A Contract of Service is not a form of property
The employee coal miner was prosecuted for absenting himself from work. He was found liable by the justices and appealed. The basis of the appeal was that he had formerly been employed by the Hickleton Mining Company Limited. That had become amalgamated with other companies pursuant to a court order made under section 154 of the Companies Act 1929. He contended that his contract did not transfer when that amalgamation occurred and he could be criminally liable only if he was employed by the new company. Section 154(1)(a) provided that the court, in ordering the amalgamation, could make an order for the transfer to the transferee company of ‘the property’ of the transferor company. Section 154(4) then went on to provide that: ‘In this section the expression ‘property’ includes property rights and powers of every description and the expression ‘liabilities’ includes duties.’ The question was whether a contract of employment between the transferor company and an employee was included within the definition of ‘the property’ of the transferor company, such that on the amalgamation, the employment contract was, thereby, transferred from the transferor company to the transferee company without the consent of the employee.
Held: Section 154 did not apply to contracts of service.
It is a fundamental principle of the common law that an employee should not be compulsorily transferred against his will, and that it would require very clear language to achieve that result. (Lord Romer dissented)
Lord Thankerton said: ‘If it had been intended [by Parliament] to extinguish the rights of third parties, that should have been done ‘ by a clear, definite and positive enactment, not by an ambiguous one such as the section relied on in this case”
Lord Atkin said: ‘I confess it appears to me astonishing that apart from overriding questions of public welfare power should be given to a court or anyone else to transfer a man without his knowledge and possibly against his will from the service of one person to the service of another. I had fancied that ingrained in the personal status of the citizen under our laws was a right to choose for himself whom he would serve and that this right of choice constituted the main difference between a servant and a serf.’
Viscount Simon LC observed that Parliament would legislate only for the purpose of bringing about an effective result. Its intention can ordinarily be taken to be that an enactment, when brought into force, will not be futile but will have practical consequences for the life of the community. And it is for Parliament, not the Executive – unless Parliament confers the necessary power upon it – to determine when an enactment comes into force.
And: ‘a free citizen, in the exercise of his freedom, is entitled to choose the employer whom he promises to serve . .’
Lord Porter observed: ‘Having regard to these considerations I find myself thrown back upon a consideration of the meaning to be placed on the word ‘property’ in sub-s 1 (a). Prima facie I should not expect it to include non-transferable contracts. In truth the word ‘property’ is not a term of art but takes its meaning from its context and from its collocation in the document or Act of Parliament in which it is found and from the mischief with which that Act or document is intended to deal. The word is used in many Acts of Parliament but I propose to confine myself to the Companies Acts themselves. The Companies (Consolidation) Act, 1908, s 122 and following sections, and the Companies Act, 1929, s 156 and following sections, deal with winding-up. Sect 151, sub-s 2, of the former Act enacts that: ‘(2) The liquidator in a winding up by the Court shall have power, but (subject to the provisions of this section) in the case of a winding up in Scotland or Ireland only with the sanction of the court, – (a) to sell the real and personal property, and things in action of the company by public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels: . . (g) to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets.’
Sect 189 of the latter Act contains similar provisions. In neither case has it ever, so far as I know, been suggested that ‘property’ included anything other than property of which the company then in course of being wound up could dispose.’
Viscount Simon LC, Lord Thankerton, Lord Atkin, Lord Porter, Lord Romer
[1940] AC 1014, [1940] 3 All ER 549, [1940] 3 Al 1
Companies Act 1929 154
England and Wales
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Lists of cited by and citing cases may be incomplete.
Employment, Company, Constitutional
Leading Case
Updated: 02 November 2021; Ref: scu.280083