the terms by returning a signed copy but he declined to do so.[11]On 18 December 2007 the Bank paid £31,899.29 into Mr Geys’s bank account. It is agreed that this was the equivalent of his basic salary and flexible benefits allowance for three months and so was a payment satisfying the monetary requirements of paragraph 8.3 of the Handbook. Mr Geys admitted in his witness statement that he became aware of the payment ‘at some point before 2 January 2008’ and the judge found that ‘it was probably before the end of December 2007’ that he did so. Mr Geys accepted in his oral evidence that, whilst he could not be sure what the payment related to, ‘the best guess I could have’ was that it was intended to be a payment in lieu of notice.[12]On 21 December 2007 Mr Geys’s solicitors wrote in reply to the Bank’s letter of 10 December asking for further information, in particular as to how the proposed payments had been calculated. That letter again reserved ‘all our client’s rights in relation to his employment/contract of employment.’[13]There is no dispute that at some uncertain point (but the judge made no finding as to precisely when) the Bank sent Mr Geys a payslip, accompanied by a P45, detailing the make up of the payment of 18 December 2007 and describing the major part of it as ‘in lieu pay’ (£37,500 before deductions). Mr Geys first saw the payslip when he returned to London on 7 or 8 January 2008 from Belgium, where he had spent the Christmas and New Year holiday.[14]On 2 January 2008 Mr Geys’s solicitors wrote to the Bank’s solicitors saying that he ‘has decided to affirm his contract of employment.’ The letter referred to the payment of 18 December 2007 and reserved his position ‘in relation to the acceptance of these monies once we understand what they constitute.’[15]On 4 January 2008 Ms Baverstock of the Bank’s HR department wrote to Mr Geys ‘further to your meeting … on 29 November 2007 [the one at which the Bank dismissed him] to confirm the details of the termination of your employment.’ This was the letter that Mr Adams, in his letter of 10 December 2007, had said would be written and it set out Mr Geys’s entitlements under various headings. The first two were as follows:
‘1. Notice Entitlement Under your terms and conditions of employment, you are entitled to 3 months’ notice of termination of your employment. [The Bank] gave you notice to terminate your employment with immediate effect on 29 November 2007 (your Termination Date) and will pay you in lieu of your notice period. This payment will be calculated in accordance with Section 1/8.3 of [the Handbook]. 2. Final Salary Payment Your notice payment was credited to your bank account on 18 December and your final salary slip and P45 was sent to your home address. This amount was paid to you with deduction of income tax or employee NICs.’
Those paragraphs were worded infelicitously, but despite the apparent futurity of the payment promise in paragraph 1 their overall sense was that the promised payment was satisfied by that of 18 December 2007, which was pay in lieu of notice (‘PILON’) for the purposes of paragraph 8.3 of the Handbook.[16]With that background, I proceed to the first two grounds of the Bank’s appeal. They challenge the judge’s conclusion that Mr Geys’s employment contract was not terminated until 6 January 2008. That was the day when Mr Geys was deemed (by the notice provision in paragraph 8.1 of the Handbook) to have received the Bank’s letter of 4 January 2008. The importance of that letter was, the judge held, that it was the first occasion on which the Bank notified Mr Geys that it had exercised its right to terminate his contract by a PILON under the provisions of paragraph 8.3. It was only when Mr Geys was given such notice that, the judge held, the employment contract was terminated: nothing that had happened before had been sufficient to terminate it. It is to Mr Geys’s financial advantage that his contract should have survived beyond 1 January 2008. It is to the Bank’s financial advantage that it was terminated before that date. By the first two grounds the Bank seeks to make good its case that it was so terminated. I explain the financial importance of this point later, when dealing with Ground 3 of the Bank’s appeal.

Ground 1: was Mr Geys dismissed on 29 November 2007?

[17]By Ground 1 the Bank submits, contrary to the judge’s holding, that it terminated Mr Geys’s employment contract on 29 November 2007 when it summarily dismissed him, following which he did not return to work. The problem with that submission is that it is common ground that the Bank’s summary dismissal of him was a repudiation of his contract which he did not accept either in 2007 or at all. (The Bank argued before the judge that Mr Geys had impliedlyaccepted the Bank’s repudiation, but the judge rejected that argument and it was not renewed before us). That being so, Mr Gatt did not develop Ground 1, nor when asking for permission to appeal did he suggest he would. That is because he recognises that, at this level of the judicial hierarchy, Ground 1 is doomed to failure because of adverse prior authority binding upon this court as upon the judge. Gunton v. Richmond-upon-Thames London Borough Council [1981] 1 Ch 448 is authority of this court (Shaw LJ dissenting) that an unaccepted repudiation of a contract of employment does not automatically terminate it even though a repudiatory dismissal will at least terminate the employee’s status as an employee. Gunton was followed by this court in Boyo v. Lambeth London Borough Council [1994] ICR 727, the members of the court (or at least Ralph Gibson and Staughton L.JJ) expressing regret that they were bound by it.[18]The Bank raised Ground 1, and I gave it permission to appeal on that ground, solely to enable it to keep open the possibility of an appeal to the Supreme Court to re-consider this area of the law and hold that, in the context of employment law, a repudiatory dismissal of an employee in breach of contract will by itself terminate the contract even if the repudiation is not accepted. There is, therefore, no need to say much more about Ground 1.[19]Whilst I agree that this court is bound to hold that its unaccepted repudiatory dismissal of Mr Geys on 29 November 2007 did not terminate his employment contract, I consider that such dismissal would at least have constituted the ‘effective date of termination’ (‘the EDT’) of his employment for the purposes of section 97(1) of the Employment Rights Act 1996 and so would (among other things) have triggered the running of the three-month time limit within which Mr Geys might have brought a claim for unfair dismissal before an employment tribunal (section 111(2)): see Dedman v. British Building & Engineering Appliances Ltd [1974] ICR 53; and Robert Cort & Son Ltd v. Charman [1981] ICR 816. That, however, is not in point for present purposes, the appeal raising the different question of when according to the principles of the general law of contract Mr Geys’s employment contract terminated. I would dismiss Ground 1 of the Bank’s appeal.

Ground 2: payment in lieu of notice (PILON)

[20]Recognising the problems posed by Gunton and Boyo, the Bank’s primary case for a 2007 termination was and is that it effected it on 18 December 2007 by paying £31,899.29 into Mr Geys’s bank account by way of a PILON under paragraph 8.3 of the Handbook. That payment represented what was due to Mr Geys by way of three months basic salary and flexible benefits allowances as at 29 November 2007. No point arises as to the amount of the payment. Nor has any point been taken that anything turned on the passage of time between 29 November 2007 and the date of payment.[21]Mr Geys’s responsive argument before the judge was that the PILON provision in paragraph 8.3 in the Handbook was in conflict with the three months’ notice provision in clause 13 of the contract, with the consequence that clause 17 of the contract required clause 13 to prevail over paragraph 8.3. If so, there was no right to terminate the contract by a PILON and nothing else happened in 2007 to bring the contract to an end. Mr Geys’s alternative argument was that, if paragraph 8.3 didgive the Bank the right it claimed, the Bank did not effectively exercise it until it had given notice to Mr Geys that it had done so; and it did not do that until it wrote its letter of 4 January 2008, deemed to have been received on 6 January 2008.[22]The judge rejected the conflict argument. He held that the provisions of the contract and the Handbook were all terms of the employment contract, which had to be construed as a whole so as to give effect, where possible, to all parts of it. He referred to Pagnan SpA v. Tradax Ocean Transportation SA [1986] 2 Lloyd’s Law Reports 646, in which Steyn J said, at 653, that ‘… the Court’s duty is to reconcile seemingly inconsistent provisions if that result can conscientiously and fairly be achieved.’ He also cited from Bingham LJ’s judgment in the Court of Appeal in that case ([1987] 2 Lloyd’s Law Reports 342, at 350):
‘It is a commonplace of documentary construction that an apparently wide and absolute provision is subject to limitation, modification or qualification by other provisions. It does not make the later provisions inconsistent or repugnant. … It is not enough if one term qualifies or modifies the effect of another; to be inconsistent a term must contradict another term or be in conflict with it, such that effect cannot fairly be given to both clauses.’
The judge said that Pagnan illustrated that that approach applies equally in a case in which one provision is in the special conditions and the other in the printed clauses of the contract, with the contract including an ‘inconsistency clause’ providing that the special conditions ‘shall prevail in so far as they may be inconsistent with the printed clauses.’[23]Applying that approach, the judge concluded that there was no inconsistency between clause 13 and paragraph 8.3. Clause 13 could not on any view be read as giving Mr Geys an unqualified right to three months’ notice of termination, because other provisions of the contract contained express rights to terminate it with immediate effect (for example, clause 5.8, providing for immediate termination for specified causes). Clause 13 obviously had to be read as qualified by that. The judge held that paragraph 8.3 qualified clause 13 but was not in conflict with it. He rejected Mr Geys’s conflict argument.[24]The judge, however, accepted Mr Geys’s alternative argument that the right to terminate the contract by a PILON was not validly exercised until in January 2008 the Bank gave him notice of such exercise. He rejected the Bank’s argument that all that the Bank needed to do was to pay the money into Mr Geys’s bank account. He considered that it would be surprising if an employment contract could be terminated by an act by the employer of which the employee was unaware. He recognised, in paragraph 35 of his judgment, that it would be possible for an employment contract to provide for the contract to be terminated by a payment subjectively intended by the employer to be in lieu of notice but said that clear words would be required before such an intention could be attributed to the parties. This was not, he held, a reasonable interpretation of paragraph 8.3. His conclusion was that:
‘35. … In order for a payment to amount to a payment “in lieu of notice” within the meaning of the clause, I would hold that it is necessary for the Bank not only to make a payment to [Mr Geys] of a sum calculated in accordance with the clause, but also to give notice to [him] that it is exercising its right to terminate [his] employment by making the payment. On general principle, such a notice must be sufficiently clear and unambiguous in order to be effective. 36. In the present case it was not until the Bank belatedly sent its “standard Human Resources letter” to [Mr Geys] on 4 January 2008 that it clearly conveyed that it had decided to exercise its right to terminate [his] employment by making a payment to him in lieu of notice and that the sum credited to his bank account on 18 December 2007 was intended to include such a payment. The fact that [Mr Geys] could have, and probably had, guessed that this was the most likely explanation for the credit was not in my view sufficient to alter his legal rights before the position was made clear.’
[25]Ground 2 of the Bank’s appeal challenges that conclusion. By a respondent’s notice, Mr Geys challenges the judge’s conclusion on the conflict point. The conflict point logically arises first and so I will take it first.[26]Mr Cavender, for Mr Geys, submitted that the judge was wrong to reject the conflict argument. A notice under clause 13 resulted in the contract continuing for a further three months. A PILON under paragraph 8.3 brought the contract to an immediate end. There is therefore a difference under the two provisions in the way in which the Bank can terminate Mr Geys’s contract without cause, but both are directed to achieving the same end. There is therefore a conflict between them. Moreover the choice as to method (whether under clause 13 or paragraph 8.3) can (and in the present case does) have material implications on Mr Geys’s position, since his contractual rights under a 2008 termination are significantly more valuable than under a 2007 termination. This is because his qualification for certain benefits under his contract – the FISS (which I explain when dealing with Ground 3) – was on a calendar year basis and depended upon his being employed as at 31 December in relation to the relevant year. The financial difference was some €2.5m. Mr Cavender’s submission was, therefore, that the paragraph 8.3 PILON option was simply not open to the Bank. The consequence was, he submitted, that the summary dismissal of 29 November 2007 took effect as a three months’ notice terminating the contract on 29 February 2008. That (subject to the Bank’s claim to have terminated the contract by a PILON) was what the judge had held in paragraph 20 of his judgment, where he said that the dismissal letter:
‘… gave [Mr Geys] notice by implication that his contract was to be terminated at the earliest possible date on which such notice would be effective – which under the terms of the contract was in three months time. It follows that, unless the effect of subsequent events was to terminate the contract sooner, the contract came to an end on 29 February 2008.’
[27]Mr Cavender also submitted in his written argument (but did not develop the point orally) that unless paragraph 8.3 was struck out as conflicting with clause 13, it could result in Mr Geys being deprived of his statutory rights to seek compensation for unfair dismissal. With respect, I do not follow that. If the contract was terminated by three months’ notice under clause 13, any claim for unfair dismissal could be made within three months of the expiry of the notice, which would be the EDT. If the contract was terminated by a payment under paragraph 8.3, any such claim could be made within three months of that date, which would prima facie be the EDT (or perhaps within three months from when he first learnt of such payment or had a reasonable opportunity of finding it out: I return to this qualification in paragraph [39] below). In the present case, the EDT was in fact on 29 November 2007, and Mr Geys’s three month period ran from then.[28]There is, therefore, in my view nothing in the ‘unfair dismissal’ point. The point based on the potential financial disadvantage to Mr Geys of a termination by a PILON in late 2007 as compared with a termination in early 2008 is, in my judgment, also of no relevant significance. It arises simply because the relevant events happened to straddle two calendar years. Had they all happened in, say, the summer of 2007 (with a summary dismissal in July followed by a PILON in August), it is difficult to see that any like point could have arisen. In any event, the point goes nowhere because it is tacitly based on the proposition that the correct interpretation of the contract must be the one that, in the circumstances that have happened, favours Mr Geys rather than the Bank. I fail to see why the contract should be interpreted in such a Geys-centric way and that an interpretation favourable to the Bank should be excluded as irrelevant. The question is not who is advantaged or disadvantaged by the consequences of a particular interpretation of the contract applied to particular circumstances but how the reasonable man would interpret it.[29]The only point arising under this issue in the appeal is whether there is any true ‘conflict’ between clause 13 and paragraph 8.3 (see again clause 17). In my judgment, the judge’s answer to this question was obviously correct. The terms of the contract and of the Handbook must be read as a whole and any seemingly inconsistent provisions must, if they fairly can, be reconciled so that effect can be given to both or all of them. It is only if any term in the Handbook conflicts with one in the contract that it may, under clause 17 of the contract, have to be rejected as repugnant.[30]There is no conflict between clause 13 and paragraph 8.3. An example of a true conflict would have been if the Handbook had provided that the contract could be terminated by just two months’ notice. The present so-called conflict is nothing like that example. Had clause 13 been written as two sub-clauses, with clause 13(1) incorporating clause 13, and clause 13(2) incorporating paragraph 8.3, the ‘conflict’ point would have been unarguable. It would have been obvious that what clause 13 was giving the Bank was the option of terminating the contract by three months’ notice, or (commercially a like thing) with immediate effect by making a PILON. The options would not have been inconsistent or in conflict with one another and each would have been open to the Bank. The fact that the PILON option was included in paragraph 8.3 of the Handbook rather than in clause 13 of the contract makes no difference. It must be read together with clause 13 and, so far as possible, reconciled with it. There is no difficulty in doing that. The judge was correct to hold that paragraph 8.3 gave the Bank a lawful alternative of terminating the contract by a PILON. I would uphold his decision in that respect.[31]The second PILON issue before us is raised by the Bank’s appeal against the judge’s conclusion that, whilst termination by PILON was an option open to it, it only exercised it effectively by both(a) making the payment on 18 December 2007 and(b) notifying Mr Geys that it had exercised its right so to terminate his contract, which it only did by its letter of 4 January 2008. The judge held that Mr Geys was deemed to have received that letter on 6 January 2008, although in fact he only saw it on 7 or 8 January 2008.[32]The judge’s concern was that the Bank’s argument rested upon the proposition that it was open to it to terminate Mr Geys’s employment contract by a mechanism that did not involve giving him notice that it had exercised its right to do so. He said that no authority as to whether that could be done had been cited, the only authority put before him being this court’s decision in Kirklees Metropolitan Council v. Radecki [2009] ICR 1258, which he did not regard as helpful. The judge, with respect, misdescribed the outcome of that case, but it is anyway an immaterial authority in the present context. It was not about whether the employee’s employment contract had been terminated at common law. It was about the EDT of his contract for the purposes of section 97(1) of the Employment Rights Act 1996, the significance of which is that it is from then that the short three-month time limit for making an unfair dismissal claim to an employment tribunal begins to run (section 111(2)). There is no doubt that an employee must know the EDT (or at least have a reasonable opportunity to find it out), as the Supreme Court explained in Gisda Cyf v. Barratt [2010] UKSC 41: see paragraphs [34] and [36] of the judgment of the court delivered by Lord Kerr. The EDT, however, is a statutory construct for the purposes of the 1996 Act. It will not necessarily coincide with the termination of the employment contract for common law purposes and it did not do so in this case.[33]Mr Gatt submitted that the judge was right to accept that it was in principle possible for an employment contract to provide for its termination by the employer’s payment to the employee of a sum subjectively intended to be in lieu of notice, but was wrong to hold(a) that paragraph 8.3 had not validly given the employer such a right and(b) that it followed that as well as making the payment, the Bank must also notify Mr Geys that it had exercised its paragraph 8.3 right. In his submission, paragraph 8.3 was unambiguously clear that the mere fact of payment brought the contract to an end ‘with immediate effect’ and that it neither expressly nor impliedly required any notice to be given to Mr Geys that the right it conferred had been exercised. Therefore the contract was terminated on 18 December 2007. The judge’s conclusion that the contract was only terminated when, on 6 January 2008, Mr Geys was deemed to have received notice of the fact of the earlier payment and its effect cannot stand with the fact that paragraph 8.3 provides that the payment alone ends the contract ‘with immediate effect’. The judge had implied a ‘notice’ term into paragraph 8.3 for which there was no justification. It is no part of a court’s function to improve an instrument that it is called upon to construe. It is concerned only to discover what it means, and Mr Gatt cited Lord Hoffmann’s judgment in Attorney General of Belize and others v. Belize Telecom Ltd and another [2009] 1 WLR 1988 (Privy Council), paragraphs [16] to [27]. Moreover, the term the judge implied was not necessary in order to reflect the parties’ intentions. It was also impermissible as contradicting the express provision in paragraph 8.3 that it was the paymentthat terminated the contract.[34]Mr Gatt submitted in the alternative that if any sort of notice was required to be given to Mr Geys, it was no more than notice that a PILON had been made to him. Mr Geys accepted in cross-examination, and the judge found, that he probably learnt of the payment before the end of December 2007; and that his ‘best guess’ was that it was a PILON. He therefore knew in 2007 that the PILON had been made. Mr Gatt submitted in the further alternative that if the judge was in principle right that notice of the exercise of the paragraph 8.3 right had to be given to Mr Geys, he should also have made a finding that the payslip and P45 had been sent to Mr Geys before the end of 2007. The Bank did not, however, adduce evidence in support of that at the trial because, Mr Gatt explained, it was only at the trial that Mr Geys first advanced the unpleaded argument that a valid exercise of the paragraph 8.3 right required the giving of notice to Mr Geys that such right was being, or had been, exercised. Mr Gatt did not, in circumstances he also explained, even address arguments to the judge on when the payslip and P45 were sent to Mr Geys, but he suggested that we could now make a finding on that ourselves, or else remit the matter to the judge for him to make a finding on it. For reasons I will give, I regard it as unnecessary to consider this last issue further. I should, however, say that, were I to regard it as a material one, I would not be prepared to make a finding as to when the payslip and P45 were sent to Mr Geys.[35]Mr Cavender, in response to this ground of appeal, submitted that the judge was right to conclude that notice of the exercise of the paragraph 8.3 right was necessary, essentially for the reasons that he gave. He disputed that the judge was implying a term into paragraph 8.3 that such notice had to be given but said that it was implicit in paragraph 8.3 that it did. The judge was, he said, simply interpreting paragraph 8.3.[36]In my judgment, essentially for the reasons advanced by Mr Gatt in support of his primary argument, the judge fell into error in holding that the making of the paragraph 8.3 payment did not terminate the employment contract but that it was only terminated when notice of the exercise of the paragraph 8.3 right was given to Mr Geys in January 2008. There is nothing in paragraph 8.3 providing, or even suggesting, that any such notice is required in order to perfect a termination effected under it. On the contrary, the paragraph provides unambiguously that all that is required to effect the termination is the making of the payment; and, moreover, once made, the payment terminates the employment ‘with immediate effect’. On the judge’s interpretation, the making of the payment had no effect at all. Unless and until the Bank also notified the employee that it had exercised its paragraph 8.3 right, the contract remained alive. It was, he held, the giving of the notice in January 2008 that terminated the contract. The judge therefore applied paragraph 8.3 as if it had provided something along the following lines:
‘The Bank reserves the right to terminate your employment as follows. The Bank may make a payment to you in lieu of notice. If it does so, then upon the Bank giving notice to you that it has exercised its right under this paragraph, your employment shall thereupon terminate with immediate effect.’
[37]The judge’s interpretation involved an unjustified re-writing of paragraph 8.3 or else the unjustified implication into its terms of an additional condition. He correctly acknowledged that there was in principle no reason why, subject to the use of clear words, the parties to a contract could not include a provision along the lines of paragraph 8.3. But he appears to have concluded that paragraph 8.3 did not use sufficiently clear words, although he did not say so expressly. The words of paragraph 8.3 are, however, perfectly clear. The judge’s reason for declining to accept that paragraph 8.3 meant what it said was because so to interpret it would not be reasonable ‘in circumstances where the exercise of this right will have a very significant effect on the position of the employee by bringing his employment to an immediate end’ (paragraph 35).[38]I do not, with respect, understand what the judge meant by that. If he meant that an immediate termination on 18 December 2007 would deprive Mr Geys of the financial benefits he would enjoy if the contract survived to January 2008, that is true but irrelevant. If the judge was right in his interpretation, the requisite notice could have been given at any time before the end of 2007 and would have had the same consequence. What difference does it make if (let it be assumed, although on the facts it is not clear that it is so) Mr Geys only learnt in January 2008 of the effect of the payment? He might be disappointed to discover that his contract had not survived into 2008. But why should that affect its interpretation?[39]I should revert to the Supreme Court’s decision in Gisda Cyf. That case was all about the need for an employee to know, or have a reasonable opportunity of discovering, the EDT of his employment, from which date the short three-month time limit for bringing an unfair dismissal claim begins to run (section 111(2)) and the even shorter seven-day period for applying to the tribunal for interim relief begins to run (section 128). Had the Bank not summarily dismissed Mr Geys on 29 November 2007 (which was the EDT of his employment), it may perhaps be – but the point does not arise in this case, and I express no decided view on it – that even though (as I consider) Mr Geys’s employment contract was terminated with immediate effect on 18 December 2007, the EDT for the purposes of the Employment Rights Act 1996 would only be when (if later) he actually learnt, or had a reasonable opportunity of learning, of such termination, and would be so notwithstanding the terms of section 97(1)(b) of the Employment Rights Act 1996. Lord Kerr makes it clear that the EDT is not a term deriving from contract law but a statutory construct specifically defined for the purposes of a legislative scheme of employment rights.[40]Nothing in the judgment in Gisda Cyf therefore assists in the resolution of the issue before us as to the interpretation of paragraph 8.3 in relation to when, as a matter of the law of contract, the employment contract was terminated, although it is worth noting that it was part of the employer’s argument in that case that, as a matter of general contract law, there is no reason why a valid termination of an employment contract cannot predate the employee’s knowledge of such termination (see paragraphs [14] and [20]). Having noted that, I also note that the court had no contrary argument and said in paragraph [38] that it was not to be taken as endorsing the appellant’s argument on common law contractual principles. Nor, however, did it suggest that the proposition so put was wrong. It was simply not in point in dealing with the statutory construct – the EDT -- with which it was concerned.[41]I would accept the correctness of the argument in Gisda Cyf that there is no reason in principle why, as a matter of general principle, the parties to an employment contract cannot provide for its termination without notice of such termination being given to the employee, or therefore in the manner provided for by paragraph 8.3. There will, I consider, ordinarily be no basis for implying a provision into a term such as paragraph 8.3 that the termination can only be effective when the employee has notice of the exercise of such right. Nor in practice will there be any need. He will either already have been told that he is being dismissed with immediate effect and that a payment in lieu is about to be made. Or -- I suspect more unusually -- he will be told about the payment and his dismissal when he next turns up for work. There is no need to speculate about the position in other, more improbable, factual circumstances that might arise. It will not usually be of any particular significance precisely when the employee learns what has happened: he has six years to bring a common law claim for wrongful dismissal.[42]In my judgment, the judge was wrong to find that Mr Geys’s employment contract was terminated on 6 January 2008. It was terminated on 18 December 2007. I would dismiss Mr Geys’s cross-appeal in relation to the ‘conflict’ point. I would allow Ground 2 of the Bank’s appeal.

Ground 3: construction of the tax efficiency obligation

[43]This involves a sum of about €650,000. To understand it, I must explain the remuneration provisions in the contract. They are fairly indigestible but are in essence as follows.[44]By clause 4 Mr Geys was entitled to a basic salary of £150,000. By clause5.1 he was eligible to participate in the Bank’s discretionary performance based bonus scheme. By clause5.2 he was eligible to participate in its Fixed Income Salary Scheme (‘FISS’) in respect of each of the calendar years ending 31 December 2005 to 2008; and clause 5.2 provided that any award would be made on or about 23 March – ‘the Relevant Date’ – of the year following the calendar year to which the award related. Clauses5.3 and5.4 explained the calculation of the FISS entitlement for each of the four calendar years. Clause 5.5, the provision in issue (hereafter ‘the tax efficiency obligation’), provided: ‘[The Bank] will use all reasonable endeavours to ensure that any award made to you under the FISS is made in as tax efficient a manner as possible to take advantage of your Non-UK domiciled status and to keep you informed about the endeavours that [the Bank] is using. However, any award made under the FISS will be subject to such Income Tax and National Insurance Contributions (or other similar deductions) as [the Bank] may be required to deduct and [the Bank] will not be required to gross-up any award to take account of any Income Tax or National Insurance Contributions (or other similar deductions) in any circumstances, including if making an award in a tax efficient manner is not feasible or if the manner in which any award is made is less tax efficient than anticipated. When the FISS terminates, [the Bank] will consider whether or not to apply any tax efficient schemes to the incentive arrangements (if any) in which you may be eligible to participate after that date.’ (Emphases supplied, these sentences being relevant to the argument).[45]It is the FISS entitlement that is material under this ground of appeal. Clause 5.7 contained a ‘deferral’ provision in respect of part of any FISS award:
‘Any award paid or made under the [performance based bonus] Scheme and/or under FISS will be subject to a deferral (the “Deferral”) in that 25% of any award in excess of Euros 250,000 will be retained by [the Bank] and in respect of any award that may become payable under paragraph 5.3 will be released in three instalments on the Relevant Date of the first, second and third years following the year in which the original award was paid or made, and in respect of any award that may become payable under paragraph 5.4, will be released in three instalments on the Relevant Date of the first, second and third years following the year in which the original award was paid or made. Alternatively, any awards that may become payable in respect of paragraph 5.3 or 5.4 may be subject to a deferral of 25% of the amount so payable in accordance with any other terms agreed in advance between you and [the Bank]. In respect of any other awards becoming payable under the Scheme, 25% of any award in excess of Euros 250,000 will be retained by [the Bank] and released in three instalments on the Relevant Date of the first, second and third years following the year in which the original award was paid or made. [The Bank] may in its absolute discretion amend the rules of the Deferral from time to time. Any such award paid or made under the Scheme and/or the FISS will be paid to you in Euros.’
[46]The relevant schemes were subject to separate rules in documents headed the ‘SG CIB Fidelity Scheme 2005 – As Applicable to [Mr Geys]’ (and likewise for 2006), which provided in each case, by paragraph 5(c), that the deferred parts of any FISS awards would be forfeited if his employment was terminated other than in specific circumstances (for example, redundancy), circumstances that in the event did not apply. It is agreed that Mr Geys did lose the deferred parts of his FISS awards upon the termination of his employment.[47]The contract also provided for various payments to be made to Mr Geys in the event that his employment was terminated. It therefore provided for the exit provisions even before the ink on it was dry. The relevant provisions are these. First, clause 5.14(c) provided that if the Bank terminated Mr Geys’s employment in certain specified circumstances (which occurred), it would within 28 days after such termination make a payment to him – described in clause 5 as ‘the Termination Payment’ – of an amount specified in clause 5.15.[48]Clause 5.15 provided that the Termination Payment was equal to the aggregate of two items. The first, defined in clause 5.15(a) and dealing with the deferred FISS payments not yet paid out, was described thus:
‘the value (calculated, as at the date of the termination of your employment, in accordance with the rules of the Deferral) of the proportion of any award or awards that has or have been made to you but retained by [the Bank] under paragraph 5.7 and not yet released ….’
The second item, described as ‘the Compensation Payment’, was explained in clause 5.15(b). Its amount depended upon when the employment contract was terminated. There is no need to say more than that, if it terminated before 1 January 2008, the Compensation Payment would be a proportion of the average of the FISS awards for 2005 and 2006; and if on or after that date, a proportion of the average of the FISS awards for 2006 and 2007. It is this provision that provoked the issues under Grounds 1 and 2: a 2007 termination would exclude the latter averaging exercise and confine Mr Geys to the former.[49]Clause 5.18 provided:
‘If your employment terminates in the circumstances contained in paragraph 5.14 your eligibility to participate in the Scheme and/or the FISS and/or any scheme that replaces the FISS in respect of the year ending 31 December in which such termination of employment occurs will be replaced by the arrangements set out in paragraph 5.24 which will not be subject to the Deferral under paragraph 5.7.’
Clause 5.24(a) set out the replacement bonus arrangement in relation to the FISS, to be calculated by reference to the Gross Revenue and Net Revenue Forecasts of the Division for the relevant year (‘the replacement bonus’).[50]It was common ground before the judge, as before us, that the clause 5.5 tax efficiency obligation applied to payments of FISS under clauses 5.2 to 5.4; and, in the event that the employment contract terminated in 2008, to any FISS payment for 2007. Mr Geys’s case was that the tax efficiency obligation also extended to the following payments to be made following termination pursuant to the bespoke termination arrangements:(a) that part of the Termination Payment due under clause 5.15(a) representing the ‘value … of the proportion of any award or awards that has or have not been made to you but retained by [the Bank] under paragraph 5.7 and not yet released’; and(b) the replacement bonus due under clause 5.24. The Bank’s case was that the tax efficiency obligation applied only to payments of FISS simpliciter under clauses 5.2 to 5.4 made during the currency of Mr Geys’s employment and did not extend to the separate payments made under the termination arrangements.[51]The judge held that the tax efficiency obligation extended to the clause 5.15(a) payment but not to the replacement bonus. His reasons were these:
‘77. It seems to me that there are differences between the two kinds of payment in dispute such that they fall on opposite sides of the line. Taking first the payment provided for in clause 5.15(a) which is the first part of the Termination Payment, this relates to sums which already constitute awards that have been made to [Mr Geys] under the FISS, albeit that under the arrangements governing deferral the money has been retained by the Bank and not yet released. The effect of the provisions applicable on termination is to accelerate the release of the money. I can see no logical reason why the tax efficiency obligation should not apply to such an accelerated payment. It seems to me to be an unduly technical argument to say that because the payment specified in clause 5.15(a) is expressed to be not the retained proportion of the any award but the value of that proportion calculated at the date of termination, it is not of an “award … under the FISS”. The purpose of the language used in clause 5.15(a), as it seems to me, is merely to provide for the sum payable to be reduced to reflect its early receipt. The purpose of the forfeiture provision in the FISS rules, and also of clause 5.17 of the Contract, is simply to ensure that [Mr Geys] will have no claim to receive any further payment following the termination of his employment. I do not consider that these provisions are intended to displace the fact that the payment specified in clause 5.15(a) is of an award that has been made to [Mr Geys] under the FISS. 78. On the other hand the amount payable under clause 5.24(a) is not in my view, either as a matter of language or in substance, an “award made to you under the FISS”. Clause 5.18 makes it clear that [Mr Geys] is only entitled to an award under the FISS in respect of any year if he is employed by the Bank at the end of the year in question. The “replacement bonus arrangement” applies to the year (up to the date of termination) in which [Mr Geys’s] employment is terminated and therefore to a period in respect of which there has not only been no award made to [him] under the FISS but he is not entitled, and will never become entitled, to such an award. Moreover, the language of the Contract expressly distinguishes between the FISS and a replacement arrangement. For example, clause 5.26 states: “The calculation of any bonus payments and/or awards (including, without limitation, under the Scheme, the FISS and any successor to the FISS and any replacement arrangements shall be subject to pro-rata deductions in accordance with the provisions of paragraph 5.27 and 14(b).” (The judge’s emphasis) In these circumstances and where, in contrast, clause 5.5 refers only to awards under the FISS and not to payments under “any replacement arrangements”, I do not think that clause 5.5 can properly be construed as covering such payments. 79.

(a) ’

[52]The Bank challenges the judge’s decision that the clause 5.5 tax efficiency obligation extended to the clause 5.15(a) element of the Termination Payment. Its submission is that the language of the tax efficiency obligation and the structure of the contract – which distinguish between(i) benefits payable as a reward for performance during the employment and(ii) sums payable on termination – show that the tax efficiency obligation extends only to the former benefits and not to the latter payments.[53]In elaboration, Mr Gatt said that the tax efficiency obligation expressly applies only to ‘any award made to you under the FISS’, the FISS being the scheme identified in clauses 5.2 to 5.7. The sum payable under clause 5.15(a) is not, however, a FISS award. Such awards are subject to deferral under clause 5.7, and under the applicable schemes any awards so deferred are forfeited upon the termination of Mr Geys’s employment other than in specified circumstances, which did not apply in his case. Thus Mr Geys did lose his deferred FISS awards. What clause 5.15(a) provided was not the resurrection of his forfeited FISS award but a substituted payment in lieu of such forfeited award. In addition, there was unchallenged evidence from Graham Clarke that the value of the replacement obligation under clause 5.15(a) was different from, in fact greater than, the value of the deferred FISS.[54]Mr Gatt said also that, had the parties intended the tax efficiency obligation to apply to awards or payments other than FISS awards, they could and would have said so. The judge had, he said, read words of extension into the clause 5.5 tax efficiency obligation that were not there. The tax efficiency obligation related exclusively to the payments made during the lifetime of the contract as a reward for performance and a replacement payment under clause 5.15(a) to be made on termination. Moreover, the judge was also wrong to identify a difference between the clause 5.15(a) payment and the replacement bonus. He rightly held the latter to be a replacement arrangement and therefore not a FISS award. But, for two reasons, he was wrong to regard clause 5.15(a) as simply accelerating the release of money to Mr Geys:(i) clause 5.15(a) did no such thing. His deferred FISS awards were forfeited on termination, clause 5.15(a) represented its replacement by a different obligation and it is not conceptually possible to accelerate the receipt of a forfeited payment; and(ii) the clause 5.15(a) payment was in fact greater in value than the deferred FISS and so could not be an accelerated payment of the FISS award.[55]Mr Cavender submitted that the judge’s decision in relation to the clause 5.15(a) payment was right for the reasons he gave. He was right to characterise that payment as ‘accelerated FISS’ and, bearing in mind that the FISS entitlement was such an important part of Mr Geys’s overall remuneration package, it would make no sense if the contract was not intended to apply the tax efficiency obligation to such accelerated payment. The Bank’s point that the clause 5.15(a) payment was a substitute payment did not answer the question whether it was a payment to which the tax efficiency obligation was objectively intended to apply.[56]By a respondent’s notice, Mr Geys challenged the judge’s decision on the ‘replacement bonus’ issue. Mr Cavender said that the arrangement for such a payment was, by clause 5.18, by way of a ‘replacement’ for the, by then, terminated FISS entitlement. Whilst recognising that the argument was a more difficult one, he submitted that the judge should have found that the replacement arrangement was ‘any award under the FISS’ within the meaning of the tax efficiency obligation because any different interpretation was unduly technical and ignored the substance of the matter. He pointed to the last sentence of the clause 5.5 tax efficiency obligation and said the ‘replacement bonus’ was an ‘incentive arrangement’ of the nature there mentioned.[57]In my judgment, for the reasons advanced by Mr Gatt, the judge’s decision on the clause 5.15(a) payment was wrong. The judge misinterpreted the contract and should have held that the tax efficiency obligation had no application to that payment. As for the respondent’s notice, I consider that the judge’s decision on the ‘replacement bonus’ point was correct, for the reasons he gave. That bonus was equally not ‘an award made to you under the FISS’ and the tax efficiency obligation did not extend to it. Mr Cavender’s submissions that the judge was wrong on that issue made no impression upon me. In particular, that based on the last sentence of the tax efficiency obligation involved what I would respectfully suggest was an obvious misreading.[58]I would allow the Bank’s appeal on Ground 3 and declare that the clause 5.5 tax efficiency obligation does not apply to the clause 5.15(a) element of the Termination Payment. I would dismiss Mr Geys’s cross-appeal on the ‘replacement bonus’ point.

Ground 4: full and final settlement? Ground 5: condition precedent?

[59]These grounds are related and it is convenient to take them together. The issues here arise from the fact that the contract contained bespoke termination arrangements. It required Mr Geys to enter into a termination agreement with the Bank under which he would be entitled to receive potentially substantial termination payments but in return for which he agreed (subject to immaterial exceptions) to release all other claims he might have against the Bank. The Bank’s case is that the termination payments that would become so due to Mr Geys would not otherwise have been due to him and they were payable to him in consideration of his agreeing to such a clean break. On the Bank’s calculation, the payments amount to a minimum of €7.9m. If Mr Geys wanted them, he had to sign the termination agreement and waive any other claims he might have. If he considered such other claims to be more valuable, he could waive his right to the termination payments, decline to sign the termination agreement and pursue the other claims. The Bank’s case is also that, in the events that have happened, Mr Geys has anyway forfeited his right to sign up to a termination agreement under which he could recover the payments. That is because he has brought claims against the Bank for damages for breach of contract.[60]The judge held that Mr Geys had not forfeited his right to sign up to a termination agreement; and that he is entitled both to receive the termination payments and to pursue any damages claims for which he might be able to sue the Bank, the latter at least including the claim for wrongful dismissal (said to be worth about €2.5m) but perhaps also (although, as I have said, I am unclear as to the position) the right to claim in respect of alleged breaches of the tax efficiency obligation in relation to the 2005 and 2006 FISS payments (see paragraph [4] above). By Ground 5, the Bank challenges the judge’s decision on the forfeiture point. If wrong on that, by Ground 4 it submits that, upon the true interpretation of the contract, the judge’s conclusion makes no commercial sense. Mr Geys cannot both claim the termination payments and a right to sue the Bank for damages. He cannot, it says, have his cake and eat it.[61]The termination payments are those due under clause 5.14(c), entitling Mr Geys to the Termination Payment comprising the two elements defined in clause 5.15; and the replacement bonus due under clauses 5.18 and 5.24. I turn to the provisions relevant to the Bank’s assertions under Grounds 4 and 5.[62]Clause 5.16 provides: ‘5.16 In consideration for [the Bank] making the Termination Payments (which will be made subject to such Income Tax and National Insurance Contributions (or other similar deductions) as [the Bank] may be required to deduct) you will enter into a termination agreement with the Bank (in the form of the draft termination agreement in Schedule 1 of this letter [meaning the contract] but amended to take account of any payments due to you under this letterand to take account of relevant legislative developments)under which you will waive all contractual and statutory claims against [the Bank] and any Group Company (save for any pension rights accrued to the date of determination of your employment, any personal injury claims that you have may against [the Bank] or any Group Company and save for any accrued rights you may have under the Deferral scheme and any share incentive scheme which will be dealt with subject to and in accordance with the rules of any such scheme) arising out of your employment with [the Bank] and its termination and under which you will agree to comply with the post-termination restriction in paragraph 14(a)(iii) and the confidentiality provisions in [the Handbook]. If [the Bank] and you wish to amend the form of draft termination agreement further than as set out above, such amendments must be agreed within 28 days after the date on which your employment terminates (or such longer period as you and [the Bank] agree), failing which you and [the Bank] will enter into the termination agreement in the form of the draft termination agreement in Schedule 1 of this letter only amended to take account of any payments due to you under this agreement and to take account of relevant legislative developments).’ (My emphases, the emphasised words being central to the arguments)[63]Schedule 1 to the contract contained a draft of the termination agreement referred to in clause 5.16. The draft was, on its face, required to be completed following the termination of Mr Geys’s employment in the manner it explained. Paragraph 1 entitled Mr Geys to be paid his normal salary and benefits up to the termination date. Paragraph 2(i) entitled him to any PILON, if appropriate in the circumstances (which it was not, as he had already received it). Paragraph 2(ii) is important and I should quote it. It obliged the Bank to:
‘pay you an amount of £ (less such deductions as [the Bank] is required by law to make) [as compensation for the termination of your employment REWORD AS APPROPRIATE TO INCLUDE SUCH OF THE PAYMENTS REFERRED TO IN SCHEDULE 2 OF THE LETTER AGREEMENT BETWEEN YOU AND THE COMPANY DATED [INSERT DATE] JANUARY 2005 TO WHICH YOU ARE ENTITLED IN ACCORDANCE WITH THE TERMS OF YOUR EMPLOYMENT DEPENDING ON THE CIRCUMSTANCES IN WHICH YOUR EMPLOYMENT TERMINATES] (this includes any entitlement you may have to a statutory redundancy payment);’
The ‘letter agreement’ refers to what I have been calling the contract; and ‘the Company’ is a reference to the Bank.[64]Schedule 2 contemplated that Mr Geys’s employment might be terminated in one of four alternative circumstances and listed the payments to which he was to be entitled according to which of the four applied. It is agreed that the applicable alternative is the third one, covered by paragraph 3, Mr Geys’s employment having terminated for a reason specified in clause 5.14(a) to (d) of the contract. Paragraph 3 lists five categories of payment which are due to Mr Geys in such circumstances. Paragraphs 3.1, 3.2 and 3.4 refer respectively to the termination payments and replacement bonus due under clauses 5.15(a) and (b) and 5.24. Paragraph 3.4 refers to sums due in respect of any accrued (but unpaid) FISS award or discretionary bonus to which he was entitled at the date of the termination of his employment. Paragraph 3.5 refers to a lump sum equal to accrued (but unpaid) rights as at the date of termination in respect of salary, discretionary flexible benefits and core benefits. All these sums are liquidated sums that Mr Geys has earned and become entitled to under the contract or upon its termination. The total of the five figures under paragraphs 3.1 to 3.5 is required to be inserted into paragraph 2(ii) of the termination agreement as the amount the Bank must pay him.[65]Paragraph 7 of Schedule 1 (being a further provision that will form part of the termination agreement) provides, so far as material: ‘7.(a) You represent and warrant that:- (i) you have instructed the Adviser who is referred to at the end of this letter [meaning the termination agreement] to advise you whether you have or may have any Statutory Claims (as defined in paragraph 7(d) below) [these list the statutory claims that might be available under various pieces of employment legislation] against [the Bank] or any Group Company arising out of or in connection with your employment … and its termination; and (ii) you have provided the Adviser with whatever information is in your possession to enable the Adviser to advise whether you have or may have any such Statutory Claims; and (iii) having had legal advice from the Adviser, you may have Statutory Claims for unfair dismissal [and a redundancy payment ADDITIONAL CLAIMS AS APPROPRIATE] the (“Alleged Claims”); and (iv) having had legal advice from the Adviser, you have no Statutory Claims other than those referred to in this paragraph 7(a) against [the Bank] and/or any Group Company, arising out of or in connection with your employment with [the Bank] and/or any Group Company or its termination.(b) You hereby unconditionally and irrevocably waive the Alleged Claims, and neither you nor anyone else on your behalf will repeat, refer to or pursue the Alleged Claims.(c) You accept the payment to be given to you pursuant to this letter in full and final settlement of:- (i) the Alleged Claims [a range of statutory claims not material for present purposes]; and (ii) all other claims and rights of action howsoever arising, which you (or anyone on your behalf) have or may have against [the Bank], and/or any Group Company arising from or connected with your employment by [the Bank] and/or any Group Company or its termination, with the exception that this paragraph 7(c) will not apply to any pension rights or pension benefits which have accrued to you up to the Termination Date or to any personal injury claims you may have. You represent and warrant that you are not aware of any personal injury claims subsisting at the date of this letter not [sic: should be “nor”] aware of any basis on which you could bring any personal injury claims.(d) …(e) It is a fundamental term of this letter that:- (i) the payments to be given to you under paragraph 2 will at all times be conditional on you refraining from issuing or pursuing any type of employment related proceedings in respect of the Alleged Claims, any other Statutory Claim or any contractual or common law claim (howsoever arising), (with the exception of any claim for accrued pension rights, pension benefits or personal injury, as in paragraph 7(c)), against [the Bank] or any Group Company, (whether in an Employment Tribunal, the High Court, a County Court or otherwise); and (ii) if you subsequently issue or pursue such employment related proceedings in breach of this letter then the payments paid to you under this letter (other than any statutory redundancy payment paid) will be repayable to [the Bank] forthwith on demand; and (iii) the total sum will be recoverable as a debt, together with all costs (including legal costs) reasonably incurred by [the Bank] in recovering the sum and/or in relation to any proceedings brought by you. The repayment provisions of this paragraph 7(e) will be without prejudice to [the Bank’s] right to seek further damages from you in respect of the breach referred to in this paragraph and any other breach of this letter.(f) You acknowledge that [the Bank] has relied on this paragraph 7 in deciding to offer you the terms set out in this letter.’ 8. … 9. This letter represents the entire agreement between us relating to the termination of your employment.’ (Emphases supplied, these provisions being of particular relevance)[66]The Bank’s case was that the scheme was therefore one under which the contract provided that, upon its termination, termination payments were to be payable to Mr Geys to which he would not otherwise have been entitled. Clause 5.16 required him to execute a Schedule 1 termination agreement against payment to him of the Schedule 2, paragraph 3, payments, which included the termination payments. He would thereby agree to waive all damages claims. By contrast, Mr Geys contended that he was entitled both to recover the Schedule 2, paragraph 3 payments due under the contract (including the termination payments) andto sue the Bank for damages for breach of contract.[67]The judge agreed with the Bank that the correct analysis of clause 5.16 is that the Bank’s obligation to make the termination payments and Mr Geys’s obligation to enter into a termination agreement were concurrent conditions. Once the correct amount of the termination payments to which Mr Geys was entitled was established, and the Bank offered to pay it, Mr Geys was obliged as a condition of receiving it to enter into the prescribed agreement. He disagreed that Mr Geys could not be entitled both to accept the termination payments andto sue the Bank for damages for breach of contract. He said:
‘98. I see nothing self-evidently logical about an arrangement of such a kind. Suppose, for example, that the Bank was in breach of the tax efficiency obligation during the period of the contract with the result that [Mr Geys] has suffered loss and has a good claim for damages. It is not obvious why [he] should be required to abandon this claim in order to be entitled to a Termination Payment which he would equally have been entitled to receive if the Bank had performed its contractual obligation. On the contrary, to require [Mr Geys] to give up the claim seems to me to produce a windfall for the Bank. The implications of the Bank’s argument are even more unmeritorious in relation to a claim for damages for wrongful dismissal. The consequence of the Bank’s argument is that, if it wrongfully repudiates the contract and [Mr Geys] accepts the repudiation as bringing the contract to an end, [he] cannot pursue a claim for damages for the losses which he has suffered without losing his right to the Termination Payment to which he would equally have been entitled if the contract had been terminated lawfully. This allows the Bank potentially to profit from its own wrong. Far from being a matter of “logic and common sense”, the result seems to me wholly unreasonable. 99. The purpose of the provisions, as I interpret them, is to achieve finality once any dispute about the sums payable to [Mr Geys] under the contract has been resolved. The object is not to prevent [him] from bringing proceedings to claim sums which he contends are due to him under the agreement (either as a debt or damages) or to penalise him if he does so. What the Bank is reasonably concerned to protect itself against is a situation in which, having agreed to make payments to [Mr Geys] which are intended to settle all his claims arising out of his employment, [he] is later able to bring proceedings asserting further claims against the Bank which were not raised before the termination agreement was concluded. 100. In my view the contractual provision which determines what claims [Mr Geys] may pursue before a termination agreement has been entered into is not paragraph 7(e)(i) of Schedule 1, which applies only to claims pursued after a termination agreement has been concluded, but clause 5.16 of the Contract in so far as it obliges [Mr Geys] to enter into: “a termination agreement with [the Bank] in the form of the draft termination agreement in Schedule 1 of this letter but amended to take account of any payments due to you under this letter” (the judge’s emphasis) Reading “this letter”, as I have pointed out that it must be read, as meaning “this Contract”, this expressly envisages that [Mr Geys] is entitled to claim and receive any payments due to him under his contract of employment. Such payments must in my view include not only any agreed sum which is outstanding but also any damages which are payable as a result of any breach of contract by the Bank. The expression “under” the contract is capable as a matter of language of including a liability to pay damages as well as a debt, and if a payment of damages were not included it would the unreasonable consequences that I have referred to above.’
[68]Mr Gatt’s submission was that on that interpretation of the contract, Mr Geys would give up virtually nothing by signing the termination agreement. He would be entitled to pursue all claims for damages arising both during his contract and upon its termination as well as to recover the termination payments. The only purpose of the waiver provisions in the termination agreement would be to prevent him at some later stage from bringing claims that had not surfaced prior to its signing, a waiver that in practice would be likely to bite on nothing. The scheme of the contract was, Mr Gatt submitted, that upon the termination of the contract, Mr Geys has the option of(i) taking the termination payments; or(ii) rejecting them and suing the Bank for damages. He cannot do both.[69]Whilst the judge was, he said, correct to hold that the Bank’s obligation to make the termination payments and Mr Geys’s obligation to sign the termination agreement were concurrent obligations, he was wrong in paragraph 100 to interpret clause 5.16 of the contract as providing that the ‘amendment’ to the draft termination agreement in the words which he there quoted embraced an amendment by the inclusion of claims for damages for breach of contract which had surfaced before the time the termination agreement came to be signed. In Mr Gatt’s submission, the words in clause 5.16 upon which the judge fastened were directed at no more than requiring the parties to fill in the blanks in the Schedule 1 termination agreement when the amounts of the termination payments and the other Schedule 2, paragraph 3 figures were ascertained. ‘Payments’ in the quoted words could only, in the context, be interpreted as referring to the contractual termination payments provided for in that checklist, the total of which is then required to be inserted into paragraph 2(ii) of the termination agreement as the amount that the Bank agrees to pay Mr Geys. More particularly, clause 5.14 obliged the Bank, in the circumstances that had arisen in Mr Geys’s case, to make a clause 5.15 ‘Termination Payment’ to him; clause 5.24 describes the replacement bonus and its calculation; and clause 5.29 provided that:
‘Schedule 2 of this letter sets out the payments which you (or your estate as appropriate) will be entitled to receive in the specified circumstances.’ (My emphasis) Mr Gatt said that nothing in Schedule 1, paragraph 2(ii), or in Schedule 2, provided for the termination agreement to include an entitlement for Mr Geys to pursue claims for damages. All that it entitled him to were the payments listed in the Schedule 2 checklist. Those were the ‘payments’ referred to in the words from clause 5.16 that the judge quoted and ‘payments’ in that context cannot be interpreted as meaning ‘claims in respect of any damages claims you may have’
. The phrase is the language of debt.[70]The Bank’s further point, under Ground 5, was that, upon the correct interpretation of clause 5.16 and paragraph 7(e)(i) of Schedule 1, it was a condition precedent of Mr Geys’s entitlement to the termination payments that he had neither issued nor pursued any claims against the Bank for breach of contract. The fact that his present claim originally included claims for damages for breach of contract, and still included at least one such claim, meant that he had by issuing and pursing them failed to satisfy that condition precedent. Thus he was no longer entitled to the termination payments. Mr Gatt conceded that nothing in the contract precluded Mr Geys from issuing proceedings in order to ascertain the correct amount of the termination payments and that, to the extent that his claim sought to do that, its issue and pursuit did not deprive him of the right to recover the termination payments. The problem was the inclusion of his claims for damages.[71]In developing that argument, Mr Gatt referred to the ‘fundamental term’ in paragraph 7(e) of Schedule 1; to the fact that paragraph 7(e)(i) provided that the payment obligations under paragraph 2 were ‘at all times’ conditional upon Mr Geys refraining from issuing or pursuing any type of employment related proceedings, which Mr Gatt said made the condition one that was looking in part to the past and was therefore a condition precedent; and to the fact that paragraph 7(e)(ii) was, by contrast, looking to the future and was in the nature of a condition subsequent. As Mr Geys had since the termination date issued claims against the Bank for breach of contract of a nature excluded by paragraph 7, it followed that he had failed to satisfy the paragraph 7(e)(i) condition precedent and had so debarred himself from any right to the termination payments. Mr Gatt disavowed any suggestion that the reach of the condition precedent meant that any proceedings that Mr Geys might merely have issuedduring the currency of the employment contract would prevent his entitlement to the termination payments. Nor would the pursuit of any such claims to a final conclusion before the termination date have done so. Its reach was, he said, confined to the issue and/or pursuit of proceedings after the termination of the contract but before execution of the compromise agreement, which was when the line for the operation of the condition precedent had to be drawn. He said the reference in paragraph 7(e)(i) to payments ‘to be given’ to Mr Geys under paragraph 2 of the termination agreement showed that the obligation not to issue or pursue proceedings post-termination was engaged before the compromise agreement was signed. The post-termination issue or pursuit of any claim would, therefore, deprive Mr Geys of any right to the termination payments.[72]The judge rejected the Bank’s ‘condition precedent’ arguments. He said this:
‘89. … I would agree that the correct analysis of clause 5.16 is that the Bank’s obligation to make the Termination Payment and [Mr Geys’s] obligation to enter into a termination agreement are concurrent conditions. [Mr Geys’s] obligation is thus conditional upon the Bank making, or being ready and willing to make, the Termination Payment specified in clause 5.15 of the Contract. … Once, however, the correct amount of the Termination Payment has been established in these proceedings and the Bank pays or offers to pay this amount, [Mr Geys] will be obliged as a condition of receiving the payment to perform his concurrent obligation to enter into a termination agreement in the required form. 90. It is at the second stage that the Bank’s argument in my view goes wrong. According to the Bank, the effect of paragraph 7(e)(i) of Schedule 1 is to make [Mr Geys’s] entitlement to the payments to be given to him under the termination agreement conditional on his having refrained from issuing or pursuing proceedings against the Bank since the Termination Date [the judge’s emphasis]. However, this is not what paragraph 7(e)(i) says. I am unable to construe that provision as looking backwards in this way and applying to proceedings which have already been issued or pursued before the termination agreement is executed and the condition in paragraph 7(e)(i) takes effect. In my view the wording of paragraph 7(e)(i) is plainly prospective and refers only to any proceedings which may be issued or pursued at any time in the future. 91. The fact that it is inconsistent in this way with the plain wording of the contract would be sufficient reason in itself to reject the Bank’s argument, but there are a number of further objections which I also regard as fatal to it. 92. First, if the intention had been to make [Mr Geys’s] right to receive payments on termination conditional on his having refrained after the Termination Date from making Non-Conforming Claims against the Bank, then one would expect the body of the contract to contain a clause which expressly states this and, given the draconian consequences of non-compliance with the condition, which states it clearly. It is an opaque and roundabout way of depriving [Mr Geys] of the right to receive termination payments where he has made Non-Conforming Claims to require him to enter into an agreement under which the Bank undertakes to make such payments (and which it must be ready and willing to make) but which [Mr Geys] is then disqualified from receiving as soon as he signs the agreement by reason of doing so. More than this, on the Bank’s construction, [Mr Geys] is even required (as the final words of paragraph 7(e) indicate) by signing the agreement to assume a liability in damages for any loss caused to the Bank by his prior actions. I regard an interpretation which has this result as one which could not reasonably have been intended. 93. Second, if the Bank were right that paragraph 7(e)(i) looks backwards to proceedings which have previously been issued or pursued, then there is nothing in the wording to prevent it from applying to any such proceedings which have been brought at any time in the past. No doubt recognising the unreasonableness of this consequence, Mr Gatt QC submitted that the provision applies only to proceedings issue or pursued after the Termination Date. However, I can see nothing which justifies this limitation. 94. Third, the logical consequence of the Bank’s interpretation of paragraph 7(e)(i) is also that, if there is a dispute about the amount owing to [Mr Geys] on termination of his employment, as has occurred in this case, [he] cannot bring proceedings to resolve the dispute and recover the amount to which he claims to be entitled without forfeiting his entitlement to recover that amount (or any amount). This is because the scope of paragraph 7(e)(i) is as wide as could be and includes “any contractual or common law claim (howsoever arising), with the exception of any claim for accrued pension rights, pension benefits or personal injury …)” against the Bank. The fact that the Bank’s interpretation leads to such a wholly unreasonable result where [Mr Geys] cannot enforce his contractual rights without losing them is a further compelling reason to reject it.’
[73]Mr Cavender acknowledged that the key to the issues under Grounds 4 and 5 was the interpretation of clause 5.16 and paragraph 7(e) of Schedule 1. He said that the task of the court is, as usual, to interpret the employment contract as a whole. The contract provides Mr Geys with a generous leaving package, but he said it makes no sense to interpret it as precluding him from bringing other claims that he is entitled to bring on termination. Despite Mr Gatt’s concessions as to the limits of his ‘condition precedent’ argument, the logic of the language upon which the Bank relies meant(i) that the making by Mr Geys of any claim during the currency of his employment would result in his forfeiting his right to the termination payments;(ii) that a like consequence must even flow from a claim by Mr Geys directed only at establishing the amount of the termination payments to which he is entitled;(iii) that it would follow that even though the tax efficiency obligations were at the heart of the contract, Mr Geys would have no remedy in respect of any breach of them if he wished to preserve his right to the termination payments; and(iv) that the like result would follow if he wished, as he does, to claim damages for the Bank’s wrongful dismissal of him. Absent clear contractual words, Mr Geys is not to be taken to have agreed to give up these rights as a condition of receiving the termination payments. Mr Cavender adopted the judge’s reasoning on the ‘condition precedent’ point, submitting that clause 7(e)(i) is looking forwards from the signing of the compromise agreement, not backwards to prior events. He accepted that, were Mr Geys to pursue or issue employment related proceedings afterthe date of its signing, the provisions of clause 7(e) would apply. As for Ground 4 of the Bank’s appeal (full and final settlement) Mr Cavender also adopted the judge’s reasoning. He endorsed the judge’s view that, in clause 5.16, ‘any payments due to you under this agreement’ included the payment of any damages recovered or recoverable for breach of the contract. Once that conclusion is arrived at, Mr Geys is not faced with any such option as the Bank advances. No such option is spelt out in the contract.

Discussion and conclusion on Grounds 4 and 5

[74]The disposition of Grounds 4 and 5 depends upon the correct interpretation of the contract and its Schedules 1 and 2; and, in particular, on the relationship between clause 5.16 and paragraphs 7(c) and (e) of Schedule 1.[75]First, I respectfully disagree with the judge and with Mr Cavender that the phrase in clause 5.16 reading ‘… amended to take account of any payments due to you under this letter …’ includes ‘payments in the nature of damages recoverable by you under any claim you may bring for any alleged breach of this letter’ or words to that effect. It followed, as I understand the judge to have held, that Mr Geys could not be required to sign a termination agreement until he had pursued his damages claims to judgment and the figures for any recoverable damages could be inserted into the termination agreement, which the parties would then be required to sign. Once that had been done, all that the wide words in paragraph 7(c) and (e) would then refer to would be the pursuit of any futureclaims that might suddenly surface: i.e. they would prevent the issuing and pursuit of any claim that would, at the date of signing of the termination agreement, be in nature of an unknown unknown.[76]The quoted words must of course be interpreted in their context and I recognise that an obligation to pay damages is a secondary obligation that a contract breaker assumes under a contract. Even so, it seems to me inapposite to interpret these words in clause 5.16 (and repeated at its end) as extending to any such damages claims. Clause 5.16 is focussing upon Mr Geys’s obligation to enter into a Schedule 1 termination agreement under which the Bank will assume an obligation to make the bespoke termination payments. The draft for that agreement in Schedule 1 is to be ‘amended to take account of any payments due to you under this letter …’; and Schedule 1 requires the completion – or, per clause 5.16, the ‘amendment’ – of the draft termination agreement in various respects according to the particular circumstances of the case at the time. In the present case, paragraph 2(i) of Schedule 1 has no application. Paragraph 2(ii) does. That requires completion by the insertion of a sum representing the total of the ‘payments referred to in Schedule 2’ that Mr Geys is ‘entitled [to] in accordance with [the contract] depending on the circumstances in which [his] employment terminates …’, and such sum must also include any entitlement he may have to a statutory redundancy payment. Schedule 2 then includes the four groups of alternatives tailored to different types of termination and Mr Geys’s case is covered by paragraph 3. The payments there listed are payments falling under five specific heads. None includes any damages award that might be recovered under any claim that Mr Geys might have commenced prior to the signing of the termination agreement.[77]In my judgment, it is apparent that it was no part of the scheme of clause 5.16 and Schedules 1 and 2 that the termination agreement should include any such damages as part of the severance package. The contrary construction involves, in the context, both an unnatural reading of clause 5.16 and the illegitimate re-writing of Schedule 2, paragraph 3 by the addition of a new paragraph 3.6 reading ‘any damages for breach of contract that Mr Geys may recover by an action brought following the termination of his employment.’ The suggestion that such a provision formed any part of the parties’ bargain appears to me to be fanciful. Mr Geys’s argument that clause 5.16 tacitly recognises that he would be entitled on termination to pursue any claims for breach of contract as well as to recover and retain the termination payments is in my view impossible to reconcile with the language and scheme of the contract read as a whole. Taking in particular Mr Geys’s assertion that it is implicit in clause 5.16 that he is entitled to pursue his claim for wrongful dismissal as well as to recover the termination payments, both clause 5.16 and Schedule 1 spell out that he is not so entitled. The former explains that under the termination agreement he will have to waive inter alia all claims ‘arising out of [his] employment … and its termination’, and a like phrase appears, as one would expect, in paragraph 7(c)(ii) of Schedule 1. Mr Geys’s argument has to be that these are merely references to unknownsuch claims that he only discovers following the signing of the termination agreement. That is a wholly improbable interpretation, which I would reject.[78]Thus far I am therefore with the Bank. The next issue I shall address is whether the Bank is right on its ‘condition precedent’ argument. As to that, I am against the Bank and consider that the judge was correct to reject it. First, nothing in clause 5.16 assists the argument. I comment first on a possible inconsistency between the opening line of clause 5.16 and the nature of the obligations to be assumed under the Schedule 1 termination agreement when the same is executed. On one reading of clause 5.16, it is saying that the making by the Bank of the termination payments will precedethe signing of the termination agreement, and that it is in consideration of such payments that Mr Geys will then sign that agreement. On the other hand, the draft termination agreement in Schedule 1 makes it plain that the Bank’s obligation to make the relevant payments only arises underthe agreement when signed, in particular under paragraph 2(ii). If there is any internal inconsistency in the drafting in this respect, it is the draft of the termination agreement that must prevail. That is, after all, the agreement that the parties are agreeing to sign; and it is that agreement that will determine their mutual obligations.[79]Having clarified that, all that clause 5.16 does is to provide that, following the termination of Mr Geys’s contract, he and the Bank must execute a termination agreement in a form that has appropriately filled in the blanks in the Schedule 1 draft. Clause 5.16 provides a short explanation of what Mr Geys will be committed to if and whenhe does sign the termination agreement. It does not, however, impose any obligations upon him with which he must comply during the currency of his employment if he wants, upon its termination, to sign such an agreement.[80]Accordingly, there is nothing in clause 5.16 or elsewhere in the contract of employment that precludes Mr Geys during its currency from issuing and pursuing any claim he may have against the Bank for breach of the contract; or, more relevantly for present purposes, there is nothing in the contract providing that it is a condition of his right to the benefit of a termination agreement that he should in the meantime have refrained from issuing or pursuing any such proceedings. In fact, I do not understand that Mr Geys ever did issue any proceedings during the currency of his employment contract.[81]I turn, therefore, to Schedule 1 to see whether it helps the Bank on the ‘condition precedent’ topic. It does not. Schedule 1 does not impose any ‘condition precedent’ upon Mr Geys that he must satisfy before he is entitled to sign a termination agreement. All it does is to provide the draft of the agreement that, by force of clause 5.16, he and the Bank are obliged to complete and sign. The parties’ mutual obligations under the termination agreement – payment by the Bank of the termination payments and the operation of its other provisions, including paragraph 7(e) -- only arise when and if it has been executed. That has not yet happened.[82]Mr Gatt’s difficulty is, in my judgment, that he cannot identity any condition precedent that meets the case the Bank wants to make. All he can do is to point to paragraph 7(e) of Schedule 1. But that takes him nowhere since unless and until a termination agreement in the form of Schedule 1 is executed, the words that one sees in paragraph 7(e) of Schedule 1 signify precisely nothing. If and when a termination agreement isexecuted, the position will be different. The Bank will be under an obligation under paragraph 2(ii) to make the termination payments there described. It will also be ‘a fundamental term’ of the agreement that their making will then ‘at all times be conditional on [Mr Geys] refraining from issuing or pursuing any type of employment related proceedings … [including] any contractual or common law claim (howsoever arising)’, subject to certain immaterial exceptions. If he breaches that term, the consequences in paragraph 7(e)(ii) and (iii) and following will or may ensue.[83]In my view any argument that the ‘fundamental term’ in paragraph 7(e)(i) is – once the termination agreement has been signed -- looking backwards to proceedings already issued (perhaps pursued to judgment) is misconceived. It would, moreover, be astonishing if it were doing so. It would mean, for example, that any claim that Mr Geys might have brought during his employment contract in respect of, say, an underpayment of his salary would be pre-destined from the moment of its issue to lead to the consequence that upon(i) the subsequent termination of his contract, and(ii) the execution of a termination agreement that clause 5.16 committed both parties to enter into, the Bank could then(iii) promptly refuse to make any paragraph 2 payments because of the making of that earlier claim. It is obvious that if any such action by Mr Geys were intended by the parties to forfeit his right to receive the termination payments, the contract would have said so, no doubt in clause 5.16. It did not. It nowhere said anything of the sort.[84]Equally, if the Bank’s backward-looking ‘condition precedent’ argument were right, Mr Geys’s right to recover the termination payments would (once the termination agreement had been executed) be regarded as having been forfeited by proceedings legitimately brought by him for the purpose of resolving a genuine dispute as to the amount of termination payments to which was entitled. That, according to the ordinary meaning of the words of paragraph 7(e)(i), would be a ‘contractual … claim (howsoever arising).’ Until, however, any such dispute is resolved, no termination agreement can be proffered which Mr Geys can be required to sign, yet the very bringing by him of the necessary claim to resolve the dispute would, on the Bank’s construction of paragraph 7(e)(i), deprive him of his right to receive, or to retain, the termination payments once the termination agreement has been entered into.[85]I deliberately there said ‘on the Bank’s construction’ rather than ‘the Bank’s argument’ because Mr Gatt conceded that the reach of his claimed backward-looking condition precedent would not extend to proceedings issued by Mr Geys for the ascertainment of the amount of the termination payment, any more than it would extend to the issue of proceedings before the termination of the contract, although it would, he said, extend to their pursuit after its termination. That was no doubt a well-judged forensic concession, but it was no more than a selective re-writing of paragraph 7(e)(i) by the carving out of arbitrary exceptions in order to avoid the reductio ad absurdum to which the Bank’s case was otherwise inexorably heading. The re-writing was illegitimate. Paragraph 7(e)(i) would, if the backward-looking condition precedent argument were in principle right, mean that the bringing of any such proceedings would result in the non-satisfaction of the condition.[86]I would, therefore, reject the ‘condition precedent’ argument and would, in consequence, dismiss Ground 5 of the Bank’s appeal. As follows, I regard Mr Gatt’s suggestion that paragraph 7(e)(i) and (ii) are respectively conditions precedent and subsequent as mistaken. The latter provision is simply complementary to the former and is there to explain what happens if the former condition is broken. The former condition is a condition subsequent.[87]That leaves Ground 4. As I have said, I interpret clause 5.16 of the contract as imposing a mutual obligation upon the parties to enter into a termination agreement in the form of the Schedule 1 draft as appropriately amended by reference to Schedule 2 to cater for the particular circumstances of Mr Geys’s case. Clause 5.16 gives the parties 28 days from the termination of the employment contract to agree the inclusion of provisions in the draft in additionto the amendments required by paragraph 2(ii) of Schedule 1 (or, I suppose, to agree any other departure from the draft as so amended); but in default of agreement as to any such departures within that time, the agreement is to be in the form of the draft as amended in the manner prescribed by paragraph 2(ii). The parties would then be under a mutual obligation to proceed to its execution, although if there remained any genuine disputes as to the amount of the payments to be made under it, it must, I consider, be open to either party to take proceedings for their resolution, as has happened. Until such disputes are resolved, if necessary by proceedings, neither side can compel the other to execute a termination agreement.[88]Once the differences are resolved, the parties are, I consider, under an obligation to sign the termination agreement. Whilst we had no argument on this, I consider that, if one or other side refused to do so, a claim for specific performance would probably be available. Alternatively, and we also had no argument on this, it may be that the willing party could give notice to the other requiring it or him to execute the termination agreement within a reasonable, specified time and then, if there was still no co-operation, treat that as a repudiation of the agreement. I specifically, however, express no decided view on the remedies available to the parties.[89]As I have rejected the argument that the reference to ‘payments’ in clause 5.16 includes damages awards under any claims that have been issued, it follows that if and when a termination agreement isexecuted the paragraph 7(e) guillotine will fall. The effect will be that Mr Geys will have to cease the pursuit of any pending claims for breach of contract against the Bank (whether for wrongful dismissal, breach of the tax efficiency obligation in relation to 2005 and 2006 or otherwise) or else forfeit the termination payments and face a claim for their repayment; and he will issue and pursue any new claims at his like peril.[90]As parties often do in arguments about the construction of documents, each has submitted that the other’s argument produces a commercial absurdity. I can, however, see nothing absurd about the commercial consequences of the interpretation that I would favour. Whether contracts such as this one, including as it does exit provisions to arise on termination, are unusual, I do not know. There is, however, in my view much force in Mr Gatt’s submission that the essence of the bargain that was here being made was that the Bank was agreeing to pay potentially enormous sums to Mr Geys on his exit – at least €7.9m on the Bank’s case -- being payments that, but for the express provision for their payment, Mr Geys would not have been entitled to. The consideration for his receipt of such payments was, on the face of language to which he agreed, the giving up by him of all claims against the Bank save for certain immaterial express exceptions. That is what paragraph 7(c) expressly provides. The underlying scheme can be seen as one directed at achieving an early, litigation-free, clean break. Mr Geys’s proposition that the contract should nevertheless be interpreted as entitling him to pursue substantial claims for damages against the Bank of a nature that not only do not fall within the express exceptions but are, by any natural interpretation of the language of clause 5.16 and paragraphs 7(c) and (e) expressly excluded, is one I regard as obviously mistaken. It is not necessary also to characterise it as commercially absurd.[91]I add this. Mr Gatt more than once asserted that Mr Geys is under no obligation to sign a termination agreement. He can, he said, if he wishes waive his right to the benefits he would receive any such agreement if signed, and instead pursue a claim for damages if he regards that as likely to yield more for him. I do not understand why he should be so entitled. Clause 5.16 imposes an obligation upon both sides to sign a termination agreement, and it does not include an option to Mr Geys to decline to do so. Moreover, were his damages claims perceived by the Bank as more valuable than its liabilities under a termination agreement, it would have every incentive to hold him to clause 5.16. Of course, it would, however, always be open to the Bank to agree to release him from his clause 5.16 obligations if he wanted a release.

Disposition

[92]I would dismiss Mr Geys’s cross-appeal and Grounds 1 and 5 of the Bank’s appeal. I would allow the Bank’s appeal on Grounds 2, 3 and 4. What the consequence of all this will be on the judge’s order may be a matter of some potential complication. I would invite counsel to endeavour to agree a form of order that will reflect the court’s decision.

Lord Justice Pitchford :

[93]I agree.

Lady Justice Arden :

[94]I also agree with the judgment of Lord Justice Rimer. I add a few words on Ground 2.[95]The interpretation of paragraph 8.3 of the Handbook accepted by the judge is in line with the approach of cases such as Gunton v. Richmond-upon-Thames London Borough Council [1981] 1 Ch 448 and Boyo v Lambeth LBC [1994] ICR 727. Those cases proceed on the basis of the need for a bilateral approach to termination of an employment contract. In those circumstances there has to be communication of notice of termination.[96]However, unilateral or automatic termination of the employment is also possible when the parties’ agreement provides for that result and the parties can dispense with any requirement to give notice of such termination: see generally Chitty on Contracts, 30th edition, vol 1, at para 22-051.[97]Here, in my judgment, the parties agreed to a process of termination which was to be ‘in lieu of notice’. ‘Notice’ in the context of clause 11 of the contract and paragraph 8.3 of the Handbook in my judgment means notice of termination of the contract. Such a notice generally postulates termination at a future date, rather than termination with immediate effect. It may be that for that reason the parties did not expressly stipulate in paragraph 8.3 for the giving of notice as well as the making of a payment. However that may be, for the reasons given by Lord Justice Rimer, the true interpretation of paragraph 8.3 is that the parties have agreed that communication for the purposes of paragraph 8.3 should be simply by way of making payment. There is no basis for implying a requirement for communication, even when paragraph 8.3 is read with clause 11 of the contract as required by clause 17. Moreover, payment must actually be made: it is not enough to send payment.[98]The making of the agreed payment constitutes an outward manifestation of the Bank’s decision to terminate the contract of employment with immediate effect. By stipulating for the making of such a payment as the means of termination, the parties in my judgment dispensed with any additional requirement for communication of that decision.[99]I agree with the comprehensive analysis of Lord Justice Rimer on each of the issues arising on this appeal.

Cited in 7 later judgments