Alan Auld Associates Ltd v Rick Pollard Associates & Anor

Persistent late or non-payment may constitute repudiatory breach even where time for payment is not of the essence. The issue is assessed by examining the cumulative impact of the breaches in the context of the transaction as a whole. Relevant factors include the centrality of payment, the seriousness and persistence of the defaults, repeated complaints and broken assurances, and what the history indicates about future performance. A contract for services may closely resemble employment where payment is the provider’s only earned income. An appellate court should respect the trial judge’s evaluative assessment where the judge has directed herself properly.

The claimant company engaged Dr Pollard under an oral engineering sub-consultancy agreement. It was to pay his monthly invoices promptly after receiving payment from the United Kingdom Atomic Energy Authority. The claimant repeatedly paid late, and more than £21,000 was outstanding by May 2006. Dr Pollard stopped invoicing through the claimant and treated the agreement as terminated.

The County Court dismissed the claimant’s claim for lost profit and gave judgment for the defendants on their counterclaim for £11,250.19, interest and compensation under the Late Payment of Commercial Debt (Interest) Act 1998. The appeal challenged the finding that time was or became of the essence and the conclusion that the repeated payment breaches were repudiatory.

1. Appeal dismissed. The Court of Appeal did not uphold the alternative conclusion that time was or had become of the essence. The respondent did not seek to support the judgment on that basis. The appeal was determined on the ground that the claimant’s repeated late payments constituted repudiatory breach.
2. Where the contract does not itself provide the answer, repudiatory breach is assessed by examining the impact of the breaches in the context of the transaction as a whole. The cumulative effect must be sufficiently serious to justify bringing the contract to an end. Not every deliberate breach, refusal or omission has that consequence.
3. Past breaches may be considered for what they show about likely future performance. Repeated defaults, complaints, broken promises and the prospect of continued non-performance may demonstrate that the defaulting party no longer intends to be bound, or intends to perform only in a manner substantially inconsistent with the agreement. Decro-Wall SA v Practitioners in Marketing Ltd [1971] 1 WLR 361 and Rice (T/A The Garden Guardian) v Great Yarmouth Borough Council [2000] All ER (D) 902 supported that contextual and cumulative approach.
4. The importance of payment in an employment contract, and the distinction between an isolated administrative delay and repeated persistent non-payment, provided an apt analogy for this contract for services. The court relied on Cantor Fitzgerald International v Callaghan and Ors [1999] ICR.
5. On the facts, payment lay at the heart of the agreement. None of the nineteen invoices was paid on time; most were paid substantially late; over £21,000 was outstanding; and the defaults continued despite repeated complaints and broken assurances. Dr Pollard was entitled to infer that the position would continue for the remaining project period. The claimant was therefore in repudiatory breach, which Dr Pollard accepted by ending the agreement on 7 June 2006. The County Court’s judgment was upheld.

• Court of Appeal (Civil Division): On 15 May 2008, Lord Justice Tuckey gave the leading judgment, with Lord Justice Longmore and Lord Justice Toulson agreeing. The appeal was dismissed.
• County Court: Recorder Deborah Sherwin dismissed the claimant’s claim and gave judgment for the defendants on their counterclaim for £11,250.19, interest and statutory compensation.