Abrahams v Performing Rights Society Ltd
|England & Wales
|LORD JUSTICE ALDOUS,LORD JUSTICE HUTCHISON
|19 May 1995
|Judgment citation (vLex)
| EWCA Civ J0519-1
|Court of Appeal (Civil Division)
|19 May 1995
 EWCA Civ J0519-1
(Sir Michael Davies)
Before: Lord Justice Aldous Lord Justice Hutchison
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN'S BENCH DIVISION
MR. I HUNTER QC & MR. A HOCHHAUSER (Instructed by Messrs Simmons & Simmons EC2M 2RT) appeared on behalf of the Appellant
MR. N DAVIS QC (Instructed by Messrs Hamlin Slowe W1A 4SQ) appeared on behalf of the Respondent
Friday 19 May 1995
This is an appeal from a judgment of Sir Michael Davies, sitting as a Deputy High Court Judge, which he gave on 26 May 1994, whereby he decided an appeal from Master Tennant on an issue falling for determination under Order 14A. This issue was whether the Plaintiff, Mr. Abrahams, who had brought an action against his former employers, Performing Right Society Limited, was under a duty to mitigate. That issue arose by virtue of a plea in paragraph 8 of the Defence. Both the Master and the Judge held that there was no duty to mitigate and struck out so much of the Defence as asserted the contrary. The question on this appeal is whether they were right.
The facts were summarised with exemplary clarity by the Judge. He said, and the notice of appeal and written skeleton arguments before us assert, that the facts are not in dispute. Certainly both parties were and remain willing to proceed on that basis, and it is undoubtedly true that there are very many facts which are not in dispute. I mention them as briefly as I can.
1. On 1 April 1987 the Plaintiff, who had been employed by the Defendant since 1980, entered into a new five year contract. During the currency of that contract new terms were by agreement incorporated into it dealing with termination and notice. It is clear from contemporary documents that the stimulus for the new arrangements (which involved other executives as well) was the Defendant's realisation that the effect of provisions of the Employment Protection (Consolidation) Act 1978 was that on the expiry of a fixed term contract an employee whose contract was not renewed could advance a claim for unfair dismissal. The new provision in the Plaintiff's contract is, the parties agree, accurately embodied in the following documents, the material parts of which I cite. The first document is an extract from the Staff Committee Minutes of 11 January 1989.
"Mr. Freegard referred to the difficulties which had arisen in the negotiations with Mr. Billingham preceding his appointment as Director of Membership Services regarding the concept of the fixed-term contracts…….Mr. Freegard recalled that, following telephone consultations with those members of the Committee who had interviewed Mr. Billingham, his appointment had been made not on the basis of a fixed-term contract but on the footing that two years' notice of termination (or salary in lieu) would have to be given by the Society (except in the case of gross misconduct) and this formula had been applied, therefore, also to the appointment of Mr. Axon as Director of Administration. In the case of the other three top managers, there was no such provision in their contracts (which were for a fixed term), although in Mr. Freegard's case there was provision at the mid-term review (scheduled to take place two years before the end of the fixed term) for extension of that term to be considered.
In these circumstances the Committee decided that the two years' notice provisions in Mr. Axon's and Mr. Billingham's letters of appointment should, with immediate effect, apply also to the three other top management service agreements."
The second document is a letter from the Defendant's chief executive to the Plaintiff dated 28 March 1989 in which, after drawing attention to the minute just quoted, the writer continued:
"My understanding of the effect of the Committee's decision as regards your own position is that in the event of termination of your employment by the Society, either at the end of a fixed term contract period or at any time during the final two years of such period, you would be entitled, other than in the case of dismissal for gross misconduct, to a period of notice of two years or an equivalent payment in lieu; however, the period of notice that you would be required to give in the event of your terminating your employment either at the end of any fixed term contract or at any time within the previous twelve months, remains at one year."
The Plaintiff accepted the variation in his contract by signing a copy "agreed".
2. The 5 years under the agreement expired on 31 March 1992 and, early in that year, negotiations took place for a renewal. Terms for a new fixed term contract could not, however, be agreed and the parties reached a form of agreement the effect and interpretation of which has given rise to the controversy at the heart of this case. To explain what happened I begin by quoting a passage from the judgment of Sir Michael Davies:
"At a staff committee meeting held on 4 March 1992 the Plaintiff made a statement which he had put into writing.
It included the following:
'…..As you are all aware, the decision that has emerged is non-renewal of my contract but with an indication of my readiness to continue in post for 2 years from its expiry at the end of this month, i.e. the same period of notice as PRS has contracted to give me…..
…..As I have indicated, it is my intention to serve out the 2 years notice and I wish to do so with as much as possible of my previous commitment to the organisation. Hence the importance that I attach to clearing the air…..'
There followed a letter from Mr. Freegard to the Plaintiff of 9 March 1992 and a 'Staff Announcement' signed by Mr. Freegard and the Plaintiff 'issued on 12 March 1992.
The letter stated:
'Our meeting began by your confirming to me what you had already indicated to me in January, namely, that you did not wish to negotiate a new contract but wished to continue under the terms of your existing contract for a further two years.'
The Signed 'Staff Announcement' is the second crucial document and the relevant words are:
'We are sorry to announce that discussions between the Society and Robert Abrahams have not resulted in agreement on the terms of a fresh service agreement to replace the existing one, which expires on 31st March 1992.
It has, however, been mutually agreed that Mr. Abrahams will remain in post as Director of External Affairs/Deputy Chief Executive for a further two years until 31st March 1994 under the terms of his existing contract.'
It is agreed that this constituted a new agreement between the parties; what is in dispute is its construction and effect, particularly having regard to the last quoted words viz. 'under the terms of his existing contract'."
The last observation by the learned Judge is essentially correct—the parties did and do agree that the Staff Announcement evidenced the new agreement.
The next material occurrence was that on 14 October 1992, the Defendant company summarily terminated the Plaintiff's employment. It has at all times accepted—perhaps I should say asserted—that in doing so it was in breach of contract.
The interlocutory history, including the nature of the issues before the Master and the last-minute amendment of the Defence at the first, and by reason of that amendment abortive, hearing before the judge in chambers, is set out in the judgment of Sir Michael Davies. I do not propose, despite the importance which both parties in their skeleton arguments attached to the fact that the Statement of Claim and the Defence were amended, to rehearse that history because it seems to me that, on a matter of construction and/or of law, it is not helpful to make the point that what is finally alleged did not at first occur to the parties or their advisers. It is to the final version of the pleadings that I make reference, and I shall cite the material paragraphs.
The Amended Statement of Claim, having pleaded the March 1989 variation, goes on to assert:
"4. In about March 1992, as evidenced by a Staff Announcement issued by the Defendant on 12th March 1992, it was agreed that the Plaintiff would remain in the Defendant's employment for two years until 31st March 1994 under the terms of his existing Contract. Accordingly such employment was agreed to be subject to the terms of the Contract of Employment (as varied).
7. In the premises, on 14th October 1992, the Defendant terminated the Plaintiff's employment without notice and is liable to pay the Plaintiff in lieu of such notice as follows…."
There then follows a computation:
"Basic Salary£96,005.00 pa
[Plus certain ancillary annual payments
amounting in all to 20,191.01]
There were then calculations, one on the
"x 24 months (being two years to 14th
October 1994) 232,292,00
x 17 months 17 days (being to 31st
The Plaintiff will give credit for the sum of £54,061.24 paid by the Defendant to the Plaintiff after 14th October 1992."
The material part of the Amended Defence reads:
"5. Paragraph 4 is admitted save that the said agreement created a contract for a fixed term to expire by the effluxion of time on 31st march 1994 in substitution for the entitlement on the part of:
(a) the Defendant to terminate on notice;
(b) the Plaintiff to receive such notice.
8. It is further admitted that subject to:-
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