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England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Antuzis & Ors v DJ Houghton Catching Services Ltd & Ors  EWHC 843 (QB) (08 April 2019)
Cite as:  Bus LR 1532,  IRLR 629,  WLR(D) 254,  EWHC 843 (QB),  LLR 441
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QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
|(1) NERIJUS ANTUZIS AND OTHERS|
|(2) TOMAS NECAJUS|
|(3) PRANAS STRIBYLYS||Claimants|
|(1) DJ HOUGHTON CATCHING SERVICES LTD|
|(2) JACQUELINE JUDGE|
|(3) DARRELL HOUGHTON|
|(4) THE GANGMASTERS LICENSING AUTHORITY||Defendants|
Andrew Allen, Mark Greaves (instructed by Brett Wilson Solicitors) for the Defendants
Hearing dates: 19, 20, 21, 22 February 2019
Crown Copyright ©
MR JUSTICE LANE :
B. THE ORDER OF 8 AUGUST 2018
i) paragraphs 74-75 of the generic particulars of claim;
ii) paragraphs 19, 26-28 and 55 of the generic defence;
iii) paragraphs 17-19 of the individual defences in the cases of Vygantas Bucyms and Edmundas Mikiulkevicius;
iv) any other paragraphs identified in the application notice.
C. APPROACH TO SUMMARY JUDGMENT AND PRELIMINARY ISSUE
"a) … considers that:
(i) the claimant has no real prospect of succeeding on the claim or issue; or
(ii) the defendant has no real prospect of successfully defending the claim or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at trial".
"The words 'no real prospect of succeeding' do not need any amplification, they speak for themselves. The word 'real' distinguishes fanciful prospects of success …they direct the court to the need to see whether there is a 'realistic' as opposed to a 'fanciful' prospect of success."
D. EMPLOYMENT LEGISLATION REGARDING AGRICULTURAL WORKERS
"Guaranteed overtime" means overtime which a worker is obliged to work under their contract of employment and in respect of which the worker's employer guarantees payment to the worker, whether or not there is work for the worker to do;
"night work means work (apart from overtime hours) undertaken by a worker between 7 p.m. one evening and 6 a.m. the following morning, but excluding the first two hours of work that a worker does in that period;
"on-call" means an arrangement whereby a worker who is not at work agrees with their employer to be contactable by an agreed method and able to reach the place where they may be required to work within an agreed time;
"other overtime" means overtime (other than guaranteed overtime) worked by a worker under their contract of employment;
"sickness absence" means the absence of a worker from work due to the worker's incapacity by reason of:
(a) any illness suffered by the worker;
(c) an injury that occurs to the worker at the worker's place of work;
"worker" means a worker employed in agriculture;
"working time" means:
(a) any period during which the worker is working at their employer's disposal and carrying out their employer's activities or duties;
(b) any period during which the worker is receiving relevant training; and
(c) any additional period which the worker and employer agree shall be treated as working time."
"(a) when they are working; or
(b) (other than a worker who has a contract of employment which provides for payment at piece rates) when they are available at or near their place of work for the purpose of working and when they are required to be available for such work…"
(e) in any week (starting from midnight on a Sunday) [the worker] works for more than 39 hours with the same employer, but in calculating those hours for the purposes of this sub-paragraph, account shall be taken only of those hours worked that do not qualify for payment of overtime by virtue of the provisions set out in sub-paragraphs (a) to (d)."
E. REGULATION OF GANGMASTERS
F. COMPANIES ACT 2006
"(1) A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to -
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(d) the impact of the company's operations on the community and the environment,
(e) the desirability of the company maintaining a reputation for high standards of business conduct, and
"(1) A director of a company must exercise reasonable care, skill and diligence.
(2) This means the care, skill and diligence that would be exercised by a reasonably diligent person with—
(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the director in relation to the company, and
(b) the general knowledge, skill and experience that the director has."
G. PROCEEDINGS BEFORE SUPPERSTONE J
"The Houghton Defendants accept that the Second and Third Defendants [here, D2 and D3] were jointly responsible for the First Defendant."
H. PROCEDURAL MATTERS
I. THE EVIDENCE AND ITS ASSESSMENT
J. SUMMARY JUDGMENT
(1) Underpayment of AWO rates
(2) Employment or work-finding fees
(3) Accommodation Fees
(4) Unpaid Wages
(5) Holiday Pay
K. PRELIMINARY ISSUE
"If the company was really trading independently on its own account, the fact that it was directed by Messrs Feldman and Partridge would not render them responsible for its tortious acts unless, indeed, they were acts expressly directed by them. If … those in control expressly directed that a wrongful thing can be done, the individuals as well as the company are responsible for the consequences." (467).
"But the servant who causes a breach of his master's contract with a third person seems to stand in a wholly different position. He is not a stranger. He is the alter ego of his master. His acts are in law, the acts of his employer. In such a case it is the master himself, by his agent, breaking the contract he has made, and in my view the action against the agent… must therefore fail just as it would fail if brought against the master himself for wrongly procuring a breach of his own contract ….
I hold that if a servant acting bona fide within the scope of his authority procures or causes the breach of a contract between his employer and a third person, he does not become liable to an action of tort at the suit of the person who contract has thereby been broken. I abstain from expressing any opinion as to the law which may apply if a servant, acting as an entire stranger, wholly outside the range of his powers, procures his master to wrongfully break a contract with a third person."
"54 McCardie J's statement in Said v Butt was made obiter as he had already found that there was no contract between the plaintiff and the theatre. Nevertheless, the Said v Butt principle has been consistently endorsed and applied in the United Kingdom and other jurisdictions such as Australia and Canada (see the High Court of Australia's decision in O'Brien v Dawson (1942) 66 CLR 18 ("O'Brien v Dawson") at 34 and the Newfoundland Court of Appeal's decision in Imperial Oil Ltd v C&G Holdings Ltd (1989) 62 DLR (4th) 261 ("Imperial Oil") at 266). The principle has also been applied by our courts in Chong Hon Kuan, Nagase (at –), and more recently in M+W Singapore Pte Ltd v Leow Tet Sin and another  2 SLR 271 ("M+W Singapore") (at–). Although Said v Butt concerned the tort of inducement of breach of contract, which was the applicable tort in that case, its application has been extended to other torts involving a company's breach of contract, such as unlawful means conspiracy where the unlawful means pertains to the contractual breach: see O'Brien v Dawson at  below.
55 However, there has thus far been no detailed analysis by the courts of what precisely the principle entails, in particular what it means to act "bona fide within the scope of [the director's] authority". Previous decisions of our courts have interpreted the Said v Butt principle to comprise two conjunctive requirements namely: (a) acting bona fide; and (b) acting within the scope of the director's authority, and to apply only to "protect persons in authority within corporate entities who genuinely and honestly endeavoured to act in the company's best interests": see Chong Hon Kuan at  and Nagase at . Thus in Nagase, where the company's director, through the company, fraudulently overcharged the plaintiff, the director was held not to be entitled to the protection of the principle.
56 Conversely, a director who acts in good faith and within his authority would be immune from tortious liability, notwithstanding that he may have been genuinely mistaken as to the company's contractual obligations or even that he had the predominant intention of causing loss to another. An example of the former is the case of Ng Joo Soon (alias Nga Ju Soon) v Dovechem Holdings Pte Ltd and another suit  2 SLR 1155 ("Ng Joo Soon"), where the plaintiff sued the company's directors in the tort of inducement of breach of contract and in conspiracy for the wrongful breach of the company's obligation to pay the plaintiff certain sums under a contract. Philip Pillai J held (at ) that the directors were immune from such liability as they had acted within their authority and in good faith, and it thus did not matter that they had been mistaken as to the company's contractual obligations. For the latter, Woo Bih Li J opined in Chong Hon Kuan (at  and ) that the requirement of a predominant intention to injure was an essential requirement for lawful means conspiracy. If such an allegation could deprive a defendant of the protection of the Said v Butt principle, such a principle would become emasculated. Something more was thus needed, although it was not necessary for Woo J to consider what that was.
57 A brief examination of the application of the Said v Butt principle in other jurisdictions also reveals scant authority on its precise scope. In the United Kingdom, the principle has been consistently endorsed by the courts but without much judicial exploration: see Scammell G & Nephew Ltd v Hurley  1 KB 419 at 443 and 449, and DC Thomson & Co Ltd v Deakin and others  Ch 646 at 680–681. Of particular significance is the decision in Ridgeway Maritime Inc v Beulah Wings Ltd and Dr Tunji Braithwaite (The "Leon")  2 Lloyd's Rep 611 ("The Leon"), where Waller J investigated the limitations of a director's liability for his company's breach of contract, in particular the definition of bona fide. He stated (at 624 col 2–625 col 1): There certainly are well known circumstances in which an employee may be liable for inducing a breach of contract where the employee is himself acting unlawfully including in breach of his own contract with his employer. … I find the words "bona fide", if they are meant to add anything to acting unlawfully, quite difficult in this context. Do they contemplate that an individual who knows that what he is doing will lead to the company being in breach of contract being somebody not acting bona fide? Or do the words bona fide relate to the relationship of the individual with the company i.e. if he is seeking to force the company to do something contrary to its own interests? If the latter, I am not satisfied that without the action of the employee also being a breach of contract or legal duty to the employer, it could found an action for tort for inducing a breach. [emphasis added] Waller J thus acknowledged that an employee could be liable in tort for procuring his employer to breach the latter's contract with a third party, provided that the act of inducement was in breach of the employee's own contract with or legal duty owed towards his employer.
58 In Australia, the Said v Butt principle was approved by the High Court of Australia in O'Brien v Dawson but without specifically addressing the bona fides requirement, ie, that directors who exercise their functions as directors and act within their authority are immune from the tort of inducing the breach of contract. The plaintiffs in O'Brien v Dawson sued a company and two of its directors for conspiracy to injure the plaintiffs when the defendants ejected the plaintiffs from certain theatres, even though the plaintiff had been occupying the theatres pursuant to an agreement with the company. The court held that the directors could not be held personally liable either for conspiracy with the company or for procuring the company to breach its contract because a director acting within the scope of his authority in the exercise of his functions acted in the capacity of and as the company, and not himself. The company should thus be properly liable for such acts, and not its directors.
59 The uncertainty of the scope of the principle, in particular whether it protects directors ordinarily acting within their authority but not in good faith or in the best interests of the company, was recently canvassed by the Supreme Court of Western Australia in Knights Capital Group Ltd v Bajada and Associates Pty Ltd  WASC 69. The plaintiff sued the company's directors for inducing the company to wrongfully repudiate a management agreement with the plaintiff. The defendant-directors applied under O 16 r 1 of the Rules of the Supreme Court 1971 (WA) for summary judgment on the basis that they had a good defence on the merits, namely that they had acted within their authority in taking the decision to terminate the management agreement and were entitled to immunity on the basis of the principle in O'Brien v Dawson. The plaintiff argued that the defendant-directors were not entitled to immunity because their conduct, although ordinarily within their authority as the company's directors, was not engaged in good faith or in the best interests of the company, and their conduct was thus an exception to the Said v Butt rule.
Pritchard J, in considering the plaintiff's argument, stated (at –) that the scope of the rule in Said v Butt remained "largely unexplored" and that the rule did not sit comfortably with the body of law recognising that a director may be personally liable for procuring other wrongs by the company. However, as there was no evidence to suggest that the directors had not acted in the best interests of the company, summary judgment was granted in favour of the defendant directors and the case did not progress any further. This case is however useful in demonstrating, first, that the scope of the principle in Said v Butt should be more clearly demarcated, and second, that there is a question as to the consistency of the Said v Butt principle with the other body of law which provides that a director is generally liable for other torts he has procured the company to commit (we address the latter at – below).
60 In Canada, the Said v Butt principle was approved by the Newfoundland Court of Appeal in Imperial Oil. The court interpreted the principle to mean that a director was immune when he acted bona fide within the scope of his authority in the best interests of the company. However, even when the director was not so acting, he would only be personally liable if the circumstances additionally showed that his dominant concern was on depriving the third party of its contractual benefits. Marshall JA reasoned that the director's duty to act bona fide was owed to his company and was of no concern to third parties. To require directors to justify their corporate actions to third parties such that they would obtain immunity from suit would "extend the concept of piercing the corporate veil beyond the limits prescribed by law" (at 266). Thus, even where a director was not acting bona fide, the additional factor of a dominant purpose to deprive the plaintiff of its contractual benefits was required.
61 The Ontario Court of Appeal in ADGA Systems International Ltd v Valcom Ltd  OJ No 27 ("ADGA Systems")44 similarly approved the Said v Butt principle as an exception to the general rule that directors are personally liable for their tortious conduct even though their conduct may be bona fide in the best interests of the company. But Carthy JA held (at ) that the exception did not apply in that particular case. The plaintiff and defendant were competitors. The plaintiff held a contract with the Canadian prison services for technical support and maintenance of security systems, which was expiring, and fresh tenders were called. The defendant company's sole director and senior employees convinced the plaintiff's employees to permit their names to be used in the defendant's tender documents (such that the defendant could show that they had technicians with the requisite experience) and to work for the defendant if the defendant won the tender. The plaintiffs sued the defendant company's director and senior employees for inducing a breach of contract and breach of fiduciary duties between the plaintiff and its employees. Carthy JA noted that the Said v Butt exception applied to exempt only directors acting bona fide within the scope of their authority from personal liability for the tort of inducement of breach of contract. In that case, the plaintiff's claim was premised on the inducement of breach of fiduciary duties and not inducement of the breach of contract (at ). The Said v Butt principle also did not apply to protect the defendant-directors because the defendant-directors were not causing a breach of a contract between their company and the plaintiff, but between the plaintiff and its employees. The plaintiff there had no contractual relationship with any of the defendants. The defendants' appeal to the Supreme Court of Canada was refused.
62 Having reviewed the authorities, we find that the scope of the Said v Butt principle should be more clearly demarcated and defined to provide certainty for directors in the performance of their duties. In our judgment, the Said v Butt principle should be interpreted to exempt directors from personal liability for the contractual breaches of their company (whether through the tort of inducement of breach of contract or unlawful means conspiracy) if their acts, in their capacity as directors, are not in themselves in breach of any fiduciary or other personal legal duties owed to the company."
"39. To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so. This proposition is most strikingly illustrated by the decision of this House in British Industrial Plastics Ltd v Ferguson  1 All ER 479, in which the plaintiff's former employee offered the defendant information about one of the plaintiff's secret processes which he, as an employee, had invented. The defendant knew that the employee had a contractual obligation not to reveal trade secrets but held the eccentric opinion that if the process was patentable, it would be the exclusive property of the employee. He took the information in the honest belief that the employee would not be in breach of contract. In the Court of Appeal McKinnon LJ observed tartly ( 4 All ER 504, 513) that in accepting this evidence the judge had "vindicated [his] honesty…at the expense of his intelligence" but he and the House of Lords agreed that he could not be held liable for inducing a breach of contract.
40. The question of what counts as knowledge for the purposes of liability for inducing a breach of contract has also been the subject of a consistent line of decisions. In Emerald Construction Co Ltd v Lowthian  1 WLR 691, union officials threatened a building contractor with a strike unless he terminated a sub-contract for the supply of labour. The defendants obviously knew that there was a contract - they wanted it terminated - but the court found that they did not know its terms and, in particular, how soon it could be terminated. Lord Denning MR said (at pp; 700-701)
"Even if they did not know the actual terms of the contract, but had the means of knowledge - which they deliberately disregarded - that would be enough. Like the man who turns a blind eye. So here, if the officers deliberately sought to get this contract terminated, heedless of its terms, regardless whether it was terminated by breach or not, they would do wrong. For it is unlawful for a third person to procure a breach of contract knowingly, or recklessly, indifferent whether it is a breach or not."
41. This statement of the law has since been followed in many cases and, so far as I am aware, has not given rise to any difficulty. It is in accordance with the general principle of law that a conscious decision not to inquire into the existence of a fact is in many cases treated as equivalent to knowledge of that fact (see Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd  1 AC 469). It is not the same as negligence or even gross negligence: in British Industrial Plastics Ltd v Ferguson  1 All ER 479, for example, Mr Ferguson did not deliberately abstain from inquiry into whether disclosure of the secret process would be a breach of contract. He negligently made the wrong inquiry, but that is an altogether different state of mind.
42. The next question is what counts as an intention to procure a breach of contract. It is necessary for this purpose to distinguish between ends, means and consequences. If someone knowingly causes a breach of contract, it does not normally matter that it is the means by which he intends to achieve some further end or even that he would rather have been able to achieve that end without causing a breach. Mr Gye would very likely have preferred to be able to obtain Miss Wagner's services without her having to break her contract. But that did not matter. Again, people seldom knowingly cause loss by unlawful means out of simple disinterested malice. It is usually to achieve the further end of securing an economic advantage to themselves. As I said earlier, the Dunlop employees who took off the tyres in GWK Ltd v Dunlop Rubber Co Ltd (1926) 42 TLR 376 intended to advance the interests of the Dunlop company.
43. On the other hand, if the breach of contract is neither an end in itself nor a means to an end, but merely a foreseeable consequence, then in my opinion it cannot for this purpose be said to have been intended. That, I think, is what judges and writers mean when they say that the claimant must have been "targeted" or "aimed at". In my opinion the majority of the Court of Appeal was wrong to have allowed the action in Millar v Bassey  EMLR 44 to proceed. Miss Bassey had broken her contract to perform for the recording company and it was a foreseeable consequence that the recording company would have to break its contracts with the accompanying musicians, but those breaches of contract were neither an end desired by Miss Bassey nor a means of achieving that end.
44. Finally, what counts as a breach of contract? In Torquay Hotel Co Ltd v Cousins  2 Ch 106, 138 Lord Denning said that there could be liability for preventing or hindering performance of the contract on the same principle as liability for procuring a breach. This dictum was approved by Lord Diplock in Merkur Island Shipping Corporation  2 AC 570, 607-608. One could therefore have liability for interference with contractual relations even though the contracting party committed no breach. But these remarks were made in the context of the unified theory which treated procuring a breach as part of the same tort as causing loss by unlawful means. If the torts are to be separated, then I think that one cannot be liable for inducing a breach unless there has been a breach. No secondary liability without primary liability. Cases in which interference with contractual relations have been treated as coming within the Lumley v Gye tort (like Dimbleby & Sons v National Union of Journalists  1 WLR 67 and 427) are really cases of causing loss by unlawful means.
L. FINAL MATTERS
"The calculation was done in exactly the same way but the total weekly wage earned by a catcher was then divided by the relevant minimum wage in order to give us a notional number of hours worked for the purpose of payslip."
"12. As far as I was concerned, the catchers were paid piece rates so the money they were receiving was just the same. It was merely a different way of reporting it. When we had worked out the notional number of hours worked, I applied the night rate to the first 50 hours and the day rate thereafter. There was no particular reason for this, other than the fact that they were worked 5 nights per week and probably didn't work any more than 10 hours per night. I didn't actually know how many hours a week they worked. Jackie said it was impossible to log the hours of work. She said it was very difficult to keep track of who was working.
"13. Jackie never instructed me to do it in any particular way, although we did discuss how we could calculate the notional hourly rate and adopted that method.
14. In September, the GLA inspected the payroll records to check that all was in order. Colin Moorhen was the representative from the GLA who sat with me and went through the records. It wasn't a long visit. He asked me to explain how I calculated wages, which I did in the same way I explained above. He could see that hours were being reported on the payslip. He seemed to be satisfied by the way I had arrived at those figures. He said he would go away and write up a report. However, neither Jackie nor I ever received a report or any feedback. I don't know if the report was ever drafted."
"The GLA would not approve this method and it does not comply with the basic legal requirement. During the application inspection Mr Godfrey provided DJ Houghton with a timesheet which made provisions of a recording start and finish times and rest breaks. As can be seen from the appellant's records this time sheet was not used."
"Workers have told the GLA that they often have to travel considerable distances for work which requires them to stay away from home. Workers say that they have to sleep in the bus used for transport. You told the GLA inspectors during the inspection that you used to provide overnight accommodation. However, you no longer do so because workers used to get drunk and treat it as a holiday. You also stated that keeping workers on the minibus in between jobs was the best way to "keep control of them"."
"129. Throughout the Notice and Grounds of Appeal, DJ Houghton apportions blame for all their failings to various parties, namely, their accountants, the workers, the GLA and [Edikas]. Where they cannot apportion blame they do not respond."
"RL: What about the amounts on the cheques being less than on the payslips?"
DH: No idea. I only knew about what came through on payroll".
"RL: The GLA found that workers were suffering. Do you not think it was your responsibility as a Gangmaster to stop that and do everything to prevent it?
DH: If I knew it was going on in the workplace or in my properties, then Yes.
RL: Are you saying you were completely ignorant?
DH: Yes. In hindsight, it wouldn't happen again. There would be more help. JJ and I were by ourselves. If I didn't make sure that this never happened again then I would be a fool."
"I asked Perry's to do my payroll from 2007. There was an inspection in 2010. No-one ever told me that they were doing it wrong. Had they done so, we would have fixed it. We gave Perry's the bird numbers and the drivers' hours and she made up the time if necessary, or she didn't. I left it to Perry's. We all know in hindsight that they didn't do a very good job. I have been to a new accountant."