Valilas v Januzaj
| Jurisdiction | England & Wales |
| Judge | Lord Justice Underhill,Lord Justice Floyd,Lady Justice Arden |
| Judgment Date | 08 April 2014 |
| Neutral Citation | [2014] EWCA Civ 436 |
| Docket Number | Case No: B2/2013/0849 |
| Court | Court of Appeal (Civil Division) |
| Date | 08 April 2014 |
[2014] EWCA Civ 436
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Worcester County Court
His Honour Judge Hooper QC
1UC69309
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Arden
Lord Justice Underhill
and
Lord Justice Floyd
Case No: B2/2013/0849
Mr Simon Clegg (instructed by Breakwells) for the Appellant
Mr Jonathan Cohen (instructed by Comptons Solicitors LLP) for the Respondent
Hearing date: 27 February 2014
INTRODUCTION
This is an appeal, brought with the permission of Beatson LJ, against a decision of His Honour Judge Hooper QC, sitting in the Worcester County Court. The Appellant, the Defendant below, is represented by Mr Simon Clegg and the Respondent, the Claimant below, by Mr Jonathan Cohen. Both counsel also appeared before the Judge.
THE FACTS
The primary facts are not in issue and can be stated fairly shortly.
Both parties are dentists. The Defendant was the principal of a practice in Droitwich Spa – the Droitwich Spa Dental Practice ("DSDP" for short). The dentists who practised at DSDP included the Claimant. He was not an employee or a partner of the Defendant. He practised under an oral agreement which was described by the Judge as "the facilities contract". In essence, the arrangement was that in return for the right to make use of the premises and equipment and the services of the dental nurses and other staff he would pay the Defendant each month 50% of his receipts.
The great majority of the Claimant's earnings from his practice at DSDP came from his contract with the local Primary Care Trust ("the PCT"). He was contracted to carry out a specified number of "Units of Dental Activity" ("UDAs") for NHS patients over a year running from April to March, for a fixed price per unit. There was a dispute, which the Judge did not find it necessary to resolve, as to both the number and the price of the UDAs required under the contract. The argument proceeded before us on the basis that the total annual sum payable by the PCT was, in round figures, £195,200. That amount was paid, in advance, in equal monthly instalments of some £16,260. The greater part of each instalment was paid direct to the Claimant himself, though part (in respect of so-called "non-exempt patients") was paid, for essentially administrative reasons, through DSDP: the amounts that he received himself seem to have been about £12,000 per month.
It is an important feature of the case that the work under the PCT contract did not have to be spread evenly through the year; but if the Claimant did not achieve the full number of units by the end of the year he was obliged to refund the consequent overpayment to the PCT. It is the Claimant's case that in that event the Defendant would in turn be obliged to refund to him the equivalent proportion of what had been received in monthly payments during the year. I will assume that that is correct (though see para. 27 below).
Those arrangements had been in place since 2007, though initially with the Defendant's predecessor as owner of the practice. In each of the first three years the Claimant achieved the requisite number of units under his PCT contract, and no question of a refund arose.
In the early part of 2010 the relationship between the Claimant and Defendant deteriorated. On 15 June there was a meeting between them. Following the meeting the Defendant wrote to the Claimant recording various criticisms which he had raised. Among them was the fact that the Claimant had declined to sign a standard-form "associate agreement". The letter said:
"You have been informed during that meeting that, not signing the associate agreement and continuing to Practice at Droitwich Spa Dental Practice is not an option, I hope you will reconsider signing, otherwise consider this letter as an intention to give you notice to complete your undergoing treatments before leaving."
(The spelling and punctuation are as in the original: English is not the first language of either party.) To anticipate, the Judge held – and it is common ground before us – that that letter did not constitute notice to terminate the facilities contract but only a threat or warning that the Defendant would do so if the Claimant did not sign the agreement.
It is not clear what happened in response to that letter, but the Defendant wrote again on 6 September repeating his complaints in more detail. He did not repeat the threat contained in his letter of 15 June, but nor did he withdraw it.
The Claimant responded to the letter of 6 September on 21 September. He dealt at considerable length with the Defendant's criticisms. His letter concludes by saying that he would be happy to continue working at the DSDP if a constructive relationship could be restored, which would involve the Defendant making a written apology to him, but that otherwise the Defendant should "consider this letter my final notice to you". There is then a postscript in the following terms:
" IMPORTANT NOTE:
Until the above matter is clear, either by you agreeing to change the working environment with the way proposed above or me leaving the DSDP, I have been advised by my solicitor to stop any further payment to you. The reason for this, as I am sure you are aware, is that I am running behind with my UDAs and this is purely because of the stress you have caused me, hence a rebate to the PCT maybe necessary from both DSDP and myself. If this letter is taken as my final notice it is unclear how many UDAs I will be able to complete at the DSDP and since there is now a total lack of trust between us I cannot be confident that your component of what is to be paid back to the PCT will be settled. Contractually this payment remains my responsibility as such I need to take steps to protect my position."
No further payments were made after that date; and in fact the Claimant had already failed to make the payment due in August.
That postscript is reasonably self-explanatory, but I should perhaps spell out what the Claimant was saying. If the Defendant did not accept his conditions, the letter should be treated as a "final notice". In that eventuality, the facilities contract would terminate at some (albeit unspecified) point short of the full period of the PCT contract – i.e. before the end of March. In that case the Claimant would be unable to complete the PCT contract, and an assessment would have to be made of whether he had at that point performed sufficient UDAs to cover the monthly payments already received. Because he was running behind, that would probably not be the case and he would have to make a repayment to the PCT; and he would by the same token be entitled to a proportionate repayment from the Defendant of what he had paid to him. The point being made in the letter is that he did not trust the Defendant to make that repayment (if it proved necessary); and he was accordingly withholding payment as a precaution until it became clear whether that situation would arise.
I should say that the question of why the Claimant was behind with his UDAs was contentious as between him and the Defendant. His explanation was, as appears from the postscript, that it was the result of the "stress" which the Defendant was causing him. The Defendant believed that it was because the Claimant had taken too much holiday and was spending too much time in London, where he had a separate part-time practice. The Judge did not find it necessary to resolve that issue.
On 21 September 2010 the Defendant wrote to the Claimant complaining of his failure to make the August payment. He said:
"However you continue to use the practice, and as a practice we have bills to be paid. If you continue to withhold payment I may find it necessary to consult a third party with this matter."
(That letter does not appear to be intended as a response to the Claimant's letter of the same date: it seems that the two crossed.)
On 5 October 2010 the Defendant wrote at some length in response to the Claimant's letter of 21 September. He referred among other things to the fact that the Claimant was falling behind with the number of UDAs required to perform his obligations to the PCT (as of course the Claimant had already acknowledged). Towards the end of the letter he said:
"In order to avoid any inconvenience to patients and ourselves I would like to ask you to reconsider your decisions regarding the agreements and payments due to the Practice:
1. Sign an agreement with the Practice, regulating your position and all the arrangements with the Practice.
2. Continue with regular payments due to the Practice.
3. Propose a credible plan how you are going to increase your availability to our patients and this way increase the activity benefiting patients but also perform the number of UDAs you are due, all this in accordance with the GDS Contract between you and the PCT and the new agreement to be signed.
A little further down he said:
"I regret to say, but if you continue with the position you have taking, it will not be possible to continue working together, and any day you may be prevented from entering the premises.
Surely you realise that if you use the Practice you need to pay. Payments can be regulated by the agreement so that in case you have to refund money to the PCT, you would only refund your share."
On 12 October 2010 the Claimant wrote to the Defendant recording a conversation which he had had earlier that day with the Practice Manager. He said that he understood that the Defendant was...
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