England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIIL DIISION)
ON APPEAL FROM ORDER OF HIS HONOUR JUDGE ANTHONY
(Lewes County Court)

		Royal Courts of Justice Strand London WC2 Monday, 26th March 2001

1. LORD JUSTICE RIX: This is an appeal from the judgment of His Honour Judge Anthony and arises out of the sale of a taxi cab business.
2. The claimants, in this court the respondents, are husband and wife, Mr and Mrs Gentry-Wells, who traded as the Ringmer Cab Company. They employed seven drivers and utilised four cars. They worked from offices in Ringmer. They operated as a call-cab company. The defendants - in this court the appellants - are two brothers, Stephen and Stuart Cooley. They are in fact the brothers of Mrs Gentry-Wells. They traded as Becks Taxis and ran a similar, if larger, operation in Lewes. Lewes and Ringmer are nearby to one another.
3. After a number of years building up their Ringmer Cab Company, the Gentry-Wells decided that they would be better off selling their business to the Cooleys. They did so under an oral agreement which was not committed to writing made in around March or early April 1997 and put into effect on 7 April 1997. The essential terms of this agreement, as found by the judge, were that the entire operation and assets of the claimants' business was to be transferred to the Cooleys - that is to say, the Ringmer office, the cars and the drivers employed by the Ringmer Cab Company - and that in return Becks Taxis would employ Mr and Mrs Gentry-Wells. The Cooleys would take over responsibility for the leasing agreements, in particular, the agreements relating to the four cars which the Gentry-Wells ran in their business, and would otherwise indemnify the Gentry-Wells against any liability under those transferred liabilities. They would also pay off other liabilities of the Ringmer Cab Company up to a maximum of £2,500 and would, in addition, pay to the Gentry-Wells a sum of £5,000 in instalments over a period of 12 months. There was some dispute about whether those instalments were to be on a weekly or monthly basis. In the end the judge did not need to resolve that dispute. It is sufficient to record that the Cooleys accepted that the obligation was to pay the sum of £5,000 in equal instalments over the period of one year subject to a condition, which was common ground between the parties, that the obligation to make those instalments continued for only so long as the Gentry-Wells remained employed by the defendants.
4. There was one other important term of the business which was that the Gentry-Wells were to be employed at the Ringmer office. Mr Gentry-Wells was to be employed there with managerial responsibilities for the drivers previously employed by the Ringmer Cab Company, and Mrs Gentry-Wells, when she had terminated her current employment elsewhere, would also take up her employment as, essentially, a book keeper and administrator at the Ringmer office.
5. That was the essential structure of the sale of the business. As I mentioned earlier, it was put into effect on Monday 7 April 1997. As the judge remarked, by Thursday 10 April the whole deal had gone sour and never recovered. What happened on that day was that Stephen Cooley told Mr Gentry-Wells that he was closing the Ringmer office and transferring the radio frequencies of the Ringmer Cab Company cars to the Becks frequency. Mr Gentry-Wells protested in vigorous terms. He was told, in effect, that he was only a driver whereupon Mr Gentry-Wells - he accepts - lost his temper and left. The Cooleys were subsequently to say at trial that it was made clear to Mr Gentry-Wells that the closure of the Ringmer office was only to be a temporary one. But the judge did not accept that evidence. When subsequently, in a telephone conversation with Mrs Gentry-Wells, Stephen Cooley spoke to her in an attempt to resolve the situation, there was again no suggestion that the closure of the Ringmer office was only to be temporary.
6. It subsequently emerged, and was found at the trial, that the Cooleys saw a real difficulty in transferring telephone lines to the Ringmer office in that that would cost some £7,000, a sum they were not willing to undertake. Therefore, the judge found it was probably in their minds from that time that the closure was to be a permanent one. In any event the judge, in effect, found that that was how the matter was viewed on both sides, that the Ringmer office would be closed permanently.
7. The judge found that the Cooleys were not truthful either in their witness statements or in their evidence before the court as to this matter of whether the closure was to be temporary or permanent.
8. There was an attempt by the Cooleys to negotiate a rescission of the sale contract but that came to nothing.
9. Thus it was that the parties took up their positions then and there as from 10 April 1997 on the basis, on the part of the Gentry-Wells, that the Cooleys had repudiated the whole agreement by planning to close the Ringmer office permanently and, on the part of the Cooleys, that they had no obligation to keep the Ringmer office open, and that the Gentry-Wells had, in effect, just walked away from the agreement and discharged themselves. The Cooleys went ahead with absorbing the Ringmer Cab Company into their own operations. They kept the Ringmer office, which they closed. They kept three of the four cars; I will say something more about the fourth car in due course. They kept the former drivers of the Ringmer Cab Company. They put the three cars which they retained to use in their own business, earning fares. Their position was that they had no obligation to return any of these assets or the cars in particular, although they were called upon to do so by the Gentry-Wells. In these circumstances, the Gentry-Wells, having lost in this way to the Cooleys the whole of their operation, were in no position to keep up the instalment payments of the four cars which they had leased. I mentioned a moment ago that one of these four cars was retained by the Gentry-Wells when the deal fell apart on 10 April. This was because, as I understand it, this car (which I shall call the "P" registration car) was out on the road under hire at the time of the falling apart of the agreement, and Mr Gentry-Wells was able to obtain possession of it from the driver who was using it at the time. So the "P" registration car was the only exception to the general situation which I have described whereby, despite the bust up pn 10 April, the Cooleys took over and operated the whole of the former Ringmer Cab Company.
10. In due course this claim by the Gentry-Wells came on for trial before the judge in the Lewes County Court in the autumn of 1999. The judge heard three days of evidence, in particular from the two claimants and the two defendants. At almost every point of issue between the two pairs of witnesses, the judge preferred the evidence of the Gentry-Wells. I have already mentioned that on the critical issue of the circumstances of the bust up on 10 April, and whether the closure of the Ringmer office was to be temporary or permanent, he preferred the evidence of the claimants and found in effect that the Cooleys had lied to the court. He found that the term that the Gentry-Wells would be employed at the Ringmer office involved a term that the Ringmer office would be kept open and that that was a matter which had been specifically discussed between the parties at the time of their agreement and had been discussed in terms which had emphasised to the Cooleys the importance to the Gentry-Wells of their being able to continue their employment at the Ringmer office.
11. The statements of the Gentry-Wells - although this is not a matter spelt out in detail in the judgment - give reasons for the importance of this term to them, including the fact that the proximity of the Ringmer office to their home was an important consideration to them and to their family life as they wished to live it. It was bound up with the fact that Mr Gentry-Wells wanted to come in off the road so that he could spend more time with his family. It was in this connection that the Gentry-Wells were anxious to prove that it was one of the terms of the agreement, as the judge found it to be, that Mr Gentry-Wells would have managerial responsibilities at the Ringmer office for the old Ringmer drivers. The attitude of Stephen Cooley however on 10 April was, as I have mentioned, that Mr Gentry-Wells was just a driver. So bound up with the question of where Mr Gentry-Wells would be working, and whether there would be an office at Ringmer where he could work, was the fact of what kind of work he would be doing or whether he would be put out simply as a driver on to the roads.
12. The judge found that the term that the claimants would be employed at the Ringmer office and that the Ringmer office would therefore be kept open was a fundamental part of the agreement, so much so that the permanent closure of that office amounted to a repudiation of that agreement.
13. The judge went on to deal with matters of quantum. He found that the repossessions of three of the four cars, and the instalment payments for the relevant two months on the fourth car, were all sums which went to the loss claimed by the Gentry-Wells in this case. The repossessions of three of the cars led to a judgment sum of £18,196.86. The instalment payments on the fourth car amounted to £406.70. The total of such liabilities amounted to £18,603.56. The judge credited the defendants with £1,000, being £100 net per week over ten weeks which Mr Gentry-Wells had managed to earn by operating from his telephone at home, the hiring out as a taxi of the "P" registration car which had remained in the claimants' possession, and which he drove.
14. Another item of damages - and I mention only those which enter into the dispute on this appeal - was the loss suffered by the claimants on the remuneration they would have obtained from their employment under the sale contract. That came to a total of £12,220 net.
15. On this appeal Mr Peebles, on behalf of the defendants, has one general over-arching point but, in substance, raises three issues. The first issue is that the judge was wrong to find that it was a term of the contract that the Ringmer office would remain open and was, in any event, wrong to find that breach of that term amounted to a repudiation of the contract as a whole. The second issue raised by him is that there was no term of the agreement that the Gentry-Wells would be employed for a year. It followed therefore, so Mr Peebles submitted, that the claimants were entitled neither to the damages which the judge awarded them as a matter of compensation for their loss of employment under the sale contract, nor were they entitled to the £5,000 which the judge also awarded them and which they would have obtained in instalments over a year under the terms of the contract. The third issue related to one item of the head of claim relating to the judgment sum in relation to the repossession of the three cars. One of those three cars was the "P" registration car which remained in the possession of the claimants. In respect of that car the judgment sum was £6,431.53. Mr Peebles submits that since that car remained in the possession of the claimants, unlike the other three cars, the fault for the failure to keep up instalment payments under the leasing agreement - and thus the responsibility for the judgment sum in respect of the failure of the leasing agreement in that case and the consequent repossession of that car - was all down to the claimants themselves. He submits that they should have kept up the instalment payments and then they would not have faced the judgment sum involved in repossession. Those are the three specific matters.
16. There is, as I mentioned, an over-arching submission in relation to all three matters. Mr Peebles submits that the judge failed to give sufficient reasons in his judgment either of law or of findings of fact and failed, in effect, to set out his conclusions with sufficient transparency, so much so as to necessitate a re-trial. As I understand Mr Peebles' submissions as a whole, they are that in the absence of a transcript - which he tells us his clients simply could not afford to commission for the purpose of this appeal - the most that he can hope for, if his specific submissions find favour, is a re-trial of this claim. Following a trial of three days of evidence and one day of argument, and in the context of claims which, however important they are to the parties, are relatively small compared to the costs involved in the proceedings to date, including this appeal, and in the prospective costs of a re-trial, the submission of Mr Peebles is an unpalatable one. Of course, if it proves to be justified, then however unpalatable, an order for re-trial would have to be made.
17. For the purposes of that over-arching submission, Mr Peebles relies in particular on Frank Flannery and Ann Flannery v Halifax Estate Agency Ltd [1999] BLR 107 where this court emphasised that, although everything must in the end depend upon the particular circumstances of each case, it may well not be enough for a trial judge simply to derive his conclusions by a process of reasoning whereby he states that he prefers the evidence of one party to that of another. As it happens, that was a case in which the critical issues arose between expert witnesses. The essence of the judgment of the court there given by Lord Justice Henry is at page 110 where he states:

"This is not to suggest that there is one rule for cases concerning witnesses' truthfulness or recall of events, and another for cases where the issue depends on reasoning or analysis (with experts or otherwise). The rule is the same: the judge must explain why he has reached his decision. The question is always, what is required of the judge to do so; and that will differ from case to case. Transparency should be the watchword."

18. With that introduction I turn to the first of the three issues, the issue of repudiatory breach. In this connection Mr Peebles accepts, as he must, that it was a term of the agreement that the claimants would be employed at the Ringmer office. He accepts as well that in the light of that term the closure of the office would have been a breach of the term to employ the claimants at the Ringmer office. Nevertheless, he submits that the employment aspect has to be severed from the sale of business aspect of the overall agreement and that looking at the term in the employment contract - that the claimants were to be employed at the Ringmer office - there was nothing to indicate there that employment in one place rather than another was a fundamental term. He accepts that in theory it is possible that a requirement that an employee take up and move his employment from one place to another can amount to repudiation of an employment contract or amount to constructive dismissal. He submits nevertheless that there is no reason why, on the facts of this case, that analysis should be the one to be adopted. He criticises the judge for regarding the maintenance of a Ringmer office where the claimants can be employed as, what he calls, a freestanding term rather than simply an aspect of the term relating to the claimants' employment.
19. In my judgment, there is nothing in these submissions. A term that the claimants are to be employed at the Ringmer office necessarily involves a term - it matters not whether it is called freestanding or whether it is simply a part of a longer obligation that that Ringmer office remain open. There is in my mind no doubt that it was a term of the contract which can be regarded as either an express part of the express term that the claimants are to be employed at that office or as a term implicit in that express term. It seems not to matter which analysis is adopted. That is a term of the contract of which the defendants are in breach.
20. The next question is whether that is a repudiatory breach or not. The judge said:

"This was, in my judgment, a breach of the term of the agreement so important that I accept that it amount[ed] to a repudiation of the agreement and that that repudiation was accepted by Mr Gentry-Wells orally at the time when he said the words to the effect that the deal was off."

21. The judge had previously, a few lines earlier, said:

"It was a fundamental part of the agreement and I reject the evidence of the defendants to the effect that this was not even discussed and I prefer and accept the evidence of the claimants to the effect that it was discussed, was important to them and was agreed. Whilst, in fact, what may have been happening was that Becks were taking over the Ringmer Cab Company it was, nonetheless, a crucial part of the claimants' agreement to sell that there would remain a substantial and real connection with Ringmer."

22. It is perfectly true that the judge could - on the evidence which the claimants gave, evidence which I have already mentioned he essentially accepted - have given further reasons in support of those critical findings. Nonetheless, it seems to me that what the judge has done is to give perfectly adequate reasons and transparent reasons for his finding of a repudiation. If in theory, as Mr Peebles accepts, an employer's attempt to change his employee's location of work can amount to constructive dismissal, then there were certainly facts in this case on the basis of which the jduge was entitled to find that the location of the Gentry-Wells at Ringmer, and the preservation of teh Ringmer office, was a vital term of the contract.
23. Therefore, on this first issue the appeal fails.
24. The second issue relates to the period for which the claimants were to be employed. It is common ground - indeed, it was common ground on the pleadings - that the Gentry-Wells would receive £5,000 in instalments "for so long as the plaintiffs remained employed by the defendants", a phrase I take from the Cooleys' defence at paragraph 2h. It was also common ground, because it was the Cooleys' own evidence, that the £5,000 was to be paid off over the period of a year. In these circumstances the judge found that it was an implied term that the Cooleys could not dismiss the Gentry-Wells within the period of that year. Mr Peebles submits that that was an impermissible implication. He submits that in the absence of any express term as to notice any employee can be dismissed without cause on reasonable notice. He submitted that in the circumstances that would be, say, a fortnight's notice, certainly nothing like one year, and that the judge was wrong to find the implication which he did find.
25. In my judgment the implication is rooted in standard and classic law that one implies a term to give business efficacy to a contract. The contract was that £5,000 would be paid over a period of a year as long as the claimants remained in the defendants' employment. It is standard law that there is an implied term that a party should do nothing of his own motion to make it impossible for him to carry out a contractual obligation which he has accepted. If, without cause, the Cooleys could dismiss the Gentry-Wells thereby making it impossible for them to earn the £5,000 which was due to them so long as they remained employed, the Cooleys would, in my judgment, be in breach of that necessary implication that they would do nothing to prevent the performance of an obligation which they had undertaken. In my judgment, the judge was quite right to find the implied term that within a year the defendants were unable to dismiss for other than just cause.
26. It follows necessarily that the quantum in respect of compensation for loss of wages and the £5,000 was correctly awarded by the judge to the claimants.
27. The third issue relates to another item of quantum, the matter of the judgment debt in relation to the repossession of the "P" registration car. Mr Peebles submits that as this car remained in the claimants' possession and was used by Mr Gentry-Wells to earn £100 net a week over ten weeks, then the responsibility for its repossession and the judgment debt was entirely that of the claimants and could not fall upon the defendants. He submitted, in other words, that in this respect at any rate the claimants had failed to prove the cause of their loss to this extent. The judge's view was that the financial consequences of the situation whereby, despite the repudiation, the defendants had successfully taken over the whole of the claimants' business save for the "P" registration car, were that the claimants were simply in no position to make good the obligations under their lease agreements which otherwise, if the contract had been performed, would have fallen entirely upon the defendants. It is a fair point made by Mr Peebles that the particular submission as to causation made in relation to the "P" registration car is not expressly dealt with as a separate matter and rejected by the judge. Nevertheless, the judge was perfectly aware that that fourth car was retained in the possession of the claimants.
28. Thus, it was on the basis of that fact of course that he assessed the credit to be given to the defendants, by reason of the net earnings of Mr Gentry-Wells, to be £1,000 over the ten weeks concerned. I am satisfied that he had this point fully in mind. He was entitled to find that the position the claimants found themselves in by reason of the defendants' repudiation, whereby they had lost their office, their drivers and all but one of their cars, was a position in which it could not be said that their failure to keep up the instalments on any of the cars, even the one which enabled Mr Gentry-Wells to make a pitiful £100 a week, affected the matter of causation at all. While knowing of the difference between the retained car and the three other cars, the judge concluded that it was right to make no distinction between the loss in respect of that car and the other losses.
29. In my judgment, he was entitled to do so.
30. I have now dealt with each of the three specific issues raised by mr Peebles. In resepct of none of them do I find that the judge's reasons were inadequate or so lacking in transparency that the only jsut solution would be to put these parties to the expense and trouble of a re-trial.
31. It follows therefore that for these reasons all the points raised on this appeal fail and this appeal must be dismissed.
32. LORD JUSTICE MAY: I agree that this appeal should be dismissed for the reasons given by Lord Justice Rix. I accept gratefully his account of the facts and issues.
33. The issues which the judge had to decide were to a very large extent issues of fact. Among other things, he had to decide what the terms of the oral agreement were and what happened on and around 10th April 1997. He had also to decide whether what happened on 10th April constituted in all the circumstances a breach of the agreement by the defendants so grave as to amount in law to repudiation.
34. It was the claimants' case that it was expressly agreed that the claimants would be employed at the Ringmer office and the claimants' evidence was available to support this part of the agreement. That, to my mind, quite obviously carried with it an underlying agreement, for practical purposes explicit, that the Ringmer office would be kept open to enable them to be employed at it. The judge found that such was a term of the agreement. In my view, he was entitled to do so and his earlier decision not permit the claimants to amend their claim to this explicit and separate effect did not, contrary to Mr Peebles' submission, disable him from doing so. Nor in my view is this a case in which the employment part of the agreement should be looked at separately from the agreement for the sale and purchase of the business. It was to my mind plainly a single composite agreement. In the same way, there was ample evidence entitling the judge to find, as he did, that it was a term of the agreement that the defendants would pay the claimants £5,000 for the business over a period of a year, provided that the claimants remained employed by the defendants throughout that period. The plain intent of that was both that the defendants should have the benefit of that employment for that period, and that the claimants should not be disabled from fulfilling the condition entitling them to the payment of the £5,000 by an arbitrary termination of their employment by the defendants without good cause. The judge was, in my judgment, entitled so to find.
35. Having found that the announced closure of the Ringmer officer was not, as the defendants contended, temporary, the judge was entitled, in my view, to find that the gravity of the breach which he found on 10th April 1997 was in all the circumstances such as to make the breach fundamental and amounting to repudiation. The essence of the agreement was that the claimants were parting with ownership of a reasonably viable small taxi business run from Ringmer. They were receiving modest payment for this, but also entitlement to employment at Ringmer for at least a year. Immediate, permanent and, as the judge found, effectively dishonest closure of the Ringmer office was, in my view, well capable of being seen as a grave and fundamental breach. I do not accept that the judge's findings and reasoning were inadequate, as Mr Peebles submits. On the contrary, I consider that the essential findings to which I have referred were both adequately expressed and reasoned, and justified by evidence to which the judge himself referred. In so far as some of the judge's evidential references may be compressed, that is not a criticism, when it is seen that his factual findings were, as I think, justified by evidence to which we have been referred, some important parts of which were the evidence of the defendants themselves.
36. I agree with my Lord, Lord Justice Rix, on the issues of damages, in particular that relating to the "P" registration car.
37. For these brief reasons, I agree that the appeal should be dismissed.
38. LORD JUSTICE WARD: I agree that the appeal should be dismissed for the reasons given by my Lords.
Order: Appeal dismissed with the costs.