Case - Neal v Jones

[2002] EWCA Civ 1731, LTL 31/10/2002, Court of Appeal -

Appeal of the defendant ('J') from the order of Mr Recorder Tackaberry QC made on 5 December 2000 where judgment was ordered in favour of the claimant ('N') in a claim for personal injury arising out of a road traffic accident in 1997. J had admitted liability prior to trial and on the issue of quantum, the judge held that N be awarded #22,000 for past loss of earnings, #150,000 for future loss of earnings and #65,000 general damages. It was common ground between the parties that the judge erred in awarding N #65,000 for general damages and ought to have awarded #45,000. N, aged nearly 40, had been a specialist motorcycle engineer since the age of 16. He set up his own business in 1983, reconditioning Harley Davidson motorcycles. In 1985, he suffered injuries in a road traffic accident that was entirely his fault. In 1986, N and his son moved in with a woman ('T') and her two children. T sold her catering company in 1989 for #23,000 and with that money assisted in the purchase of a workshop for N's company. Shortly afterwards, T sold her house and invested a further #28,000 in N's company. The judge found that by 1987, there were two elements to the business, the engineering side managed by N and the retail side managed by T. The turnover of the business had risen from #38,000 in 1994 to #80,000 in 1997. Prior to the accident in 1997, N and T had been planning to install an MOT centre and were negotiating equipment prices. Following the accident, N spent 55 days in hospital and once discharged, was confined to his home for a further short period. N eventually returned to work, but it became apparent that N was unable to safety test or service motorcycles any longer nor lift heavy objects as a result of his injuries. There had been no formal arrangement in relation to the ownership of the business. It had been set up by N in 1983 and T had continued to see N as being in charge. T was a competent businesswoman and had significantly contributed to the business, not only in financial terms. In 1998, the DSS suggested that N seek employment through "Remploy". In order so to do, N had to cease ownership of the business and so transferred it to T. N then worked for the business in a far lesser capacity and was paid a gross rate plus overtime and Remploy could recover 65 per cent of the amount paid. N and T's relationship deteriorated shortly afterwards and by December 1999, they were living in separate homes. By June 2000, T and N's business relationship was sufficiently bad that T purported to dismiss N. He took no notice of the dismissal and took #200 per week from the till with T's knowledge. In July 2001, T found new premises and set up a new company taking all the spares, some of the machinery and all of the accounts and telephone number of the business with her. N then changed the name of the business that he was left with and represented it as a name change although it was in fact a new business. The judge felt that one of the issues to decide was in relation to the ownership of the business. This was important when calculating N's future loss of earnings. J had argued that the business was a partnership. N contended that the business was wholly his until it was transferred to T in September 1998. The judge held that T did not have a legal hold over the business. In relation to loss of earnings, the judge thought that a multiplicand of #10,000 with a multiplier of 15 was appropriate. Fresh evidence was called by the Court of Appeal in order to assist in determining the question of whether the business was a partnership between N and T or whether it was solely owned by N.
HELD: (1) In N's own evidence and in his written witness statement, N had claimed that, prior to the accident, he had owned the business "with my partner" T. It was possible that T was referring to T in an affectionate way and as the carer of his children. However, a little later on, he spoke of the business in the plural person, including the phrase "we owned everything relating to the business". When asked if he had ever referred to T as a partner in the business, N replied that he had. When changing the name of the business, N faxed his suppliers informing them that the name change arose as a result of "problems with an ex-partner" and "a partnership dispute". All of that evidence strongly suggested that there was a partnership between N and T. The facts were striking. There were two people, working together, hand in hand in a business. They bought the premises together, fitted it out together and bought the machinery together. There was clearly a partnership here. (2) In view of that conclusion, the court was required to determine the significance of that on the damages awarded to N. Regard had to be had to the decision in Kent County Council v British Railways Board (1995) PIQR Q42 where it was held that where one member of a two-person partnership was injured, the injured person could only claim for losses to that partnership to the extent of that person alone. Applying Kent (supra) in relation to past loss of earnings, the #22,000 quantum of loss had to be split in half, thereby awarding N just #11,000. In relation to the future loss of earnings, whilst the multiplicand of #10,000 was realistic, the judge based his findings on the basis that the business would have continued in its original form. However, the business came to grief and N and T parted ways. On analysis of the new business accounts, a more appropriate multiplicand was #8,000 with the multiplier of 15 thereby providing a figure of #120,000. That was the correct approach. (3) Accordingly, the judge's order would be amended to the extent that: (i) general damages would be adjusted to the correct figure of #45,000; (ii) past loss of earnings would be halved to #11,000; and (iii) future loss of earnings would be reduced to the more appropriate sum of #120,000.
Appeal allowed.

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