A company director sought payment of his directors fees of andpound;150 per annum where during the course of the year he had ceased to be a director. There was no allegation of impropriety on his part. The company’s articles provided that the directors should be entitled to fees of a certain amount per annum. The need for apportionment arose from the fact that the director in question had retired by agreement in the course of the year.
Held: Directors’ fees constituted ‘salaries’ for the purposes of the 1870 Act. The court could use the 1870 Act to apportion the payment due to him. The ‘Act, which was passed to remedy a grievance, undoubtedly affected common law rights and obligations.’ . . ‘the attitude in the minds of the tribunals was to regard the Apportionment Act as a wrongful encroachment upon common law proprieties. I take exactly the opposite view. The Act remedied a grave injustice; it is a remedial Act, and the inclination of every tribunal should be to extend rather than to restrict its operation.’ ( McCardie J). As to whether a salaried person would be entitled to apportionment if he had been dismissed for misconduct, the judges disagreed.
Lush J said: ‘I should hesitate to agree with the suggestion that he can claim in such circumstances. It is quite true that the salary is to be considered as accruing from day to day, and it is quite true that a dismissed servant is entitled to salary that has already accrued at all events up to the date of the act of dishonesty, but the Act does not say that in such a case, or for all purposes, the salary shall be deemed to have accrued from day to day; it only says that it shall be considered as accruing from day to day. That provision was merely inserted to facilitate or to extend the apportionment which the legislature was saying should be made. The sum cannot logically be apportioned unless it is treated as accruing from day to day; it is only for that purpose that it is deemed to accrue from day to day. If something has happened during the service which forfeits the right to the salary it may well be that the servant cannot take advantage of the Act . . ‘ McCardie: ‘I do not fail to see the wide stretch of the results which follow from the decision we are now giving, and one of the questions that must arise in the future is whether or not the Apportionment Act will destroy the operation of the rule under which a servant who is dismissed for misconduct loses the whole of the money accruing to him, although he is entitled to get the money that has actually accrued . . I express no opinion on this very serious question, which does not arise for direct decision. It may well be said that no servant dismissed for misconduct can rely on that misconduct as a basis for invoking a remedial Act . . On the other hand I am not altogether satisfied as to the justice of denying the benefit of the Apportionment Act to a man who has been guilty of misconduct. Suppose a salary is payable half yearly to a man, and suppose he has fulfilled his duties with absolute propriety up to the last week; that he then commits an act which justifies his master in dismissing him. Upon the law as it stands the man gets nothing for his five and a half months’ work. Is it right that he should be deprived of remuneration for five and a half months’ work because during the last fortnight he has done something for which he has been dismissed? I express no opinion upon that point. Ere long it must arise for decision. ‘
Judges:
Lush J, McCardie J
Citations:
[1921] 1 KB 423
Statutes:
Citing:
Appealed to – Moriarty v Regent’s Garage and Engineering Co Ltd CA 2-Jan-1921
Whilst the point was obiter in this case: ‘ . . it seems to me that there is no decision binding on the Court of Appeal as to whether directors’ fees are salary within the Apportionment Act in the case where the agreement . . is simply for payment . .
Cited by:
Cited – Fassihim, Liddiardrams, International Ltd, Isograph Ltd v Item Software (UK) Ltd CA 30-Sep-2004
The first defendant (F) had been employed by a company involved in a distribution agreement. He had sought to set up a competing arrangement whilst a director of the claimant, and diverted a contract to his new company.
Held: A company . .
Appeal from – Moriarty v Regent’s Garage and Engineering Co Ltd CA 2-Jan-1921
Whilst the point was obiter in this case: ‘ . . it seems to me that there is no decision binding on the Court of Appeal as to whether directors’ fees are salary within the Apportionment Act in the case where the agreement . . is simply for payment . .
Approved (Obiter) – Re William Porter and Co Ltd 1937
. .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 13 May 2022; Ref: scu.215865