Trade union – Legal proceedings – Action for wrong done to union

National Union of Mineworkers v Scargill: Chancery Division: 21 December 2012

The defendant held a number of high-ranking positions, including president, of the claimant National Union of Mineworkers (the union). In 1982, he took a three-year lease on a flat in London. The lease was renewable and was renewed regularly thereafter. The union agreed from the start to pay the rent and running costs of the flat and did so, with the exception of one period, for the remainder of the defendant's employment and after his retirement in 2002. The union also had a tradition of supplying coal to its officials for free, on a life-long basis. Where the individual's home was not heated by coal, an allowance was paid. It was common ground that the defendant was entitled to such an allowance relating to his home in Yorkshire, which was heated by gas, but an issue arose as to whether the entitlement was capped or covered the whole of any gas bill he might have.

During his employment, the union paid the annual costs associated with the security system installed in the Yorkshire house. The issue arose as to whether the union was obliged to continue following the defendant's retirement, and whether the defendant could continue to enjoy various benefits that he had enjoyed during the period of his employment with the union, and, if so, to what extent. The union brought proceedings against the defendant, seeking declaratory relief and an order for repayment of amounts paid to him since May 2005. The defendant counterclaimed for an order that he was entitled to the benefits and for the payment of the sums withheld, contending that the signatories to the agreements relating to coal and rent had acted in breach of fiduciary duty whilst acting as agents for the defendant.

The defendant contended that, in paying the rent for his flat, the union had been carrying out the equivalent of a union tradition whereby it would purchase a home in London for its presidents. He submitted that it was also customary for the union to pay for coal for its members, and that the union had taken a decision in 1975 that it should meet the heating costs of its national officials. The issue further arose as to how closely involved the defendant had been in the drafting of the contracts regarding the flat. The union contended that none of the contracts had been made with the authority of its National Executive Committee (the NEC), which was required. The defendant contended that the NEC had given the appropriate authorisation around the time that he had taken up the office of president. He further contended that, even if no authority had been given during his employment, the NEC had ratified the contract following his retirement. A further issue arose as to whether the defendant was entitled to the costs of accountancy work. It had been the practice throughout the defendant's presidency that the union or its local trustees would pay the cost of the union's auditors in preparing his tax bill. The defendant contended that that payment should continue following his retirement.

The court ruled: (1) The evidence did not support the submission that having the union pay the rent on the flat was a replacement for the custom of the union purchasing a house for its presidents. It was more likely that the understanding had been that the payment of the rent on the flat was a facility to enable the defendant to do his job properly, and that he retained the right in due course to have a house bought for him by the union. On the evidence, the defendant had been closely involved in drafting the contracts regarding the flat. The NEC had never approved the contracts, so that when the defendant retired, the contract that appeared to give him the right to have the union continue to pay the rent on the flat was not effective (see [168] of the judgment). The union had continued to pay the rent on the flat following the defendant's retirement without the knowledge or agreement of the NEC (see [168] of the judgment).

(2) With regard to the issue of fuel, there was no evidence that the 1975 decision was intended to create a distinct right beyond the putting of national officials in the same position as area officials regarding concessionary coal. There was no reason why national officials' entitlements ought not to have been capped like everyone else's. On the evidence, all that was left was the defendant's assertion that when he converted to gas he would be entitled to the full cost, but that could not by itself create a right that did not otherwise exist (see [176] of the judgment).

(3) On the evidence, the agreement to pay for the security system could not be taken to be limited to the defendant's employment. It was unrealistic to think that any security threat to him would instantly end once he retired. The union had to have contemplated that risks against the defendant would continue after his retirement, although they might diminish. The obligation would continue so long as the defendant or his widow occupied his current home (see [180], [181] of the judgment).

(4) Regarding the accountancy charges, it was reasonable to assume that during his employment by the union, a term of the defendant's contract was that the union would pay his accountancy costs. However, there was no basis on which any such obligation could continue following his retirement (see [184] of the judgment). The union was entitled to declarations regarding the issues of the flat, the fuel allowance and the accountancy costs (see [169], [177], [185] of the judgment).

(5) On the evidence, the claim for equitable compensation was fatally flawed. There was no evidence that any of the signatories to the agreements had acted in breach of any fiduciary duty whilst acting as agents for the defendant (see [188] of the judgment).

Nicholas Davidson QC and Damian Brown QC (instruct by Bird & Bird) for the union; Timothy Pitt-Payne QC (instructed by Finers Stephens Innocent) for the defendant.