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Union Trading Company, Limited, Of Basel In Switzerland & Anor V. Walter Hauri Of Seon In Switzer-land, Now In Accra (1940) LJR-WACA

Union Trading Company, Limited, Of Basel In Switzerland & Anor V. Walter Hauri Of Seon In Switzer-land, Now In Accra (1940)

LawGlobal Hub Judgment Report – West African Court of Appeal

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 tcider which he was paid the amount but agreed not to do certain acts 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’ appeal 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. Coussey (with him E. A . Bannerman) for Respondent.

The following joint judgment was delivered :–


The material part of plaintiffs-appellants’ writ of summons is as follows :—

” The plaintiffs are (inter ails) 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 (1215 5s. ld.) 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 U.T.C. Ltd., to Accra aforesaid, and, contrary to the said Agreement dated the 8th of etc.

November, 1938, commenced to carry on, and has since carried on the workv.

of Motor Engineer in competition against the plaintiffs in Accra, and has Hauri, etc. also worked with and assisted the said Friedrich in his Motor Workshop

established in Accra in competition against the plaintiffs.1Cingdon,

” And the plaintiffs claim £500 damages for the defendant’s breach of Petrides and


the said contract and an injunction to restrain the defendant from assisting r

and working with the said Friedrich also from continuing to work as Motor Paula JJ 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, 1938, 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 :—

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” 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 therefor in a Swiss Court. That action was dismissed on the ground that the document sued on (F-Thibit ” HH1 “) was not signed. The defendant thereupon commenced arbitration proceedings under the Agreement for service, which he abandoned after the plaintiffs paid him the sum Wined, i.e. 4,475.20 Swiss francs under the terms of the agreement slued on which is dated the 8th November, 1938, and of which the hollowing is a translation :-

(1) The Union Trading Company Limited pays to Mr. Walter 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.

  1. The rights and liabilities under the previous agreement of employment are considered to be squared as per balance.
  2. Mr. Hauri continues to recognise the obligation not to enter into competition with the U.T.C. in West Africa, either directly or indirectly, respectively not to settle down is 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.

” • sick niederzulassen means’ to settle down ‘ just as well -as’ to establish ‘.”

The Trial Judge found that the only charge matde against the defendant at the time his money was being withhleci 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 he had lent Friedrich £20 at the time when the latter was in the employmenf 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 returneCto 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.

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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 U.T.C. Ltd.. imposed upon defendant by Clause 7 (g) of the Agreement dated the 3rd etc.

June, 1938. The subsequent agreement is not so wide in its restraint clause.v.

Did plaintiffs think that the clause in the former agreement was too wide, Hauri, etc. 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 Kin4don, Guarantee, ‘ as they called it, from defendant. Every kind of pressure Petrides and was brought to bear upon defendant to make him enter into such agreement. Graham

He was home after having completed his tour of service in this Colony for Paul, C. J J. 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 for it in the Swiss Courts. He was told he conk] 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 ‘ Li ‘ 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 other consideration except the payment of the balance due to the defendant. From the correct translation tendered by the defendant (Exhibit ” Q9 “) 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.

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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 at 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 his 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’s claim for salary due was bona fide.

The appellants’ Counsel in argument in this Court relied greatly on the case of Miles v. New Zealand Alford Estate Co. (55 L.J. Ch. 801). That was a case in which an alleged compromise put forward as the consideration for a guarantee was held to be 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, and appellants’ Counsel laid great stress on certain passages therein. While there is authority for the proposition that the withdrawal of a genuine plea by way of defence is a sufficient consideration (Cooper v. Parker, 21 L.J. C.P. 68), it is clear that the first essential element is that there should be a reasonable defence which the plaintiffs 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 to defendant at Basle and that the allegation of breaches, and the withholding of this salary, were mads, 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 from these findings alone that he came to the conclusion that the compromise relied upon by the plaintiffs was not a compromise of a bona fide dispute. it results therefore that the agreement to pay to the defendant the money earned by and due to him, was on the authorities quoted and approved in Miles v. New Zealand 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 the 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 thereforefail.

The exhibits in this case are most unsatisfactory. Although translations of the documents in German have been put in they are not in some cases full and accurate translations. It has been necessary to refer to the so-called originals, which, in one instance, has turned out to be a copy.

The appeal is dismissed.

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