Summary

There had been a legally binding agreement between the claimant and his former firm of solicitors to pay the claimant a monthly fixed sum for three years.

Facts

The claimant (J) claimed money from the defendant (H) under an alleged contract regarding the terms of J's retirement from practice as a solicitor. J joined H's firm of solicitors and became a managing partner. The firm consisted of three partners, J, H, and another. Following certain changes within the firm H became unhappy with the pace of work and entertained thoughts of relocating to the country and working from home as a consultant. He discussed this idea with the other two partners and it was agreed that J would leave the firm at the end of the year and would be paid £2,000 per month for the next three years. J would retain a small room at the practice but most of his work would be done from home. An announcement to this effect was placed in an internal publication. It was subsequently decided that it would be preferable if J left immediately with compensation of £5,000 per month being paid for the accelerated departure. J left the firm and was paid £5,000 for each month of early departure as agreed. H however failed to pay any instalments of £2,000 from the prior agreement. J sought to recover all the instalments of £2,000 which amounted to £120,000. H counterclaimed for fraud alleging that on his departure J had indicated that he intended to retire completely but in fact he continued to work as a solicitor. J submitted that the first set of talks between all three partners had resulted in a legally binding agreement to pay £2,000 per month and that this agreement had not been superseded by the second agreement to pay £5,000 compensation for early departure. H submitted that the necessary elements were not present for the agreement to have been a legally binding contract and in any event J was in repudiatory breach of the agreement by taking office equipment illegally.

Held

When viewed objectively, the talks and agreement between the three partners resulting in the agreement to pay J £2,000 was a legally binding agreement with both sides intending to create legal relations. There was no evidence to support the allegation that J had taken office equipment without permission. It was common ground that he had taken one old computer and one old printer which was permitted. Even if J had taken such equipment it was not a breach contemplated in the agreement and in any event could not have terminated the agreement. There was no evidence that J had said he was retiring permanently. He had always made it quite clear that he sought to work from home on a consultancy basis and when that agreement fell through he was entitled to work from home without the umbrella of a consultancy.

Judgment for claimant.