Esso Petroleum Co. Ltd v Mardon [1976]

English Contract Law

Esso Petroleum Co. Ltd v Mardon [1976]
‘Gas’ by Edward Hopper

Prior to the Misrepresentation Act 1967 many cases involving mistruths and false inducements relied upon rules of collateral warranty and negligent misrepresentation to establish liability, however on this occasion an international oil company was betrayed by their own haste when attempting to victimise a willing but inexperienced employee.

In 1961 the cross-appellants looked to construct a new filling station within the busy streets of Southport, and so having established the location and calculated the potential value of business it was agreed that once opened the station could very well expect to turnover around 200,000 gallons of petrol per year within its first three years of trading. 

With such positive projections the cross-appellants purchased the site and began work, however during the planning permission stage they were delivered an unexpected blow when the local authority expressed that the petrol pumps were not permitted to face the road, but were instead to be positioned at the rear of the building.

This unexpected design change heavily reduced their previous calculations, however undeterred they sought to recruit a leaseholder for the site, and so after a successful interview the appellant was conditionally offered the post while subject to rents based upon the now unrealistic sales volumes, however during his interview the appellant queried the figures presented while the cross-appellants argued there was no cause for concern and that the original projections remained reliable.

Despite his concerns, the appellant accepted the position before working tirelessly for two years, until faced with financial ruin after losing money from the severely reduced sales, considerable personal investment and a sizeable overdraft no longer repayable, he approached the cross-appellants with every intention to quit, whereupon they agreed to reduce the rent and offer bonus payments from the sale of petrol in order to offset his losses. 

As an act of continued faith the appellant agreed to honour a twelve month contract, however his circumstances continued to deteriorate, and despite the cross-appellants offering him a more profitable station, their support diminished until the arrangement became unsustainable, and yet in 1966 the cross-appellants issued a writ for non-payment of petrol supplied during their working relationship.

Naturally shocked and angered, the appellant counter-claimed for damages caused through the loss of earnings, damage to his health, lost opportunities through his efforts to make the site a success, breach of warranty through the misleading statements made in relation to sales turnover, negligent misrepresentation and the inducement to take employment where the outcome was never going to be the one presented during his interview.

In the first instance the Court of the Queen’s Bench held that the cross-appellants comments were tantamount to opinions and not warranties, but that the claim for negligent misrepresentation was enforceable until the date of the revised employment contract in 1964, while in the Court of Appeal the appellant relied upon Hedley Byrne & Co Ltd v Heller & Partners Ltd, in which the House of Lords had held that:

“[I]f someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference.”

And so having examined the finer points of collateral warranty and the limitations of contractual breaches, the Court unanimously upheld the appeal on grounds that the flow of damages were unmistakably linked to the claims made and that remoteness could not stand when factoring in the sources of revenue used by the appellant when trying so hard to keep the station afloat, while finally clarifying that:

“[I]f a man, who has or professes to have special knowledge or skill, makes a representation by virtue thereof to another be it advice, information or opinion with the intention of inducing him to enter into a contract with him, he is under a duty to use reasonable care to see that the representation is correct, and that the advice, information or opinion is reliable.”

Adeneler and others v Ellinikos Organismos Galaklos (ELOG) [2006]

European Law

Adeneler and others v Ellinikos Organismos Galaklos (ELOG) [2006]
‘Old Milk Bottle and Grapes’ by Mark Van Crombrugge

In this case workers rights directly related to the powers conferred under a Framework Agreement annexed to Council Directive Directive 1999/70/EC were given new protections in instances where fixed-term employment contracts were no longer seen as helpful but in fact deemed contrary to the security of European citizens. 

On this occasion a collective claim was put before the Greek Monomeles Protodikio Thessalonikis (Court of the First Instance) by eighteen publicly employed staff of the Greek Milk Organisation (ELOG), after the firm failed to renew their fixed-term contracts, and although the aim of the Framework Agreement was to reduce inherent abuses found in all forms of employment, it was intended that unless an employer could demonstrate that repeated fix-term employment contracts served both the employer and employee they were to become contracts of ‘indefinite duration’.

While it is agreed under Community law principles that Member States are expected to transpose Directives within a predetermined period, the Greek government applied for a two year extension under para.2 of Directive 1999/70/EC, however it was not fully transposed until April 2003 under the Presidential Decree No.81/2003 (later superseded by Presidential Decree 164/2004).

For clarity, protections for public employees found in the Framework Agreement were presented in such a way as their employers could continue using fixed-term employment contracts for ‘seasonal purposes’, or in times requiring periodic or temporary needs, as explained in art.21 of Law No.2190/1994, while this was further supported by art.5 of Presidential Decree 164/2004, which provided that successive contracts of employment enjoyed by the same workers were prohibited if contract renewal periods were greater than three months.

In this instance the claimants had worked under contracts lasting no more than eight months, while contract renewals ranged between twenty-two days and eleven months, therefore it was argued that cessation of their employment constituted a breach under the terms of the Framework Agreement and Directive 1999/70/EC inasmuch as they had all been employed for fixed and permanent needs as opposed to those described in art.21 of Law No.2190/1994.

When referred to the European Court of Justice under art.234 EC the Court of the First Instance sought a preliminary ruling as to four questions: 

1. What was the exact date of effect of Directive 1999/70?

2. What was the definition of ‘objective reasons’ as per clause 5(1)(a) of the Framework Agreement when determining the renewal of fixed-term contracts?

3. What was the practicality of Presidential Decree 81/2003 when interposed with the terms of the Directive? 

4. Did the limitations of art.21 of Law No.2190/1994 allow for abuses in contrast to the reductive effects of the Framework Agreement?

Having appreciated the somewhat unnecessary aims of the questions it was ultimately  agreed by the European Court of Justice that:

1. The date of effect was that of the publication of the Directive, which was July 1999 and not April 2003.

2. That national legislation cannot overrule the aims of objective reasoning as prescribed within the framework agreement.

3. That clause 5(1)(a) to (c) offered a number of available measures to the Member States in order to reduce contractual abuses.

4. That the same clause again offered sufficient remedies in order to fully support the effects of Directive 1999/70 and the Framework Agreement.

Therefore the Court upheld the claim while reminding the parties that:

“[F]rom the date upon which a Directive has entered into force, the courts of the Member States must refrain as far as possible from interpreting domestic law in a manner which might seriously compromise, after the period for transposition has expired, attainment of the objective pursued by that Directive.”

Marshall v Southampton and South West Area Health Authority (No.1) [1986]

European Law

Marshall v Southampton
‘Abstract Women 010’ by Corporate Art Task Force

Dismissal upon grounds of sexual discrimination and the direct effect of Community law Directives in issues of state employment were the key ingredients to this matter, when a former employee of the South-West Hampshire Area Health Authority was subjected to unexpected termination of her employment, despite intimations that her post was secure beyond policy requirements.

Having joined the department in 1974 the applicant had enjoyed working as a Senior Dietician until she reached the contracted retirement age (five years earlier than her male colleagues) at which point it was agreed that she could continue working although no specific end date was discussed, however the applicant was dismissed without notice two years later upon grounds that she was a woman and so considered beyond retirement age and surplus to requirements.

Immediately after her departure the applicant sought to challenge the decision through the enforcement of Council Directive 76/207/EEC, which supports the ‘principle of equal treatment’ inasmuch as art.1(1), (2), 2(1) and 5 collectively confer Member State obligations to apply and maintain the equal treatment of men and women with regard to employment, promotion, training, working conditions, social security, dismissal and the prohibition of any discrimination (whether directly or indirectly), while these rights applied to all manner of employment arrangements.

In the first instance the industrial tribunal denied her claim under the s.6(4) of the Sex Discrimination Act 1975, which provided that discrimination by an employer was exempt under retirement conditions, and that the pensionable age of women under s.27(1) of the Social Security Act 1975 supported the age of retirement through the  availability of state pensions as of sixty years of age. 

Upon dismissal of her appeal she challenged the findings again, whereupon the Court of Appeal was forced to raise two questions with a view to a preliminary ruling under art.177 EC, namely: 

1. Whether the appellant’s dismissal after reaching retirement age on the basis that she was a woman constituted sexual discrimination under Directive 76/207?

2. That if so agreed, whether the terms of the Directive allowed for direct effect given the conflict between domestic legislation and Community law?

And so having referred the case to the European Court of Justice it was held that while the Health Authority relied upon the narrowness of meaning when determining the powers of legislation, they failed to appreciate that all Member States are obliged to adopt the principles of a Directive within a designated period (which on this occasion had long since elapsed), and that when doing so must adjust or if necessary, remove the applicable statute so as to give full effect to the meaning of the Directive. 

It was further noted how the Health Authority had sought to avoid the duties called for under Community law while expanding the terms of the Social Security Act 1975 beyond their meaning when deciding that pensionable age was a prerequisite to retirement, which amounted to nothing more than overt sexual discrimination against which the appellant had a valid and lawful right of claim.

Looking next to the effect of Directive 76/207/EEC it was argued by the Health Authority and the United Kingdom that the terms within were prescribed for the benefit or use of the Member State and not the individual, and that the terms of an non-implemented Directive excluded contracts between private parties. 

It was further argued that the State was entitled to be seen as a private employer for the purposes of the case, thus it was contended that the appellant was denied the right to bring action against the State and so a review of the Sex Discrimination Act 1975 was required before the continuation of proceedings. 

In stark contrast the Court upheld the appeal on grounds that a failure to adopt the Directive had rendered the Health Authority liable for penalty and thereby accountable at law as an emanation of the State, therefore a citizen could claim such rights within the domestic court in lieu of their non-implementation, before reminding the parties that:

“[W]herever the provisions of a Directive appear, as far as their subject matter is concerned, to be unconditional and sufficiently precise, those provisions may be relied upon by an individual against the State where that State fails to implement the Directive in national law by the end of the period prescribed or where it fails to implement the Directive correctly.”