Steven Kent Jervis and Another v Victor John Skinner
| Jurisdiction | UK Non-devolved |
| Judgment Date | 09 February 2011 |
| Neutral Citation | [2011] UKPC 2 |
| Date | 09 February 2011 |
| Docket Number | Appeal No 0103 of 2009 |
| Court | Privy Council |
[2011] UKPC 2
Privy Council
Lord Hope
Lord Walker
Lord Collins
Lord Clarke
Sir John Laws
Introduction
This is a second appeal by Steven Jervis ('Mr. Jervis') and his company ('KST') against the judgment and order made by Mr. Justice Carroll (Acting) ('the judge') in the Supreme Court of the Bahamas on 15 June 2007. The judge held that Mr. Jervis unlawfully and in breach of contract terminated Mr. Skinner's contract of employment on 11 January 2005. By that order the judge ordered KST to pay (1) damages in the net sum of $88,312.84 for breach of the contract of employment, (2) the sum of $25,000 by way of bonus for the year 2004 and (3) the sum of $250,000 which, on 15 December 2004, Mr. Jervis agreed should be paid by KST to Victor Skinner ('Mr. Skinner') under a profit sharing agreement ('PSA') between Mr. Jervis and Mr. Skinner. The judge further made an award of interest and costs. He also made a number of declarations and directed that an account be taken under the PSA.
Mr. Jervis and KST appealed to the Court of Appeal in the Bahamas. The appeal was heard by Dame Sawyer P, Osadebay JA and Longley JA. The judgment was delivered by Osadebay JA, with whom the other members of the court agreed. By an order dated 24 June 2009 the Court of Appeal dismissed the appeal with costs, save that it held that the PSA was wrongfully terminated on 10 January 2005 and that, in respect of the period thereafter, Mr. Skinner was entitled to damages rather than to an account. It remitted the assessment of damages to the Registrar of the Supreme Court. In fact, it appears that an account had already been taken in accordance with the order of the judge that the account be taken within 60 days. By an order dated 24 September 2009 the Court of Appeal granted Mr. Jervis and KST permission to appeal to the Privy Council.
The history
This appeal arises out of an internecine dispute between Mr. Jervis and Mr. Skinner, who were once great friends but who have now fallen out. They are both British nationals and met at the Solihull Rugby Club in the late 1970s. They kept in touch over the years after that. For example, in 1984 Mr. Skinner, Mr. Jervis and Mr. Jervis' younger brother Keith went to Freeport in the Bahamas on a rugby tour. Mr. Jervis, who is an engineer by trade, became a successful businessman. In 1997 he visited Mr. Skinner in South Africa where he was by then living. By 1998 he had decided to leave the United Kingdom for tax reasons. In March 1998 he and his family went to Freeport in the Bahamas and in April 1998 he decided to settle there.
Mr. Skinner is a quantity surveyor. When Mr. Jervis decided to purchase or build a house in Freeport, he telephoned Mr. Skinner for advice. Their discussions led to the idea of developing some land on the beach in or near Freeport. The development went ahead and was called 'Shoreline'. At the invitation of Mr. Jervis, Mr. Skinner flew to Freeport in August 1998 to discuss the development. Mr. Skinner and his wife stayed with Mr. Jervis and his wife. During the visit it was agreed that the development would proceed and that they would share the profits as to 75 per cent for Mr. Jervis and as to 25 per cent for Mr. Skinner. It was further agreed that Mr. Skinner would receive a salary. However nothing was put in writing at that time. It was agreed that Mr. Jervis would put money into the scheme, while Mr. Skinner would put his skill and experience into it in order to get it up and running. Mr. Skinner initially went back to South Africa but returned to Freeport in October 1998 and stayed with Mr. Jervis. Discussions proceeded. Mr. Skinner again returned to South Africa but some time towards the end of 1998 or in early 1999 Mr. Jervis said to Mr. Skinner that his services would be required full time in Freeport as from March 1999.
As the Court of Appeal put it, Mr. Skinner was not paid compensation for his pioneering work on the project. However, he began full time employment on the project on 1 March 1999 and received his first salary after completing one month. Mr. Skinner did not immediately become aware of the existence of KST. He has maintained throughout that his employment agreement was with Mr. Jervis and not with KST or any other company. Before the judge and the Court of Appeal there was much debate about the role of KST. However before the Board it was accepted that, at any rate for the purposes of the issues between the parties in this action, KST was properly to be treated as the nominee or agent of Mr. Jervis. This judgment accordingly proceeds on that basis.
The agreements
As appears from the judgments and orders of the courts below, there were two agreements, the employment agreement and the PSA. The employment agreement was never reduced to writing. It was however agreed that Mr. Skinner would look after the construction side of the project while Mr. Jervis would look after the financial, legal, accounting, sales and marketing side. Mr. Skinner was also involved with the selection of engineers and architects for the project. Mr. Skinner was to receive a salary of $7,000 a month together with an allowance of $3,000 for his rent. Mr. Jervis was to receive an equivalent salary. Initially the project was to involve the construction of 86 houses, although in the event 76 houses were built. They included one for Mr. Skinner, at no 3, and one for Mr. Jervis at no 4.
The PSA was reduced to writing in February 2001. This was done on the insistence of Mr. Skinner, who had begun to feel marginalised. The PSA described Mr. Jervis as 'the Developer' and Mr. Skinner as 'the Project Manager'. It referred to the development as developing certain property into a residential community known as 'Shoreline Subdivision'. It recited that the Developer had agreed to give 25 per cent of the profits as defined to the Project Manager and provided that the Developer and Project Manager agreed as follows:
"1. That the Developer and the Project Manager shall share the profits of the development and sale of the lots and houses in the said Subdivision as to Seventy-five per centum (75%) to the Developer and Twenty-five per centum (25%) to the Project Manager after the following general expenses shall have been deducted from the gross profits of the said Subdivision development:-
i. pay Barclays Bank PLC all principal and interest charges loaned to the Developer for the development and sale of the lots and houses in the said Subdivision
ii. pay the Developer all moneys loaned to the company for the development of the said Subdivision without interest thereon
iii. deduct the sum of US$40,000.00 (or its Bahamian dollar equivalent) loaned to the Project Manager by the Developer for the purchase of a home by the Project Manager
iv. and all other costs expenses and disbursements associated with the development of the said Subdivision including but not limited to All Direct Construction Costs, Infrastructure Costs, Land Acquisition, Overheads, Plant and Equipment, Architect fees, Insurance, Bank Charges, Attorneys fees, Accounting and Audit fees Advertising and sales commissions.
2. That the Accounting firm of PricewaterhouseCoopers shall be the accountants for the Development of the said Subdivision and its statement as to profits subject to the aforementioned deductions shall be final evidence of the net profits of the said development of the subdivision. A review will be carried out with the Accountants on an annual basis to determine the proportion of profits to be distributed as profit shares paying due regard to cash flows and banking requirements.
3. That both parties will
a) diligently attend to the said development and devote his whole time and attention thereto;
b) forthwith pay all monies cheques and negotiable instruments received by him on account of the said development into the said Barclays Bank PLC Shoreline Subdivision development account; and
c) be just and faithful to the other of them and afford every assistance in his power in carrying on the business for their mutual advantage.
4. That this agreement is irrevocable for the term of the said development of the said Subdivision and until the last lot and house is sold in the said Subdivision.
5. This agreement shall be governed by and interpreted under the laws of the Commonwealth of The Bahamas."
The issues
The issues in this appeal may be summarised in this way:
The correct approach
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i) whether Mr. Jervis was in breach of the contract of employment in summarily dismissing Mr. Skinner on 10 or 11 January 2005;
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ii) whether Mr. Skinner was entitled to a bonus of $25,000 in respect of his work during 2004;
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iii) whether Mr. Skinner was in repudiatory breach of the PSA so as to entitle Mr. Jervis to treat the PSA as at an end;
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iv) whether Mr. Skinner was entitled to $250,000 under the PSA in respect of his net share of the profit for 2004 pursuant to an agreement made on 15 December 2004;
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v) whether the judgment of the judge was unsafe having regard to its tone and phraseology;
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vi) whether the judge failed to make specific findings of fact on four specific issues; and
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vii) whether the judgment is unsafe by reason of the delay before it was delivered.
This appeal is essentially an attack on the findings of fact made by the judge, most of which were upheld by the Court of Appeal. It is therefore a second appeal in a case in which there have been concurrent findings of fact. In any appeal which challenges a judge's findings of fact the appellant has an uphill task. The judge has had the opportunity of seeing and hearing the witnesses and the authorities show that a court of appeal will be very slow to interfere with them. A second court of...
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