Messrs Dowling & Rutter &c V. Abacus Frozen Foods Limited
| Jurisdiction | Scotland |
| Judge | Lord Johnston |
| Date | 12 December 2000 |
| Docket Number | 01426/5 |
| Court | Court of Session |
| Published date | 12 December 2000 |
| OUTER HOUSE, COURT OF SESSION | |
| 01426/5/98
| OPINION OF LORD JOHNSTON in the cause MESSRS DOWLING & RUTTER &c Pursuers; against ABACUS FROZEN FOODS LTD. Defenders: ________________ |
Pursuers: Summers; Drummond Miller, W.S.
Defenders: Sandison; Morison Bishop
12 December 2000
[1]In this action the pursuers, who are employment contractors, seek payment in respect of monies they claim are due to them from the defenders in respect of a contract to supply labour to the defenders' fish processing plant near Peterhead in 1997. The defenders plead illegality by way of defence otherwise accepting that the monies claimed would be due and also counterclaim in respect of consequential losses which they claim to have suffered as a result of an alleged breach of the contract by the pursuers.
[2]I heard a proof at which both pursuers gave evidence supported by an accountant. The defenders' managing director, Philip Greig and production manager, Mr Gill gave evidence supported by a former operations director, D. Scott and their control accountant.
[3]There was little dispute, at the end of the day, upon the evidence but the following is a narrative that I find proved.
[4]The pursuers operate, effectively, an employment agency supplying labour particularly to the agricultural industry in the East Midlands. However, their client base was wider than that and they were approached towards the end of 1996 by a consultant advising the defenders with a request to supply labour for the defenders' factory at Mintlaw near Peterhead which processed frozen fish. The pursuers, in turn, approached an organisation called Student Recruitment Ltd. run by two persons named Cox with whom they had regularly dealt and who, it appeared, inter alia, managed the importation of foreign labour, particularly from the Eastern block, into the United Kingdom. Direct contact was established between Student Recruitment and the defenders, but I am satisfied that at all times, until otherwise disclosed in the course of this action, the defenders regarded the two Mr Cox as part of the pursuers' organisation and indeed, had never heard of Student Recruitment Ltd until the point in time I have mentioned.
[5]After sundry discussions and negotiations, rates were agreed and initially 10 rising to approximately 24 persons, who were foreign immigrants, were supplied to the defenders and proceeded to commence work at their plant in January 1997. The method of payment for their services was slightly convoluted in as much that the defenders sent weekly spreadsheets, to what is in fact Student Recruitment whom they presumed to be the pursuers and who were indeed holding themselves out as such in terms of certain letterheads, giving details of payments due to the workers. These sums were settled, it seems, by Student Recruitment and thereafter the defenders were invoiced by the pursuers, both for the sums paid out in respect of wages but also including a mark-up in respect both of the pursuers' services and those of Student Recruitment. Those invoices were settled directly to the pursuers by the defenders. There was no formal written contract although the basic ingredients are to be found in a document by Mrs Scott, 7/2 No.9. While a start date is stated within that document, there is no expressed term as to the intended duration of the contract. Nor were there any specified persons. The contract was simply that the pursuers would supply a certain number of workers such as they were able to obtain. However both Mr Greig and Mrs Scott expressed the view, in evidence, that they expected the contract to last for a year.
[6]The arrangement appeared to work satisfactorily until suddenly, without warning, at the end of October 1997, the immigration authorities raided the house where the workers were staying in Peterhead, and detained them as illegal immigrants or at least as illegal working immigrants under the Asylum & Immigration Act 1996; in particular, in relation it appears to Section 8. Accordingly, the workers in question never returned to the defenders' premises. It appears that some were deported and others detained pending applications for political asylum.
[7]The sums claimed by the pursuers, in their action, represent monies due and not disputed as such in respect of the final payments due under the contract prior to its termination in respect of the particular workers. The figures were vouched by invoices.
[8]The defence pleaded by the defenders to the main action is that of illegality based upon the fact that the workers in question did not have legal authority to work in this country as immigrants under and in terms of Section 8 of the Act.
[9]The counterclaim alleges breach of contract in respect that the workers' labour was withdrawn prior to the end of the year's term as stipulated by the defenders, and the losses claimed are said to be those consequent upon a drop in production by reason of the loss of the workers in question.
[10]The issues raised are quite separate and I shall deal with them as such.
[11]Before, however, turning to the issue of illegality, I hold it established that neither pursuer was aware, at any time prior to the detention of the workers, that they did not have the necessary documentation to enable them to work in this country as immigrants. I accept their evidence that they had used a similar type of labour on many other occasions without any difficulty and had therefore assumed, in the present case, that there was no problem it being for Student Recruitment to organise the necessary documentation and to satisfy themselves that it was in order. They accordingly took no steps, at any time, even to inquire of either Mr Cox as to the state of the documentation of each and all of these workers. They stated that it was never their practice so to do, and I accept this.
[12]Mr Sandison submitted in relation to the question of illegality that it could arise for consideration by the Court in relation to the performance or enforceability of a contract in a number of ways firstly as a matter of simple common law, i.e. illegality in relation to either the content of a contract or the way in which it was performed. He referred to Walker on Contract, at p. 153, and MacBryde on Contract, at p. 629. The leading case he submitted was Jamieson v Watts Trustees, 1950, S.C. 265. The substance of the position was that if a contract was based on an illegal act, or if a person seeking to enforce a contract relied upon his own illegal act, the Court would not assist him. He accepted however, in this context, that the knowledge of the existence of such an act or at least of the illegality was necessary in relation to the pursuers before the contract could be set aside or declared unenforceable, and that knowledge either had to be actual or constructive in the sense of effective recklessness. (Smith of Madiston Ltd, 1955, J.C. 48.) He went on, however, to submit that it was perfectly possible for a person to be only an accessory to the illegal act and still be barred from suing upon the contract if it was germane to it.
[13]Again, quite generally, Mr Sandison submitted a further way in which the law would not enforce a contract in relation to illegality namely if it was contrary to public policy so to do. That normally meant that the contract had to strike at something which was contrary to the public policy of the land. Examples of public policy were legion but in this case,...
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