Foreman carpenter’s employment described in negotiations as ‘a job and a house for life’–Order for possession of house made despite wrongful termination of employment by estate–No licence for life, no tenancy for life under Settled Land Act 1925
This was an
appeal by Mr Eric Palmer, of 22 Tavistock Road, Roborough, Plymouth, from a
decision of Judge Chope at Plymouth County Court on August 5 1974 granting
possession of 22 Tavistock Road to Mr Eric James Ivory, Mr James Gilbert Sydney
Gammell and Mr Charles Matthew Farrer, trustees of the Maristow Estate, Devon.
Mr G M Godfrey
QC and Mr S A B Parish (instructed by Lucien A Isaacs & Co, agents for
Arthur Goldberg, of Plymouth) appeared for the appellant, and Mr J A S Hall QC
and Mr J G Hull (instructed by Wolferstans, of Plymouth) represented the
respondents.
Giving
judgment, CAIRNS LJ said: This is an appeal from a decision of His Honour Judge
Chope, sitting at the Plymouth County Court on August 5 of last year. The
plaintiffs in the action are the trustees of a settlement. The defendant is a
man of 53 or 54, who had been employed by the plaintiffs as a foreman
carpenter. While so employed he had the occupation of a house belonging to the
plaintiffs. The time came when he was dismissed from his employment, but he
remained in occupation of the house. The plaintiffs brought an action for
possession against him. He defended and counterclaimed. He contended that by an
oral agreement between himself and a representative of the plaintiffs he had been
employed for life, subject to his doing his work properly, and had been given a
rent-free tenancy of this house for the joint lives of himself and his wife. He
counterclaimed a declaration to that effect; alternatively, that he was a
protected tenant under the Rent Act. Then, as an alternative, if he were held
not to be entitled to remain in possession, he claimed £500 in respect of
expenditure which he said he had incurred on improving the house, damages for
loss of the right to occupy it, and damages for wrongful dismissal. The judge
held that he was employed for life subject to working properly, and that he had
a licence to occupy the cottage so long as he continued in that employment. The
judge found that the employment was in fact terminated by the plaintiffs
without good reason and without proper notice to the defendant; that the
defendant had suffered no loss of earnings, at any rate that he had proved no
loss of earnings, but that he was entitled to some damages based on the cost of
removal to another residence and the loss of the rent-free residence with which
he had been provided, and he assessed the damages at £200. The defendant
appeals, contending that the claim for possession should have been dismissed,
that a declaration should have been made in accordance with his counterclaim,
and that damages should be awarded to him on the basis of that claim. The
plaintiffs have served a cross-notice, contending that the judge should have
held that the employment was not for life but was subject to reasonable notice,
and that the right to occupy the house was a licence subject to revocation upon
reasonable notice.
It is
convenient to deal first with the issue raised by the plaintiffs’ cross-notice,
and this involves giving a rather fuller account of the facts. In September
1973 the plaintiffs advertised for an estate carpenter. The defendant applied
for the job. He was interviewed by Mrs Hood, who had authority on behalf of the
plaintiffs to engage staff. There was a discussion between them, in the course
of which it was agreed that the defendant should be employed as foreman
carpenter and that he should have a house which he and his wife could occupy
free of rent. The defendant’s evidence was that Mrs Hood said that he would
have a job for life and security for life and a home for his widow. Mrs Hood,
though her answers were not always consistent with each other, said in chief
that she had told the defendant that if he worked satisfactorily, it was a job
for life. The judge’s finding on the matter was this: ‘I am driven to the
conclusion that what the plaintiffs offered was a job for life as long as Mr
Palmer worked satisfactorily.’ The
salary was later fixed at £1,500 a year. On September 20 1973 a letter was
written by the plaintiffs, addressed to the defendant, setting out terms of
employment, making no reference to its being employment for life, and indeed,
on the contrary, providing for two weeks’ notice on either side. The defendant
said that he never received that letter. The judge accepted that he never
received it, and it disappears from the picture altogether. The question is:
what was the contract resulting from the discussion between the defendant and
Mrs Hood, together with the later fixing of the salary at £1,500 a year and the
taking up by the defendant of his work and his going to live with his wife in
the house, which he very shortly did?
All went well, apparently, until the early part of 1974, when the
plaintiffs formed the opinion that the defendant was not working
satisfactorily. He was interviewed on February 11. There was a dispute on the
evidence as to the effect of the interview, but the judge held, in favour of
the defendant, that he was told then that he was going to be dismissed and that
he protested against that. On February 28 he was dismissed summarily and called
upon to give up possession of the house. He then left the employment of the
plaintiffs and took up some other work. According to his evidence, he first
took up work as an area manager for a certain company, and then later he left
that and began to work on his own account. The judge held that the plaintiffs
had no good ground for saying that the defendant’s work was unsatisfactory, and
accordingly found that he had been wrongfully dismissed.
The
plaintiffs’ contention in this court as to the terms of employment is that the
defendant was employed subject to reasonable notice on either side; that what
was said about a job for life was no more than an expression of expectation
that, if all went well, the job would in fact be a permanent one.
Alternatively, it was argued that if there was any contractual term about a job
for life, it did not have the effect contended for by the defendant. There is
no doubt that a person may be employed on a contract of service for life, even
though there is no undertaking on his part to continue in the employment of the
employer: see Salt v Power Plant Co Ltd [1936] 3 All ER 322, a
decision of the Court of Appeal, and McClelland v Northern Ireland
General Health Services Board [1957] 1 WLR 594, a decision of the House of
Lords. These cases show that the courts will lean against such a construction
and that clear words are needed to bring it about, though in both of those
authorities the word ‘permanent,’ taken with other factors, was held to connote
employment for life. Here the very words ‘a job for life’ were used, according
to evidence which was accepted by the learned judge, and nothing else was said
as to the duration of the employment or as to any circumstances in which it
could be terminated. In my opinion, the judge was entitled to find on the
evidence here that what was said was intended to be contractual in effect, or,
putting it more accurately, according to a passage which has been shown to us
by Mr Godfrey, on behalf of the defendant:
‘The conduct
of each party and the language which was used was such as to show that each was
reasonably entitled to conclude from the attitude of the other that that was
the effect of the conversation.’
The passage in
question is in the speech of Lord Reid in McCutcheon v David
MacBrayne Ltd [1964] 1 WLR 125 at the foot of p 128. I cannot say that the
judge was wrong in his conclusion on the facts as to this matter, and in so far
as the question is one of law, I cannot say that he was wrong to hold that
there was a contract to the effect of the defendant being employed for life.
The exact effect of that expression may be open to some doubt, but for my part
I cannot see any other possible interpretation than that it meant either ‘a job
for the whole of your natural life,’ or ‘a job for the whole of your working
life.’ The latter would seem to be so
much the more reasonable construction that I would so interpret it in this
context. The judge did not go into the question of the exact meaning of it.
What then is
the effect of the contract so far as the right to occupy the house is
concerned? The judge held that the
defendant had a licence to occupy the house ancillary to his contract of
employment, and that when the employment was terminated, although wrongfully,
the licence came to an end. Mr Godfrey contends that this is wrong, and that
the defendant occupied as a licensee for life on a licence which could not be
revoked, or as a tenant for life under the Settled Land Act 1925, or as a
tenant under a lease for life which, by reason of section 149 of the Law of
Property Act 1925, would take effect as a lease for 90 years. The defendant’s
original case of a tenancy for the joint lives of himself and his wife has not
been pursued on appeal, and Mr Godfrey did not seek to establish an alternative
case under the Rent Act. The contention which he developed most fully was that
in favour of a licence for life. There is no doubt that a licence for life can
be granted. If the licensor purports to revoke such a licence, is the effect
that the licence is revoked, leaving the licensee to claim in damages for
breach of contract, or is the licence irrevocable during the life, entitling
the licensee to remain in occupation? In
Foster v Robinson [1951] 1 KB 149, where a farm worker had been
told that he could live in a cottage rent-free until he died, Lord Evershed MR
said at p 156:
Since the
recent decision in Winter Garden Theatre (London) Ltd v Millennium
Productions Ltd [1948] AC 173 I think that, although a licence of that kind
may, apart from the terms of the contract, be revoked, it may now be taken that
if the landlord, having made that arrangement, sought to revoke it, he would be
restrained by the court from doing so. Thus the result is arrived at that the
tenant was entitled as licensee to occupy the premises without charge for the
rest of his days, and he did so.
Singleton LJ
expressed himself to a similar effect at pp 160 and 161. The actual claim in
that case had been a claim for possession against the widow of the farm worker.
An order for possession had been made in the county court, and that order was
affirmed by the Court of Appeal. However, there have been several later cases
in which the present Master of the Rolls has referred to Foster v Robinson
as authority for the proposition that a licensor will not be allowed to eject a
licensee in breach of contract: see Combe v Combe [1951] 2 KB 215
at 219; Errington v Errington [1952] 1 KB 290 at 298; and Binions
v Evans [1972] Ch 359 at 367. Mr Godfrey contends that a dictum of Lord
Upjohn in National Provincial Bank v Ainsworth [1965] AC 1175 at
1239 is to be understood in a similar sense. I am not altogether satisfied that
that is a correct reading of that sentence in Lord Upjohn’s speech.
It is
unnecessary in this case to decide what is the correct rule in respect of a
licence which is a licence for life simpliciter, because the contract in
the present case was a contract for service and for a licence. The judge held
that the licence was ancillary to the service, and in my opinion that is
plainly right. The occupation of the house was rent-free, and it cannot have
been intended that the defendant should continue to occupy the house rent-free
if his service came to an end, for whatever reason. Mr Godfrey says that the
defendant would be prepared to pay a fair rent for the premises, but that would
be making a fresh bargain for the parties. Counsel also contends that despite
the normal rule that a contract of service cannot be specifically enforced, an
injunction can be obtained in exceptional cases to restrain an employer from
dismissing a servant, and he cites Hill v C A Parsons & Co
[1972] Ch 305, and especially this passage from the judgment of the Master of
the Rolls at p 314:
Suppose that
a senior servant has a service agreement with a company under which he is
employed for five years certain–and, in return, so long as he is in the
service, he is entitled to a free house and coal–and at the end to a pension
from a pension fund to which he and his employers have contributed. Now,
suppose that, when there is only six months to go, the company, without any
justification or excuse, gives him notice to terminate his service at the end
of three months. I think it plain that the court would grant an injunction
restraining the company from treating the notice as terminating his service.
I do not
believe that the Master of the Rolls would have said the same of a contract for
service for life which had been running only for a few months when the
dismissal took place. Even assuming that this contract could in effect be
specifically enforced by an injunction (which I do not for a moment accept),
there has been no attempt so to enforce it. The defendant has accepted the
dismissal from the employment, and he has given up his employment. He clearly
cannot then claim to retain the benefit of the licence to occupy the house. It
is contended that the plaintiffs are not entitled to rely upon their own wrong
in dismissing him in breach of their contract with him. But, of course, in a
sense, whenever there is a wrongful dismissal, the employer is taking advantage
of his own wrong. He is entitled, although he was wrong in dismissing the
servant, to refuse to have him working for him any more. If, for instance, the
servant was entitled to the use of a motor car during the period of his
service, the employer would be entitled to refuse to let him have it any
longer, and in that sense to take advantage of his own wrong. I cannot see that
what is claimed by the plaintiffs in this case in respect of the possession of
this house is any more taking advantage of their own wrong than those
circumstances which I have mentioned.
I therefore
reach the conclusion that there was not here an irrevocable licence for the
life of the defendant. Then did he become a tenant for life under the Settled
Land Act?
where the majority of the Court of Appeal held that where the trustees of an
estate agreed to permit a woman ‘to reside in and occupy’ a cottage ‘free of
rent for the remainder of her life or until determined as herein-after
provided,’ she became a tenant for life under the Settled Land Act. That case,
in my view, stretched to the very limit the application of the Settled Land
Act. The Master of the Rolls at p 366 of the report, says:
But it was
suggested here that the defendant was a tenant for life under the Settled Land
Act 1925, with some support from Bannister v Bannister [1948] 2
All ER 133. I cannot think this can be right. A tenant for life under that Act
has power to sell the property, and to lease it (and to treat himself or
herself as the owner of it): see sections 38 and 72 of the Settled Land Act
1925. No one would expect the defendant here to be able to sell the property or
to lease it. It would be so entirely contrary to the true intent of the parties
that it cannot be right.
I cannot
accept that a right of occupation expressed to be granted for the period of a
job, which in its turn is described as a job for life, could carry with it a Settled
Land Act tenancy. As to an ordinary lease for life, the short answer is that
there was here no rent fixed. There are no materials which would enable a rent
to be quantified, and in my view there are no circumstances which would justify
the court in holding that there was a lease rather than a licence.
I therefore
reject all the contentions directed to establishing that the defendant is
entitled to remain in possession of the premises. His remedy is in damages.
Then how are the damages to be quantified?
For the loss of the employment the damages would be the difference, if
any, between his salary under the contract with the plaintiffs and his earnings
after dismissal, multiplied by an appropriate multiplier. Here, however, there
was no evidence that his earnings after dismissal were any less than his
contractual salary. So that element of damages does not arise. For the loss of
the house, the damages would be the value of any improvements which he had made
to the house itself, as distinct from furniture, which he could take away; the
expense of removal, and a figure based on the extra cost of a new home to him.
No evidence was given of the loss in any of these three respects, and, as was
pointed out in Sunley (B) & Co Ltd v Cunard White Star Ltd
[1940] 1 KB 740 at p 745 by the judgment of the Court of Appeal, consisting of
Scott, Mackinnon and Clauson LJJ,
‘It was the
business of the plaintiffs to establish, if disputed, that the wrong had been
done, so also it was the business of the plaintiffs to prove the amount of
pecuniary loss occasioned to them.’
It might be
argued that a new house would be likely to cost something, whereas the one he
has lost cost him nothing, but this is to overlook the fact that the salary
that he was paid by the plaintiffs must have taken into account that he had a
free house, and there is nothing to show that the amount of his later earnings
did not fully compensate him for the loss of the free house. We were referred
to a decision in McClelland v Crowther, an unreported case heard
by my brother Browne LJ as a judge of first instance, where he assessed the
figure of £7,000 for the loss of a cheap house in a personal injuries case, but
there the plaintiff was incapable or almost incapable of earning anything in
future, and it was plainly necessary to add to the figure based on the loss of
earnings the value of the house, as to which the evidence was that its rental
value was about £15 a week more than he was charged for it. I do not find that
that decision is of any assistance to the court in assessing damages in this
case. It was pointed out to us that in a 19th-century case, In re English
Joint Stock Bank (1867) LR 4 Eq 350, Page-Wood V-C found, as a matter of
principle, that the plaintiff was entitled to damages in respect of the loss of
the use of a house, and the matter was referred for inquiry as to the damages
in accordance with the common Chancery practice. The practice in the county
court is that the damages are assessed at the time of trial. Although
application was made on behalf of the defendant for damages to be referred to
the registrar, the learned judge refused to refer them. He was perfectly
entitled so to refuse, and there has been no appeal against that interlocutory
decision of his.
In those
circumstances, it was necessary for the defendant to establish the amount of
his damages at the trial. Mr Godfrey says: ‘Well, there are some materials upon
which damages could be assessed. Mrs Hood agrees that in the course of her
conversation with the defendant she said that he had in this house the
equivalent of £10,000 if he worked satisfactorily.’ I dare say that the value of the house was in
the neighbourhood of £10,000, but that is really of no assistance in reaching a
conclusion as to how much worse off the defendant would be in having to go to
some other house the value of which is completely unknown. The other figure
that appears in the evidence is the figure of £5.25, which had been assessed by
a rent tribunal as the fair rent of this particular house; but I make the same
observation about that, that there are no materials to make a comparison between
the value of that house and the cost of any other house that the defendant may
have to acquire, taking into account, as it would be necessary to do also, any
change in the rate of money earnings. The conclusion I have reached is that the
defendant has simply failed to establish any sum of damages. The learned judge,
taking a very broad view of the matter admittedly–I think he used the
expression ‘taking a figure out of the air’–assessed the damages at £200. The
plaintiffs have not appealed against that to say it is excessive, and I cannot
say that it is insufficient. I would dismiss the appeal.
ROSKILL LJ
said that he agreed that the appeal should be dismissed, though on the first
point he would have been content, had it been necessary, to have upheld the decision
below on the ground that there was not on the facts of the case the contract of
employment between the plaintiffs and the defendant which the judge found had
been concluded. He (his Lordship) could not help thinking that if one looked at
the negotiations between Mrs Hood and the defendant through the eyes of
Mackinnon LJ’s famous ‘officious bystander,’ and asked what these two people
would have replied if he had said to them when they thought they had reached
agreement, ‘Have you decided that the man is to have this job and the cottage
literally for the rest of his life, and his widow the cottage thereafter,’ Mrs
Hood would have turned to him and said, ‘Good heavens, no. but that is a likely
result if he continues to give us good service over the years,’ and the
defendant would not have disagreed. [Continuing, his Lordship said:] Now let me assume, as I am most readily
prepared to do, since my Lord takes the opposite view, that I am wrong in what
I have just said, and Mr Godfrey has a correct finding of fact and a correct
conclusion of law as to the nature of the contract–that it was a contract of
employment for life. The argument then is that the plaintiff thereby acquired a
contractual licence to occupy the house for life, even though his service contract
came to an end, since that termination of his service contract came to an end
through its wrongful repudiation by the plaintiffs. The starting-point for the
consideration of this argument is an elementary proposition of contract law. It
was discussed in one of the cases referred to in Hill v Parsons,
to which my Lord has already referred, Vine v National Dock Labour
Board, reported in this court in [1956] 1 QB 658, and in the House of
Lords, in [1957] AC 488. I can take the relevant quotations from the judgments
of the Master of the Rolls and Sachs LJ in Hill v Parsons. In Vine’s
case in this court Jenkins LJ (as he then was) said:
‘But in the
ordinary case of master and servant the repudiation or the wrongful dismissal
puts an end to the contract, and the
necessarily a claim for damages and nothing more. The nature of the bargain is
such that it can be nothing more.’
In the House
of Lords this characteristically lucid statement was expressly adopted by
Viscount Kilmuir LC ([1957] AC 488 at 500). In reference to what he called the
ordinary master and servant case the Lord Chancellor said, ‘If a master
wrongfully dismisses the servant, either summarily or by giving insufficient
notice, the employment is effectively terminated, albeit in breach of
contract.’
I am not going
to say anything about Hill v Parsons (a majority decision of this
court on an interlocutory appeal), beyond that it obviously was a very special
case in which the plaintiff was seeking to assert the continuity of his
contract of employment by inviting the court to restrain the employer from
giving effect to his purported dismissal. The present is not such a case. Once
the defendant–the present appellant–was dismissed, under what was an ordinary
service agreement between employer and employee, he had, as a matter of the
ordinary contract law of master and servant, no alternative but to accept that
dismissal as an accomplished fact, whether it was right or wrong. If it was
right, he had no remedy; if it was wrong, his remedy, as was pointed out in Vine’s
case, lay in damages. But he cannot, in one and the same breath, as I ventured
to point out to Mr Godfrey yesterday, accept that his service agreement is at
an end, and yet assert that his right to the continued occupation of the
cottage remains unaffected. This is not a severable contract. It is a single
contract of employment between employer and employee. Once that contract goes,
it goes as a whole, and that, with the greatest respect to Mr Godfrey’s
argument, is the short answer to this appeal.
Mr Godfrey
sought to argue that, notwithstanding what I have just said, none the less
there was in this case a form of contractual licence which equity would
protect. Over the years there has been much discussion in this court and in the
House of Lords about a married woman’s supposed equity. I say nothing about
that, nor about the cases upon which it was supposedly based, nor about the
present statutory position. So far as I am aware, whatever the rights and
wrongs of the different views that were expressed at different times in this
court and elsewhere upon that subject, those cases have no application whatever
here. I find it quite impossible to see how this man can have acquired any
interest in this cottage which at any time in legal history equity would have
enforced or protected by injunction or otherwise. There was no estate in land
here. At the most he had a contractual licence to occupy that cottage for so
long, but only for so long, as he remained in the estate’s employment. Once his
service agreement went, then, in my judgment, it went as a whole. So, on the
second point, I find myself in entire agreement with my Lord. I venture to
think, on the basis that the learned judge reached the right conclusion on the
first point and that I am wrong, that the learned judge, on the second point,
on which he decided this case against the defendant, clearly reached the right
conclusion.
So far as the
rather strange argument under the Settled Land Act is concerned, I have nothing
to add to what my Lord has said. On damages all I would say is this. A
plaintiff suing for damages for breach of contract (for that is what the
defendant was doing by reason of his counterclaim) must prove his case. Sunley
v Cunard is the clearest possible authority for that proposition, if
authority is wanted for anything so elementary. With the greatest respect to
those who represented him below, his pleading did not adequately plead the loss
he claimed to have suffered. There may have been a very good reason for that
omission; indeed, there probably was, because I suspect he may not have
suffered any loss, or at least could not prove he had suffered any loss. But
whether he could have proved it or not, he did not plead or prove it. I would
not myself wish to take a pleading point against him in a county court case if
in the event he had proved the loss. But not only did he not plead it; he never
proved it. Mr Godfrey has made a valiant effort to make bricks without straw,
but in my judgment there simply is no evidence which would justify an increase
in the damages. For the reasons my Lord has given, £200 may indeed have been
too much. It certainly is not shown to have been too little. In the result, therefore,
I would dismiss the appeal.
BROWNE LJ said
that he also agreed that the appeal should be dismissed. He was bound to say
that he thought the contract alleged by Mr Palmer and the rather different
contract found by the judge were so improbable that it was almost incredible
that anybody on behalf of the plaintiffs should ever have made such a contract.
The plaintiffs knew little about the defendant or his work at the time when the
contract was made, and evidently knew nothing about his capacity as a supervisor,
which was what he was going to be. There was no mutuality between the parties,
in that the defendant could leave at any time, whereas the estate was bound for
his life if he chose to stay with them. It seemed to him (his Lordship) that
all the probabilities were that what was said about a job for life, and so on,
was merely the expression of a hope or expectation of what would happen if all
went well, rather than a contractual term. Nevertheless, after much hesitation,
he (Browne LJ) had come to the conclusion, in agreement with that of Cairns LJ,
that the court should not interfere with the decision below on this point.
[Continuing,
his Lordship said:] On the rest of the case I agree that, for the reasons
already given by both my Lords, Mr Godfrey’s most interesting arguments should
be rejected on all points. So far as the Settled Land Act point is concerned, I
add very little. In the case to which my Lord has already referred, Binions
v Evans [1972] Ch 359, the majority of this court, as I understand them,
based their decision on the previous decision of this court in Bannister
v Bannister [1948] 2 All ER 133, but as I read the decision in Bannister,
the court did not in fact in that case base its decision on the Settled Land
Act 1925, but on more general principles of the law of trusts. It is true that
at p 137, between letters B and C, the court varied the form of the declaration
made by the county court and said this: ‘A trust in this form has the effect of
making the beneficiary a tenant for life within the meaning of the Settled Land
Act 1925, and consequently there is very little practical difference between
such a trust and a trust for life simpliciter.’ As I understand it, however, the actual
decision in the case was not based on the Settled Land Act.
So far as
damages are concerned, I entirely agree with my Lords that Mr Palmer entirely
failed to call any evidence whatever which would have justified the county
court judge in awarding him any damages, certainly any damages in excess of the
£200 which were in fact awarded on the counterclaim. Accordingly, as I say, I
agree that this appeal fails and must be dismissed.
The appeal
was dismissed with costs, the order not to be enforced without further leave of
the court. Leave to appeal to the House of Lords was refused.
