#6708 - Addis V. Gramophone Co. - Commercial Remedies BCL

Addis v. Gramophone Company

Facts

The plaintiff was employed by the defendants as manager of their business at Calcutta at 15l. per week as salary, and a commission on the trade done. He could be dismissed by six months' notice. In October, 1905, the defendants gave him six months' notice, but at the same time they appointed Mr. Gilpin to act as his successor, and took steps to prevent the plaintiff from acting any longer as manager. In December, 1905, the plaintiff came back to England.

The plaintiff brought this action in 1906, claiming an account and damages for breach of contract. That there was a breach of contract is quite clear. If what happened in October, 1905, did not amount to a wrongful dismissal, it was, at all events, a breach of the plaintiff's right to act as manager during the six months and to earn the best commission he could make.

Holding

Lord Lokeburn

A further controversy ensued, whether the 600l. was intended to include salary for the six months, or merely damages because of the abrupt and oppressive way in which the plaintiff's services were discontinued, and the loss he sustained from the discredit thus thrown upon him.

To my mind it signifies nothing in the present case whether the claim is to be treated as for wrongful dismissal or not. In any case there was a breach of contract in not allowing the plaintiff to discharge his duties as manager, and the damages are exactly the same in either view. They are, in my opinion, the salary to which the plaintiff was entitled for the six months between October, 1905, and April, 1906, together with the commission which the jury think he would have earned had he been allowed to manage the business himself. I cannot agree that the manner of dismissal affects these damages. Such considerations have never been allowed to influence damages in this kind of case.

Lord James

My Lords, I may say if I had arrived at a different conclusion I should have been subjected to some feeling of remorse, because during many years when I was a junior at the Bar, when I was drawing pleadings, I often strove to convert a breach of contract into a tort in order to recover a higher scale of damages, it having been then as it is now, I believe, the general impression of the profession that such damages cannot be recovered in an action of contract as distinguished from tort, and therefore it was useless to attempt to recover them in such a case. That view, which I was taught early to understand was the law in olden days, remains true to this day.

Lord Atkinson

I have been unable to find any case decided in this country in which any countenance is given to the notion that a dismissed employee can recover in the shape of exemplary damages for illegal dismissal, in effect damages for defamation, for it amounts to that, except the case of Maw v. Jones.

I have always understood that damages for breach of contract were in the nature of compensation, not punishment.

Is this rule to be applied to actions of breach of contract? There are few breaches of contract more common than those which arise where men omit or refuse to repay what they have borrowed, or to pay for what they have bought. Is the creditor or vendor who sues for one of such breaches to have the sum he recovers lessened if he should be shewn to be harsh, grasping, or pitiless, or even insulting, in enforcing his demand, or lessened because the debtor has struggled to pay, has failed because of misfortune, and has been suave, gracious, and apologetic in his refusal? On the other hand, is that sum to be increased if it should be shewn that the debtor could have paid readily without any embarrassment, but refused with expression of contempt and contumely, from a malicious desire to injure his creditor?

In my opinion, exemplary damages ought not to be, and are not according to any true principle of law, recoverable in such an action as the present, and the sums awarded to the plaintiff should therefore be decreased by the amount at which they have been estimated, and credit for that item should not be allowed in his account.

Lord Collins (Dissenting)

This contention goes the length of affirming that in cases of wrongful dismissal it is beyond the competence of a jury to give what are called exemplary or vindictive damages, and it was this point that I desired to consider further.

Having thus explained and vindicated the right of juries to give exemplary damages, “for example's sake and to prevent such offences in future,” he nevertheless in other parts of his work seeks to put upon it an arbitrary and illogical limitation by confining it to actions in form of tort, as though a breach of contract, which of course is in itself an actionable wrong, might not be committed with accompanying circumstances just as deserving the reprobation of a jury as those which might accompany the commission of a trespass.

But, for the reason I have given, I think we are not bound to disallow such damages in this case, and I am not disposed, unless compelled by authority to do so, to curtail the power of the jury to exercise what, as Mr. Sedgwick points out, is a salutary power, which has justified itself in practical experience, to redress wrongs for which there may be, as in this case, no other remedy. Such discretion, when exercised by a jury, would be subject to the now unquestioned rights of the Courts to supervise, just as is done every day, where the form of action is tort. That a trespass carrying with it an...