Nokes v Doncaster Amalgamated Collieries
| Jurisdiction | UK Non-devolved |
| Judge | The Lord Chancellor,Lord Atkin,Lord Thankerton,Lord Romer,Lord Porter |
| Judgment Date | 20 August 1940 |
| Judgment citation (vLex) | [1940] UKHL J0801-1 |
| Date | 20 August 1940 |
| Court | House of Lords |
[1940] UKHL J0801-1
Lord Chancellor
Lord Atkin
Lord Thankerton
Lord Romer
Lord Porter
House of Lords
After hearing Counsel, as well on Tuesday the 4th, as on Wednesday the 5th, and Thursday the 6th, days of June last, upon the Petition and Appeal of Tom Nokes of 20 Butcher Street, Thurnscoe, near Rotherham, in the County of York, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 5th of May 1939, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioner might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed case of Doncaster Amalgamated Collieries, Limited, 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 His Majesty the King Assembled, That the said Order of His Majesty's Court of Appeal, of the 5th day of May 1939, complained of in the said Appeal, be, and the same is hereby, Reversed: And it is further Ordered, That the question of Law in the Case Stated be answered by saying that a Contract of Service did not exist between the Appellant and the Respondents: And it is further Ordered, That the Cause, be, and the same is hereby, remitted back to the Petty Sessional Division of Lower Strafforth and Tickhill, with a Direction to the Justices of the said Petty Sessional Division to dismiss the Summons, with such Order as to Costs as they may think fit: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellant the Costs incurred by him in the Court of Appeal and in the King's Bench Division of the High Court of Justice, and also the Costs incurred by him 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 the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
The question to be decided in this appeal can be thus stated. When the Court makes an order under Section 154 of the Companies Act, 1929, transferring all the property and liabilities of the transferor company to the transferee company, is the result that a contract of service previously existing between an individual and the transferor company automatically becomes a contract between the individual and the transferee company?
The Appellant is a coalminer and between January, 1937, and the 4th June, 1937, there existed between him and the Hickleton Main Colliery Company Ltd., a contract under which he worked at the colliery and received wages from that company. On the 4th June, 1937, an Order was made by the Chancery Division of His Majesty's High Court of Justice under Section 154, which transferred to the respondent company all the property, rights, powers, liabilities and duties of a number of colliery companies, including the Hickleton Main Colliery Company, and which provided that these transferor Companies should be dissolved without winding-up. The Appellant continued to work at the Hickleton Main Colliery until the 7th October, 1937, and received wages from the Respondents for his labour, but he throughout believed himself to be working under his contract with the Hickleton Main Colliery Company Ltd., which contract had never been terminated by notice. The company, however, as the result of the Order made by the Chancery Division, had ceased to exist. On October 7, 1937, the Appellant absented himself from work, in circumstances which would have made him liable under Section 4 of the Employers and Workmen Act, 1875, if he could be regarded as under a contract of service with the Respondents. This he denied, and hence, on a Case Stated by the Justices of Doncaster, the general question arises which I have defined above and which the House has now to determine.
Counsel for the Appellant argued that a contractual right to personal service was a personal right of the employer and was incapable of being transferred by him to anyone else, and that a duty to serve a specific master could not be part of the property or rights of that master capable of becoming, by transfer, a duty to serve someone else. It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A's consent, which is the same thing as saying that, in order to produce the desired result, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y. The rule is so strict that if the contract is between individuals on both sides and X dies, the contract of service is immediately dissolved ( Farrow v. Wilson, L.R. 4, C.P. 744 at p. 746), for A never promised to serve X's personal representative and X could only act as employer when alive. Where a firm consisting of four partners engaged the plaintiff as manager for a term of two years, the retirement of two partners from the firm within that period operated as a wrongful dismissal of the plaintiff ( Brace v. Calder [1895] 2 K.B. 253). If A's contract is to serve a limited company, X & Co., and X & Co. goes into liquidation, the winding-up order operates as a notice of discharge to the servants of the Company. ( Chapman's case, 1 Eq. 346).
The rules of law restricting the assignability of contracts are, however, by no means limited to contracts of personal service. In the case of contracts for the sale of goods, for example, (unless the contract expressly or by implication covers the purchaser and his assigns) the seller is entitled to rely on the credit of the purchaser and to refuse to recognise any substitute. Similarly, the purchaser is entitled to rely upon the seller and to hold him responsible for due performance. I may add that a possible confusion may arise from the use of the word "assignability" in discussing some of the cases usually cited on this subect. Thus, in ( British Waggon Company and Parkgate Waggon Company v. Lea 5 Q.B.D. 149) the real point of the decision was that the contract which the Parkgate Company had made with Lea for the repair of certain wagons did not call for the repairs being necessarily effected by the Parkgate Company itself, but could be adequately performed by the Parkgate Company arranging with the British Waggon Company that the latter should execute the repairs. Such a result does not depend on assignment of contract at all. It depends on the view that the contract of repair was duly discharged by the Parkgate Company by getting the repairs satisfactorily effected by a third party. In other words, the contract bound the Parkgate Company to produce a result, not necessarily by its own efforts, but, if it preferred, by vicarious performance through a sub-contractor or otherwise.
A quite different situation, as it seems to me, is illustrated by the well-known case of Tolhurst v. Associated Portland Cement Manufacturers [1903] A.C. 414, and, with all respect to an observation made by Lord Lindley at the end of his Judgment in Tolhurst's case, I doubt whether the British Waggon Company's case was really an authority very much in point. In Tolhurst's case the majority of this House took the view that the contract then under discussion was "assignable", because the contract ought to be read and construed as one between the named parties and their respective assigns, although assigns were not in fact mentioned in the document. By so construing the agreement the validity of the transfer of the benefit of the contract from the original company to the new company to which it assigned it became unchallengeable, and Lord Macnaghten insists, at the beginning of his Judgment that once the true interpretation of the contract was settled there was no further legal point in the case at all. Tolhurst's case, therefore, was a case in which the terms of the contract provided for its assignment; the British Waggon Company's case does not turn on assignment, but illustrates the circumstances in which the original contracting party may perform the contract by getting somebody else to do the work in satisfactory fashion.
It will be readily conceded that the result contended for by the Respondents in this case would be at complete variance with a fundamental principle of our common law—the principle, namely, that a free citizen, in the exercise of his freedom, is entitled to choose the employer whom he promises to serve, so that the right to his services cannot be transferred from one employer to another without his assent. The whole question, however, is whether Section 154 of the Companies Act, 1929, provides a statutory exception to that principle.
In favour of the view that it does, it is pointed out that the only transfers which the Section can authorise are transfers of the undertaking of one company to another, and that if the employer is a company, the servant can have no direct contact with the artificial entity but of necessity deals with and acts under the orders of the company's agents. Moreover, the change involved in a wage-earner serving the new company in place of the old is, in normal cases, no greater than the change he would experience when the company which he is serving throughout changes its directors, its shareholders, its managers, its scope of operations, and its name, all of which it may...
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