Judgment of the Supreme Administrative Court No. 4/2013. D.R. (Official gazette) No. 93, Series I of 2013-05-15

Managing partner status and granting of unemployment benefit

Harmonising case law as follows: the status of non-remunerated managing partner of a commercial company of an employee whose employment contract has come to an end, does not preclude his situation being qualified as unemployment, in accordance with and for the purposes of articles 6(1) of Decree-Law No. 119/99, of 14 April and article 2(1) of Decree-Law No. 220/2006, of 3 November, respectively.

Judgment of the Supreme Court of Justice of 2013-05-15

Just cause for dismissal of managers

With this judgment, the Supreme Court of Justice considered that the "just cause" provided for in article 257(6) of Código das Sociedades Comerciais (CSC) (Companies code) may be defined as any action performed by the manager that is generally reprehensible by the other associates and that, given the reprehensibility of such conduct, causes the loss of safety and good faith existing until then, thus making it impossible to maintain this customary functional connection and, inevitably, required by strong administration of the company.

In the case under consideration, the Supreme Court of Justice considered that there was just cause for dismissal when one of the managers beats another manager, hitting him with a stick on the head following an argument between them concerning the air conditioning system operating at the firm and where, because of that, any further relationship between them comes to an and.

Judgment of the Supreme Court of Justice of 2013-05-28

Capacity for the provision of guarantees by commercial companies

In this decision, the Supreme Court of Justice considered that where a public limited liability company, which is the debtor in enforcement proceedings, provides a personal guarantee for the debt of one of the co-debtors to the creditor, thus becoming jointly and severally liable for the sum in question, there is a co-assumption of the debt, cumulative assumption, accessio or addition to the debt, multiplicative or reinforcing assumption of the debt by the debtor in the enforcing proceedings, under the exact terms of Article 595(1)(b) and (2) of the Civil Code.

With regard to the delimitation of commercial companies’ capacity to be the subject of rights, in accordance with article 6(1) and (3) of CSC and the provisions of article 280(1) and article 294 of the civil code, in principle, it should be considered that the provision of personal or real guarantees for the debts of other entities goes against the purpose of the company, and is, as such, null and void.

However, the provision of real or personal guarantees for debts of another entity is not to be regarded as being in conflict with the purpose of the company where there is a justified own interest of the guarantor company or in case of control or group relation between them (article 6(3) of CSC).

As regards the evidence of the existence of a justified own interest of the company in question in the provision of any of the said guarantees, the entity for which the guarantee is provided should not be punished by the annulment of the act of provision of the guarantee, where it is not possible to prove the existence of such justified own interest of the guarantor company, and the said act should remain unaffected where the guarantor company is unable to prove the existence of such interest in the case in question.

Judgment of the Court of Appeal of Lisbon of 2013-05-02

Just cause for dismissal of a director

With this decision, the court considered that, where the defendant company claims in the Defence, that the Plaintiff (its former director) allegedly received certain sums referred by the latter, but denies that the same arise from an agreement relating to the participation in the company’s profits or losses, rather it was a performance bonus which could or could not be granted by the same depending on the circumstances, the defence in question is a defence by challenge and not by exception, since, besides the denial that such agreement existed, the Defendant limits itself to give a different qualification and legal nature to the payments claimed by the Plaintiff.

Where the company’s practice is to pay the entire amount of the employees pay during the first three months of sick leave, covering the extra 35% of the sickness benefit in addition to the 65% paid by Social Security, and also paying in advance the employee’s entire pay until he starts receiving the benefit, the director who receives the benefit from Social Security and fails to return it to the company that paid the whole amount of his salary in advance and who, in addition, continues to be paid 100% of his salary even after the first three months of sick leave commits a serious fault.

The behaviour of the director who, being in charge of the financial sector and accounting of the company, fails to promote the payment of the debts of another company, of which his brother was a majority shareholder, is also a serious fault.

The court concluded that these behaviours breach the essential relation of trust, inasmuch as the director in question, did not act to defend the interests of the company he administers and those of its shareholders, but rather to protect his own and his family’s interests and that therefore there is just cause for dismissal in accordance with article 403(4) of CSC.

Judgment of the Court of Appeal of Porto of 2013-05-09

Enforcement against co-guarantor of promissory notes

The court decided that the co-guarantor of a promissory note that paid the corresponding amount to its beneficiary cannot claim payment of a part of such amount from the other co-guarantors in enforcement proceedings, since the promissory note has no enforcement force vis-à-vis these other co-guarantors as evidence of indebtedness or as unsecured credit.

Judgment of the Court of Appeal of Porto of 2013-05-13

Special revitalization procedure

In this decision, the court considered that, since the special revitalisation procedure aims to achieve the viability or recovery of the debtor, the addition made by Law No. 16/2012 of 20 April to the Código de Insolvência e Recuperação de Empresas (CIRE) (Code of Insolvency and Recovery of Companies), the essential purpose of which was the satisfaction of the creditors’ claims, translates into a mitigation of that goal and a return to the previous bankruptcy legislation, which provided for schemes geared to obtain such results (recovery of companies).

Since the Recovery Plan and the Insolvency Plan are perfectly distinct legal realities, each of them with specific rules and distinct pre-conditions and goals, the provisions of article 195 of the CIRE, which identifies the content of the insolvency plan, cannot be applied to the Special Revitalisation Plan.

Judgment of the Court of Appeal of Porto of 2013-05-20

Assignment of commercial establishment’s lease

In this decision, the court considered lawful for the owner of an establishment, even one including a rental relation, to assign its operation by lease to third parties, regardless of the will of the landlord (article 1109(2) of the Civil Code); however, the assignment should be notified to the landlord within one month, failing which, the same shall not take effect vist-à-vis the landlord (article 1109(2) and 1083(2)(e) of the Civil Code).

This unenforceability only affects the rental relation and enables the landlord to defend his position in such relation through the powers granted to the landlord by law and does not entail, outside the limits thus outlined, any other effect for the commercial establishment which is the subject of the assignment.

Moreover, the court decided that, if after the assignment of an establishment that included a rented space, not notified to the landlord, the landlord proceeds to weld doors and windows in that space thereby impeding any access to the same, such behaviour has not just a local impact but also affects the integrity of the establishment itself. The landlord is civilly liable (not merely contractually but also extra-contractually liable) to the owner of the establishment destroyed, and the failure to notify the landlord of such assignment of operation does not remove such liability.