Holdsworth (Harold) & Company (Wakefield) Ltd v Caddies

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Chancellor,Earl Jowitt,Lord Morton of Henryton,Lord Reid,Lord Keith of Avonholm
Judgment Date04 March 1955
Judgment citation (vLex)[1955] UKHL J0304-1
Docket NumberNo. 2.

[1955] UKHL J0304-1

House of Lords

Lord Chancellor

Earl Jowitt

Lord Morton of Henryton

Lord Reid

Lord Keith of Avonholm

Harold Holdsworth and Company (Wakefield) Limited
and
Caddies

After hearing Counsel, as well on Tuesday the 11th, as on Wednesday the 12th, days of January last, upon the Petition and Appeal of Harold Holdsworth and Company (Wakefield) Limited, a Company incorporated under the Companies Acts and having their Registered Office at 15 Moorgate, London, E.C.2, praying, That the matter of the Interlocutors set forth in the Schedule thereto, namely, an Interlocutor of the Lord Ordinary in Scotland (Lord Strachan) of the 28th of November 1952 and also an Interlocutor of the Lords of Session there of the First Division of the 25th of June 1953, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Interlocutors, so far as aforesaid, might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of Robert Fyvie Caddies, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Interlocutors of the 28th day of November 1952 and of the 25th day of June 1953, in part complained of in the said Appeal, be, and the same are hereby, Recalled except in regard to the expenses of the amendment of the Record while the Cause was before the Inner House; And it is further Ordered, That the first plea-in-law for the Defenders be sustained and the action dismissed: And it is further Ordered, That the said Cause be, and the same is hereby, remitted back to the Court of Session in Scotland to do therein as shall be just and consistent with this Judgment: And it is further Ordered, That the Respondent do pay, or cause to be paid, to the said Appellants the Costs of the Action in the Court of Session and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That unless the Costs, certified as aforesaid, shall be paid to the party entitled to the same within one calendar month from the date of the certificate thereof, the Court of Session in Scotland, or the Judge acting as Vacation Judge, shall issue such summary process or diligence for the recovery of such Costs as shall be lawful and necessary.

Lord Chancellor

My Lords,

1

In this action the Respondent seeks damages against the Appellants for breach of contract. In the summons he concludes for payment of £25,000 and in the condescendence he makes averments purporting to support his claim for payment of that sum. The Appellants plead that the action is irrelevant and contended before the Lord Ordinary (Lord Strachan) and before the First Division of the Court of Session that it should be dismissed without enquiry. The First Division adhered to the interlocutor of the Lord Ordinary allowing a proof before answer. It is against that allowance of proof that the defenders appealed to your Lordships' House.

2

The relevant facts as presented by the pursuer are as follows. The pursuer is a worsted spinner and manufacturer of wool goods. He was formerly managing director of the British Textile Manufacturing Company, Limited (which I shall call "the Textile Company" ) and the beneficial owner of all the shares. In November, 1947, the Appellant Company, which carries on business as worsted spinners at Balne Mills, Wakefield, purchased from the Respondent the whole share capital of the Textile Company. In terms of the agreement dated 3rd November, 1947, by which the purchase was effected, the Appellant Company was bound to procure that the Respondent be appointed to the board of the Appellant Company and be appointed managing director of the Textile Company upon terms set out in the second schedule to the said agreement. The terms of the said agreement were duly implemented and the Respondent was appointed managing director of the Textile Company on the 3rd November, 1947. The appointment was for a period of five years and thereafter until terminated by written notice to be given by either party. The business of the Textile Company was in Irvine in Ayrshire, and was the manufacturing of knitted articles of wool clothing. By an agreement dated the 1st April, 1949, but to operate as from the 1st October, 1948, the Respondent was appointed a managing director of the Appellant Company. Such appointment was for a period of five years and thereafter until terminated by written notice by either party. It was provided in the second agreement, in words which I shall examine more closely in a moment, that the Respondent as such managing director should perform the duties and exercise the powers in relation to the business of the Appellant Company and the businesses of its existing subsidiary companies at the date thereof which might from time to time be assigned to or vested in him by the board of directors of the Appellant Company. At that time the Appellant Company controlled the Textile Company, Whalley & Appleyard Limited, and David Allan (Knitwear) Limited. The Respondent's remuneration under the second agreement was to be a fixed salary of £2,500 per annum with, in addition, an annual commission on the combined net profits of the company and all its then existing subsidiaries. At all times the Respondent was the sole managing director of the Appellant Company, and he avers (though it is denied by the company) that he was entrusted with the whole executive management of that company. The effect of the second agreement upon the first was not argued before us, but in fact the Respondent continued to carry out certain duties in relation to the Textile Company. His actions and proposals occasioned opposition from certain members of the board of directors of the appellant company who, he avers attempted to persuade him under threat of removal to relinquish his appointment as managing director of the company. Ultimately, at a meeting of the board of directors of the company, held on the 10th May, 1950, the board resolved that the Respondent should confine his attentions to the Textile Company only and that permanent arrangements for the management at Balne Mills would be made later. The Respondent regarded the said decision as a breach of the second agreement between himself and the company and intimated to the company on the 19th June, 1950, that as the company had repudiated the second agreement he was no longer bound to give, and would not give, his services to the company. On the 10th October, 1950, he commenced this action.

3

My Lords, when the case was heard in the Procedure Roll on the Appellants' plea to the relevancy of the Respondent's averments, the Lord Ordinary held that the question whether the resolution of the 10th May, 1950, constituted a breach of the agreement could not be decided without an enquiry into the facts. Lord Strachan took the view that the agreement and resolution should be construed in the light of the whole surrounding facts and circumstances and that regard should be had not only to the terms of these documents but also to the effect which the resolution in fact had upon the possibility of the Respondent continuing to carry out the duties of a managing director of the Appellants. The Lord Ordinary also rejected an argument for the company that, even on the assumption that there had been a breach of contract, the breach was not sufficiently material to justify repudiation of the second agreement by the Respondent.

4

When the Appellants' motion for review came before the First Division on the 24th February, 1953, the Court took the view upon a construction of the agreement and resolution that there had been no breach of the agreement. The Lord President, who gave the leading Opinion, was of opinion that the Respondent had made no clear and specific averments of surrounding facts and circumstances competent and relevant to be taken into account in determining whether a breach of the agreement had taken place. During the course of the hearing the Respondent moved for leave to amend, and the case was continued in order that the Respondent might be given an opportunity of considering an amendment. The Lord President said, "If Mr. Shaw had not made the motion with which he concluded his argument, I should have been for recalling the Lord Ordinary's interlocutor, sustaining the first plea-in-law for the defenders and dismissing the action." The Respondent subsequently lodged a minute of amendment which was duly answered by the Appellants.

5

The case was again put out for hearing by the First Division, and on the 25th June, 1953, the Court pronounced an interlocutor affirming the interlocutor of the Lord Ordinary. I cannot help noting that on this second occasion the Lord President said, "The averments, new as well as old, descriptive of surrounding facts and circumstances' bearing upon this question afford unexpectedly little aid on the point of construction, and disclose little, if any, material difference between the parties", and later stated, "I am fully conscious that in expressing the above conclusions I am departing from the provisional views which I formed at the previous debate. But the fuller argument which we have heard and a closer examination of the documents and certain of the decisions have led me to change my mind." In his second view the Lord President was of opinion that the very foundation of the agreement was the appointment of the Respondent to a specific office, namely, the office of managing...

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