Claim for damages for breach of
contract and an injunction to
restrain from a
. specified
employment-Defendant an
ex-employee of Plaintiffs
with salary owing to him, during
arbitration proceedings to
recover amount due, executed an
Agreement und which he was paid
the amount but agreed not to do
certain act and the arbitration
proceedings were dropped.
Held: (1) The agreement to pay
to the Defendant the money
earned by and due to him was
made for no consideration.
(2) Accepting the finding of
fact in the Court below, the
compromise of the arbitration
proceedings was not a compromise
of a
bona fide
dispute. The appears' is therefore
dismissed.
Miles v. New Zealand Alford
Estate Co.
(55
L..J Ch.
801) considered.
The facts appear from the
judgment.
E.
C. Quist (with him C.
C. Carter) for
Appellants.
J. H. C01tssey
(with him E. A. Bannerman)
for Respondent.
The following joint judgment was
delivered :--.
KINGDON,
C.J.,
NIGERIA,
PETRIDES , C.J., GOLD
COAST AND GHAHAM PAUL, C.J.,
SIERRA LEONE.
The material part of
plaintiffs-appellants' writ of
is as follows :---
. The plaintiffs are
(inter alia)
dealers in Motor Vehicles, and
in connexion with their said
business have established Motor
Workshops in Accra and other
places in the Gold Coast.
.. The Defendant from February,
1934 to July, 1938, was employed
by the Plaintiffs as Motor
Engineer in their Workshops
established in Accra. Sekondi
and Kumasi in the Gold Coast,
and he left the plaintiffs'
employ in or about July, 1938 .
. By an Agreement in writing
dated the 8th of November,
.1938, the defendant in
consideration of a sum of 4,475'
20 Swiss francs (£215 5s. Id.)
paid to him by the plaintiffs
and for other considerations in
the said agreement mentioned,
undertook and agreed not to
assist financially or otherwise
one Friedrich a former employee
of the plaintiffs who had set up
a Motor Workshop in Accra in
competition against the Motor
Workshop of the plaintiffs, and
further not to settle and open
up for a period of (2) two years
from the date of his departure
from West Africa (July 1938) in
places in West Africa where the
plaintiffs have themselves
established Motor Workshops or
within 50 miles thereof.
"On or about the 30th day of
November, 1938, the defendant
returned to Accra aforesaid,
and, contrary to the said
Agreement dated the 8th of
November, 1938, commenced to
carryon, and has since carried
on the work of Motor Engineer in
competition against the
plaintiffs in Accra, and has
also worked with and assisted
the said Friedrich in his Motor
Workshop established in Accra in
competition against the
plaintiffs.
" And the plaintiffs claim £500
damages for the defendant's
breach of the said contract and
an injunction to restrain the
defendant from assisting and
working with the said Friedrich
also from continuing to work as
Motor Engineer in Accra or at
any other place in the Gold
Coast where the plaintiffs have
established a Motor Workshop or
within fifty (50) miles thereof
until July, 1940."
From the Record it
appears.
that Mr.Quist, Counsel for the
plaintiffs and Mr. Coussey,
Counsel for the defendant opened
as follows :-
" Mr. Quist
opens on facts set out in his
writ
of Summons. Parties both Swiss.
Agreement of 8th November,
1\J38, made in Basle, where
defendant then was, and where he
could have obtained work had he
so desired .
Mr. Coussey for
defendant pleads not liable.
Case not one for injunction.
Defendant in financial distress
in Switzerland and litigating
with plaintiffs when Agreement
of 8th November, 1938, signed.
Made a condition of plaintiffs
paying arrears of wages to him.
No consideration for agreement
sued on, Amount paid to him was
due on his previous contract of
service. Agreement void as being
in restraint of trade. Defendant
running a separate business to
Friedrich. No limit of time to
agreement sued on."
The Agreement for service dated
3rd June, 1936, under which the
defendant was employed for the
last two years of his service
with the plaintiffs, contained
the following clauses ;--
The employee is entitled to
draw in Africa up to 50 per cent
of the salary credited to him.
The balance standing at the
credit of the employee will be
placed at his disposal in Basle
in the agreed currency after he
has faithfully performed his
contract and after all
statements from the Coast are on
hand and examined .
For the term of two years
following the termination of his
contract neither to start his
own business in West Africa nor
become engaged in any business,
which is considered to be in
competition with the Company nor
whether direct or indirect
render services to such a
business."
The defendant returned to
Switzerland from this country at
the end of July, 1938. The Trial
Judge found that the sum of
4,475' 20 Swiss francs was then
due to the defendant under the
Agreement for service.
The plaintiffs withheld payment
of this sum and the defendant
sued the plaintiffs therefore in
a Swiss Court. That action was
dismissed on the ground that the
document sued on (Exhibit "HHI ") was not signed. The
defendant thereupon commenced
arbitration proceedings under
the Agreement for service, which
he abandoned after the
plaintiffs paid him the sum
claimed, i.e. 4,475' 20 Swiss
francs under the terms of the
agreement sued on which is dated
the 8th November, ] 938, and of
which the following is a
translation :---
"(1) The Union Trading Company
Limited pays to Mr. Waiter Hauri
Fr. 4475.20 after the signing of
this agreement.
"(2) Mr. W. Hauri declares
herewith not to render any
financial or other kind of
assistance to the mechanic
Friedrich, who at present runs a
garage at Accra in competition
with the Motor Department of
the U.T.C.
(3) The rights and
liabilities under the previous
agreement of employmen£ are
considered to be squared as per
balance.
(4) Mr. Hauri continues to
recognise the obligation not to
enter into competition with the
U.T.C. in West Africa, either
directly
0 indirectly, respectively not
to settle down establish in
places or within a radius of 50
miles thereof, where the U.T.C.
maintains its' own
establishments, and this during
two years from the date of his
departure from West Africa.
.. * sich niederzulassen means'
to settle down' just as well as'
to establish '."
The Trial Judge found that the
only charge made against the
defendant at the time his money
was being withheld at Basle,
was that of giving financial
assistance to Friedrich, a
former employee of plaintiffs in
the Gold Coast. It is clear that
the Trial Judge accepted the
defendant's version that h~ had
lent Friedrich £20 at the time
when the latter was in the
employment of the plaintiffs and
that it was not paid for the
purpose of helping Friedrich to
start a rival business to
plaintiffs and that it did not
constitute a breach of the
Agreement for service. He stated
"no evidence was called to show
that defendant's version of the
matter was not true, and, if
true, it is difficult to see how
it was a breach of the agreement
of the 3rd June, 1936." On these
findings of fact it is clear
that this £20 incident could not
and did not constitute a bona
fide defence to, the
defendant's demand for payment
of what was due to him.
Shortly after the defendant was
paid the sum of 4,475'20 Swiss.
francs he returned to this
country. Although as the Trial
Judge points out the only charge
made against defendant, at the
time his money. was being
withheld at Basle, was that of
giving financial assistance to
Friedrich, it appears that
subsequently four other breaches
of the Agreement for service
were alleged which, as the Judge
found, were mainly the result of
enquiries instituted by
plaintiffs in West Africa after
defendant had returned to this
country. The Judge found that
most of the alleged breaches, if
they occurred, were condoned by
the plaintiffs wh', with full
knowledge of them, did not
dismiss or suspend the defendant
but allowed him to complete his
tour and even sent him to Kumasi
to be in charge of their
workshop there.
In the case of Beattie v.
Parmenter, 5 T.L.R.
at page 397, it was held, in an
action for wrongful dismissal,
that the employer could not
rely, as justification for the
dismissal of plaintiff, upon
certain irregularities as, after
full knowledge of them, he
continued the plaintiff in his
service. We think that the same
reasoning must apply to. the
withholding of salary earned and
that, where an employer being
fully aware of irregularities on
the part of an employee,
continues to keep the employee
in his service, he cannot at the
conclusion of that service
withhold the salary or any part
of the salary earned by it.
In the course of his judgment
the learned Trial Judge said:"
I have come to the conclusion
that the allegations of
breaches, and the withholding of
the balance of defendant's
salary, were made, and done,
for the purpose of forcing
defendant to enter into the
agreement sued upon.
For some reason, or other,
plaintiffs have not relied upon
the restraint imposed upon
defendant by Clause 7
(e)
of the Agreement dated the 3rd
June, 1936. The subsequent
agreement is not so wide in its
restraint clause. Did plaintiffs
think that the clause in the
former agreement was too wide,
and, therefore, not likely to be
enforced by the Courts? I think
that is the reason plaintiffs
were so anxious to get the
further Agreement, or ,
Guarantee, ' as they called it,
from defendant. Every kind of
pressure was brought to bear
upon defendant to make him enter
into such agreement. He was home
after having completed his tour
of service in this Colony for
plaintiffs, but the portion of
his salary which had been
retained until his tour of
service was completed, was
withheld from him. He had to
take proceedings to or it in the
Swiss Courts. He was told he
could have such salary if he
entered into the agreement
sought for by plaintiffs.
Defendant, -in my opinion, quite
correctly,--declined to enter
into any agreement which
modified his existing one.
Several months passed. Defendant
tried to get work in
Switzerland, but his lack of
capital prevented him getting
it. Exhibit Ll' shows that
even this fact was made use of,
to force him to give the new
agreement. Finally, defendant
gave plaintiffs the agreement
sued upon, and received his
salary."
As will be seen from Mr.
Coussey's opening, which has
already .been quoted in full, he
pleaded that there was no
consideration for the agreement
sued on. Now the consideration
relied upon by the plaintiffs in
their writ of summons is the
payment of
4,475' 20 Swiss francs by the
plaintiffs to the defendant and
the other considerations
mentioned in the agreement of
the 8th November, 1938. These
other considerations we are told
are contained in paragraph (3)
of that agreement, but that
paragraph in fact discloses no
ot}1er consideration except the
payment of the balance due to
the defendant. From the correct
translation tendered by the
defendant (Exhibit "QQ ")
as distinct from the incorrect
translation tendered by the
plaintiffs (Exhibit " E ")
it appears that paragraph 3
of the agreement refers only to
the payment of what was due to
the defendant. "Squared as per
balance" can mean no more than
that.
Valuable consideration is of
course always essential to the
validity of a simple contract.
The Trial Judge held, and in our
opinion rightly, that the
payment of
4,475'20 Swiss francs which was
due to defendant, afforded no
consideration to support the
agreement sued upon .
Plaintiffs' Counsel however has
further contended that the real
consideration for the agreement
of the 8th November, 1938, was
that it constituted a compromise
of arbitration proceedings upon
a claim by the defendant to
which the plaintiffs honestly
believed that they had a good
defence.
It is clear that this was not
the consideration relied upon by
the plaintiffs in their writ of
summons and it is equally clear
that the Trial Judge did not
consider that this was the
consideration relied upon by Mr.
Quist in his opening.
Be that as it may it is quite
clear that the only person who
could show that the defence to
the defendant's claim was
honestly made by the plaintiffs
was Mr. Preismark who negotiated
the agreement sued upon. Mr.
Preismark was not called as a
witness
in the Court below. It may be
that he was not in this country
it the time of the trial, but
that did not prevent him giving
evidence,. on commission. He has
not done so. Is the explanation
that Mr. Preismark could not go
into the witness box in view of
hi letters of the 17th August
and 31st October, 1938? Whatever
the explanation may be it is
quite clear that the plaintiffs
have not pleaded the compromise
and they have not called the
only
person who could have shown that
the resistance to the defendant'
claim for salary due was bona
fide.
The appellants' Counsel in
argument in this Court relied
greatly on the case of Miles
v. New Zenland Azford Estate Co.
(5 II Ch. 801). That
was a case in which an alleged
compromise put forward as the
consideration for a guarantee
was held to no consideration. In
their judgments in that case the
learned Judges examined the
authorities as to the elements
necessary to make a compromise of
a claim a consideration for a
contract, an appellants' Counsel
laid great stress on certain
passages therein While there is
authority for the proposition
that the withdraw of a genuine
plea by way of defence is a
sufficient consideration
(Cooper v. Parker, 21 LJ
C.P. 68), it is clear that
the first. essential element is
that there should be a
reasonable defence which the
plaintiff's bona fide
intended to set up against the
defendant's claim for the balance
of his earned money.
The Trial Judge has found that
there was nothing to justify the
plaintiffs in withholding
payment of the salary credited t
defendant at Basle and that the
allegation of breaches, and the
withholding of this salary, were
made, and done, for the purpose of
forcing defendant, because of
his urgent need for immediate:
payment, to enter into the
agreement sued upon. It is clear
fro these findings alone that he
came to the conclusion that this
compromise relied upon by the
plaintiffs was not a compromise of
a bona fide dispute. 1t
results therefore that the
agreement to pay to the
defendant the money earned by
and due to him, w on the
authorities quoted and approved
in Miles v. New Zeala Alford
Estate Co. made for no
consideration .
The Trial Judge has found as a
fact that the plaintiffs have
failed to prove that any
valuable consideration was given
for t agreement sued upon. We
are unable on the evidence on
the
Record to come to the conclusion
that this or any of his other
findings of fact is wrong. The
appeal must therefore-fail.
The exhibits in this case are
most unsatisfactory. Althoug,
translations of the documents in
German have been put in the' are
not in some cases full and
accurate tran~lations. It has
be, necessary to refer to the
so-called originals, which, in
one instanci has turned out to
be a copy.
