MIMI MONICA WONG v. MIRKO SACCANI AND ANOTHER

HCA 2061/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2061 OF 2004

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Dates of Hearing: 12-16 and 19 June 2006

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J U D G M E N T

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Overview

1.  The defendants, Mr Saccani and Ms Fairweather, are professional teachers of Latin and ballroom dancing and together operate a dance studio in Hong Kong.  The plaintiff, Ms Wong, is a keen amateur ballroom dancer.  She took Latin dancing lessons from the defendants from 2002 or earlier. 

2.  Ms Wong says that she had a series of three contracts with the defendants for dance tuition plus the services of Mr Saccani as her partner at dancing parties and international “pro-am” dancing competitions.  These contracts were for three periods, from November  2002 to October 2004, November 2004 to October 2007 and November 2007 to October 2012.  The contract prices were respectively HK$10 million, US$6 million and Sterling £5 million.  She paid the price of the first contract, and in respect of the second and third contracts, she paid in advance sums equivalent to about $62 million.  In August 2004 the first contract was terminated by Mr Saccani’s repudiation or otherwise.  Ms Wong now claims the return of her advance payments. 

3.  The defendants do not dispute that there was a contractual relationship, but they say that there was only one contract, revised and extended to cover the three periods.  They deny that the contract was terminated by Mr Saccani’s repudiation or at all; they say that it is still ongoing, that they are ready, willing and able to supply Ms Wong with the services contracted for, throughout the contract period, and that, whether or not she takes up those services, they are entitled to the advances already made plus the outstanding balance of £4 million, for which they counterclaim. 

4.  The trial attracted a good deal of publicity.  Ballroom dancing is a pastime enjoyed, I am told, by some very wealthy people in Hong Kong’s “high society”.  The plaintiff is a senior figure in private banking.  She spent what many people would see as an inordinate amount of money for the dancing lessons and the related services which the defendants provided.  It should be stated at the outset that these factors, and some at least of the other factors which have attracted so much publicity, are entirely irrelevant to the decision which the court has to make.  This applies in particular to the sums involved.  As Mr Coleman SC emphasised in his closing submissions,  normal contractual principles apply.

The plaintiff’s case

5.  The plaintiff puts her case on four alternative bases, namely:

(1) Termination agreement;

(2) Repudiatory conduct by Mr Saccani which Ms Wong accepted;

(3) Termination by Ms Wong under an implied term of the contracts as to reasonable notice; and

(4) Total failure of consideration in respect of the second and third agreements.

The defendants’ case

6.  As I have indicated, the defendants plead that there was only one ongoing contract which was varied by consent from time to time.  They deny that they offered or agreed to terminate this contract.  They deny that Mr Saccani’s conduct was repudiatory and say that even if it was, Ms Wong subsequently affirmed the contract and lost any right which she might have had to terminate it.  They further say that there is no total failure of consideration because the single contract was performed for almost 2 years and further that the plaintiff has no right to terminate the contract unilaterally, that they did not accept any termination and are continuing to perform it.

Background

7.  Ms Wong had a long-standing interest in ballroom dancing.  She started taking lessons in the late 1990s at the studio of a Mr Scott Todd in Wanchai.

8.  Ms Fairweather is a champion dancer.  She and her then dance partner, Mr Donnie Burns, were named World Professional Latin Dancing Champions fifteen times and were both awarded the MBE for services to the performing arts.  She retired from professional dancing and took to dance teaching in about 1999, when she came to Hong Kong with Mr Saccani, a much younger man who had competed in international professional Latin dancing competitions but not, apparently, to the same standard.  Together they went into business with Mr Todd at his dance studio in Wanchai, and ultimately they took over the studio.  They were married in 2001.

9.  Originally, Ms Wong took lessons from Ms Fairweather.  She paid per lesson, originally $1,000 and later $1,500 for a 45-minute lesson.  Later she started taking lessons from Mr Saccani as well.  Her interest increased almost to the point of obsession and she decided that she wanted to go into international competition dancing.

10.  In early 2002, Ms Wong made an oral agreement with the defendants for a package of lessons with both Mr Saccani and Ms Fairweather, practice sessions, and the attendance of Mr Saccani as her dancing partner at tea dances and dinner dances.  It was also agreed that he would be her partner at the Emerald competition in May 2002 and the Embassy and Miami competitions in September 2002.  These were “pro-am” competitions in the United States.  The cost of the package was US$133,931.43, which was equivalent to about HK$1,045,000.  Ms Wong typed a receipt for this package, dated 10 April 2002, which Mr Saccani signed.  That agreement is not part of the subject matter of this action.

11.  In about July or August 2002, the parties entered into a further oral agreement.  On the pleadings, Ms Wong calls this the first agreement, and the defendants the second agreement, which they say was subsequently varied by two further agreements.  The terms of this agreement were recorded by Ms Wong in a receipt for the final payment signed by Mr Saccani on the 19th of January 20, 2003, as follows:

“This is to confirm receipt of US$640,820 from Monica Wong being final payment for a two-year package for the period November 1, 2002 to October 31, 2004 covering the following:

- Unlimited sessions with Mirko Saccani

- Unlimited sessions with Gaynor Fairweather

- Unlimited practice sessions

- Unlimited parties

- Unlimited competition

- Priority for all the above”

12.  In this context, “unlimited” was taken to mean that there was no specific or maximum number of lessons or practice sessions, and “priority” was taken to mean that Ms Wong, who often had to travel on duty, would have priority in the booking of lessons and practice sessions over the other students of the dance studio, when she was present and wanted them.  She says that she was prepared to pay above the normal rate for this priority.  In fact it appears that Ms Wong went from taking five lessons per day, five days per week, the six lessons per day, seven days per week.  Ms Wong says that this happened in late 2003.  These were 45 minute lessons, and latterly she would attend for three of them at lunchtime and three after the end of the working day during the week, with different arrangements at weekends.

13.  It is not in dispute that Ms Wong paid a total of US$1,281,640, equivalent to about HK$10 million, for this two-year package.  The payments were made on 6 and 12 August 2002 and 23 December 2002.  All the payments involved in this case were made by transfer to Mr Saccani’s Swiss bank account.

14.  In early 2003, there were discussions between the parties about a further package of lessons.  I put this neutrally; Ms Wong says that, then and throughout, Mr Saccani constantly pestered her to take up further commitments and pay more money in advance.  This is of course denied.  I will return to it in dealing with the evidence. 

15.  In any event, the further package, which Ms Wong regards as the second agreement and the defendants as the first revised agreement, came into being in early 2003.  Ms Wong has produced an informal handwritten proposal by Mr Saccani calculating his price for this agreement at $14,104,000 per year.  

16.  Ultimately a total price of US$6 million was agreed.  Ms Wong paid, between 23 April 2003 and 2 April 2004, a total of US$1,940,000 and a total £2,217,590.93.  She wrote out, and Mr Saccani signed two receipts in respect of these payments, dated respectively 12 July 2003 and 23 May 2004.  The terms recorded were as before, with the addition in the second receipt of the following:

“No competition with any other student without prior agreement of Monica”

and this receipt also contained a summary of the payments received for the package. 

17.  The agreement that there would be “no competition with any other student without prior agreement of Monica” came into being following the parties’ attendance at a competition in Miami in 2003 when Mr Saccani partnered both Ms Wong and another lady named Ling Nelson, a person who figures in the evidence relating to the break-up of the contractual relationship and to the question of exclusivity but who has not herself given evidence.

18.  The third package which Ms Wong regards as the third agreement and the defendant as the second revised agreement came into being in about May 2004.  This was for the period from 31 October 2007 to 31 October 2012, and its price was £5 million Sterling.  Ms Wong says that payment was to be made by 5 annual instalments of  £1 million from February 2005.  It is common cause that Ms Wong paid £250,000 on each of 17 May and 6 July 2004, and £500,000 on 9 August 2004, i.e. £1 million in total.  The defendants plead that the balance was to be paid in 4 instalments from February 2005.  Again, Ms Wong typed, and Mr Saccani signed two receipts, dated 23 May 2004 and 15 August 2004 for these sums.  What was to be covered was written in the same terms as on the previous receipts.

19.  There is general agreement as to the services which the defendants were to provide in all three packages, be they separate agreements or variations of a single agreement.  In addition, the defendants say that Ms Wong was entitled to Ms Fairweather’s advice and assistance with her costume, makeup and other competition-related presentation matters.  In evidence Ms Fairweather produced a dress which she had had made for Ms Wong, which sported “millions of Swarovski crystals sewn on by hand” and she said that she used to put on Ms Wong’s face and body make-up for her, before the competitions.  I do not think there is any dispute about the extent of the extra services provided. 

20.  The defendants also say that it was agreed that upon payment by Ms Wong of the full consideration for the third package, they would cease teaching any other dance students apart from her.  This is disputed and I will return to it later.

21.  There is, I think, no dispute, and it came out in evidence that by the time the contractual arrangements came to an end in August 2004, Ms Wong was devoting a great deal of time to dancing and competition dancing in particular, and the defendants were both devoting a great deal of time to training her, preparing her for competitions and so forth.  She would pay their airfares, first-class, to attend the competitions with her, and it seems that at least on one occasion the trip was combined with a business trip on Ms Wong’s part and a visit to Naples in Italy in June 2003 when Mr Saccani visited his family there.  The parties would stay together in hotels and would use the hotel ballroom, where possible, for dance practice. 

22.  I think it is fair to say that the relationship between the parties became very close.  Ms Fairweather has described it in glowing terms; she said that Ms Wong was “my little project, my love and my heart”, and Ms Wong herself said, in a call to her friend Mr Howe, the recording of which was put in evidence, that it was “like an affair”.  An affair, as we know from the evidence, the relationship was not; but close it certainly was.  Ms Wong was the star pupil, quite unlike other ladies who only wanted social dancing, and to be partnered by their male teachers at tea and dinner dances.  Mr Saccani referred to them as “cows”.  The defendants spent a great deal of time on Ms Wong, according to them practically to the exclusion of all their other business, although this latter point is strongly disputed and in fact does not accord with their own records.  Again, I will return to this later in dealing with the evidence.

23.  It is also fair to say Ms Wong’s hard work, and the money she put in, as well as the hard work of the defendants paid off for both sides.  Ms Wong failed to make the finals in the Los Angeles and New York competitions in May and July 2002 (the latter not being included in the 2002 package) but then her dancing career took off.  She came first in the over-50 age group at the Los Angeles Embassy competition in early September, and second in the same category in the Miami competition in late September 2002. 

24.  In May 2003, at the Emerald competition in Los Angeles, she was awarded “Top Gold Lady” and came 4^th in the 18-50 age group, dancing against younger dancers.  In September 2003 at Los Angeles she was placed 3^rd in the 36-50 age group, and came first in the 50+ age group in Miami later that month.  In December of that year, she placed 4^th in the 18-50 group,  and was among the top three in the Rumba event.  She won a head-to-head event against the reigning champion, Pamela Butler. 

25.  In April 2004, at Los Angeles, Ms Wong placed 3^rd in the 18-50 age group and in May at a competition in New Jersey she placed first in the 36-50 age group.  At New York in July 2004, she placed 2^nd in the 50+ age group, and won two dances head-to-head against the reigning champion. 

26.  The next competitions were to take place in early September 2004, in Los Angeles and Miami.  As was common before competitions, Mr Saccani and Ms Wong went to practice at public dance sessions, in order to simulate, to some extent, the environment they would face.  These dances were  held on the afternoons of Wednesday 25 August and Friday 27 August at the Li Hua Restaurant in Causeway Bay. 

27.  It was at or after these dance sessions that the parties fell out, and the dispute between the parties arose.  I will deal below with what happened at the dances and in the few days  immediately thereafter, but it is not in dispute that Ms Wong took lessons on  Thursday 26^th and Saturday 28 August, and did not attend for lessons, as expected, on Monday 30 August 2004.  She wrote letters to Mr Saccani on both those days, though there is a dispute as to whether he received them.  She put the matter in the hands of her solicitors, who wrote their letter before action on 31 August; and then she applied ex parte on notice for a Mareva injunction, which came before Barma J on 3 September 2004.  The injunction was granted, but discharged by agreement on 14 September 2004 when the defendants paid into court the sums now sued for.

28.  It is as  well to set out here the two letters to which I have referred.  The first reads:

“Enclosed are the remittance instructions that you asked me to give you.  For the Nov 2004 - Oct 2007 package and the Nov 2007 - Oct 2012 package we have now both decided that we will not carry out and therefore please arrange for my money to be returned to me in accordance with the remittance instructions by the close of business on Wednesday September 1st. in the meantime we will continue with the current package which expires on October 31st 2004.”

I am sorry that I cannot attend the lessons today as I have urgent business I need to deal with.”

In the second letter, the first paragraph is the same, but the second paragraph reads:

“Until this matter is resolved, please do not issue tickets for the LA/Miami trip.”

Issues

29.  I have set out above the bases of Ms Wong’s claim and these are the issues for decision.  The first and second issues depend on heavily disputed questions of fact, but in effect boil down to the question of whether Mr Saccani or Ms Wong was in breach of contract.  This in turn depends largely on the credibility of the witnesses. 

30.  The third issue is an issue of mixed fact and law and requires the court to decide whether the term contended for can be implied.  It will only come into play if there was one single agreement, as the defendants say rather than the set of three discrete agreements for which Ms Wong contends. 

31.  Mr Westbrook SC, who appeared for Ms Wong, commenced his closing arguments by saying that on the undisputed facts alone, Ms Wong maintained that even if she was herself in breach of contract, she would still be entitled, in restitution, to recover her money.  If indeed there were three contracts, and total failure of consideration in respect of the second and third, I think this must be right.  On such a finding there would be  no need to consider the question of breach of contract.  However, credibility does to some extent come into the consideration of how many contracts there were and whether there was total failure of consideration.   It is therefore necessary to consider the evidence before going further, and then to deal in turn with the issues as set out above. 

Evidence

32.  On the plaintiff’s side the evidence came from Ms Wong herself, and from three other dance teachers, Messrs Redmond, Jordan and Foster; and there was some evidence from Mrs Foster, who was not present at either dance practice, to support Mr Foster’s evidence of his subsequent dealings with Mr Saccani over the matter of Mr Foster’s giving evidence.  On the defence side, the evidence came from Mr Saccani and Ms Fairweather, as well as her former partner, Mr Burns.  Another defence witness, Mr Bradbury, also gave evidence but he was only present on, and his evidence only related to, the dance practice on 27 August; and the defendants’ employee, Ms Tong gave evidence concerning the delivery or non-delivery of the second letter referred to above, on 30 August 2004.  There was also some evidence in the form of admitted statements, regarding the delivery of this letter.  

33.  The evidence came partly in the form of adopted witness statements, and entirely orally in respect of the incidents on the Wednesday and the Friday and subsequently.  I have been provided with a full transcript.  In addition, there were before me a transcript of a telephone conversation between Ms Wong and her friend, Mr Christopher Howe, on the evening of Friday 27 August, and transcripts of telephone conversations between Ms Wong and Mr Saccani on 30 August 2004 and subsequently.  I have been provided with the audio recordings also and, though only that of 30 August was played in the  course of the trial, I have listened to that and the others since then.  At the risk of being accused elsewhere of having failed to deal with some vital point, I will try to condense the  evidence and concentrate on its salient points.

34.  I need say little about the evidence of the dealings between the parties prior to the incidents of late August 2003.  I have already noted that Ms Wong says that she was constantly pressured to enter into greater commitments for money and time and that is why, according to her, she entered into the second and third agreements.  She says in particular that Mr Saccani demanded more money and more commitment during the preparation for the international competitions.  He also wanted more money after a competition, if the result had been good.  But the more money he got, the worse his attitude became, both on and off the dance floor.  Specifically, she says that on several occasions he told her that unless she paid more, the whole deal was off and he would repay the money he had received.  She also says that before they agreed on the three-year package, she said that she would like to stop after the two years, and see how it went, and then renew a year at a time, but Mr Saccani would not agree to that. 

35.  It is to be noted that several of the instalments were paid in the run-up to a competition.  Counsel has helpfully set out a chronology and I will not, therefore, detail the payments here. 

36.  I have also noted that Ms Wong was quite definite in her evidence that she never came to any agreement with the defendants that, once she had paid up the full price of the third package, they would cease to teach anyone else but her.  Nor does she admit to having asked the defendants to cease teaching other students and concentrate entirely on her, as they say she did.  She says that in February 2004, Mr Saccani suggested to her a 20-year exclusive commitment, for £30 million; but she regarded this as “crazy” and told him so.  She wanted to have, and she got, priority bookings; but this did not stop the defendants from taking other students.  In fact their own record, Exhibit D3, shows that Ms Wong was taking up between 40% and 60% of their time.  In any event, she says that she spent a third of her time travelling on business. 

37.  Mr Saccani and Ms Fairweather, for their part, say that there was such an agreement.  Indeed they paint a picture of Ms Wong having tried throughout to get them to stop teaching various other students of whose progress she was jealous, as well as, in particular, Ling Nelson. 

38.  I turn to the events leading up to the dispute.  On Wednesday 25 August 2004, there was a public dance practice at the Li Hua Restaurant from 3 to 6 p.m. In the run-up to the competitions to be held in Miami and Los Angeles in September, Ms Wong and Mr Saccani were to dance at this practice, as were Ms Ling Nelson and Mr Donnie Burns.  Mr Burns had taken on Ms Nelson as his first “pro-am” competition partner after the parties had reached their agreement that Mr Saccani would only partner Ms Wong at competitions.  Many people were there to watch, and particularly to see Mr Burns, the former world champion, performing. 

39.  It is not in dispute that things went wrong on the dance floor.  Ms Wong blames Mr Saccani; she says in effect that he lost concentration because the other couple was getting all the applause in the paso doble; and after that, in his eyes, she could do nothing right.  He shouted and screamed at her, using foul language.  She was used to this; he often used terms like “move your arse” or “lazy cow” in practice, in order to motivate her, and she accepted it.  But on this occasion, she claims, he went much further, and humiliated and embarrassed her in front of her friends, and those with whom she did business, among the spectators. 

40.  Mr Saccani for his part blames Ms Wong.  He says that she lost concentration because she was jealous of the applause for Mr Burns and Ms Nelson.  She danced badly, and he was trying to motivate her to move properly.  He admits to using terms like “lazy cow” and “move your arse”, and while he admits to some foul language says that he was swearing at Ms Wong’s dancing rather than at her; language such as “We are dancing fucking horrible (sic) today”.  He even admits, in cross-examination, that he screamed at her.  His version is that he was trying to motivate her to dance better and not like a “cow” which was what, on his own admission, he called the social dancing ladies who only wanted an instructor to partner them to tea and dinner dances. 

41.  Ms Wong says that in response to this treatment, she became quiet and “went into herself”; it was not her way to get into a screaming match.  She was upset.  At the end, she had tears in her eyes but no more.  At the end of the practice, Mr Saccani told her that he “never wanted to see her again”.  She told Ms Fairweather of this, and Ms Fairweather tried to comfort her as she left, telling her that it would be all right.  They both left the hall and on the way out Mr Saccani asked why she was still there. 

42.  Mr Saccani, however, says that Ms Wong was reduced to sobbing and shaking, not because of his behaviour but because she was overcome by jealousy for the fact that Ling Nelson was the star instead of herself.  She said that she herself was “an old fool”.  She had to be, in effect, wrapped up in her coat and bundled out of the place by Ms Fairweather.

43.  That evening, according to Ms Wong, she received a number of telephone calls from Mr Saccani.  In the beginning, he told her that everything was off, there would be no more lessons or competitions, and he would give her money back.  He also told her that he had someone else, who could give him £20 million, but that in order for him to get it, she had to be out of his schedule.  He asked for her account number, but she said that she did not have it at home; so he said he would send his maid for it the next day.  To this Ms Wong says she agreed, because notwithstanding the success and her great love for dancing, to be pressed with money all the time was “too much”.   

44.  There was then, according to Ms Wong, some rather inconclusive discussion of money in which Mr Saccani asked how much she had available.  She replied that she had £200,000 or £300,000, and the series of conversations ended with Mr Saccani saying “see you tomorrow”, i.e. for lessons as usual.  The next day she went for her dance lessons.  The reason she gives is that although she accepted that the arrangements would come to an end, the current contract had two months to run, and there was still a competition to do.  The atmosphere at the lessons was strained, and she says that at the evening session she suggested to Mr Saccani that he pay her back half the money and they “call it a day”; but he refused, saying that she would be out when he wanted her out. 

45.  Mr Saccani, for his part, agrees that there was a phone call or series of phone calls that evening, which he says came from Ms Wong while he was having dinner with Ms Fairweather, Mr Burns and the latter’s wife.  The call or calls lasted so long that he had to change the battery of his mobile phone.  He denies having said anything to the effect that the deal was off, or that he would return the money.  Ms Fairweather and Mr Burns, who apparently heard Mr Saccani’s side of the call or calls, say that they heard nothing of any suggestion to stop dancing or pay back the money. 

46.  On Friday 27 August 2004 , according Ms Wong, she received a text message from Mr Saccani asking if she could “send 250,000 today”.  She thought this must be a reference to the discussion of how much money she had, the night before, but took no notice because she was not going to pay any more.  She went to the dance practice, that afternoon, arriving about a quarter of an hour late.  She was asked about the £250,000 but said she would not pay it.

47.  At this dance practice, she says, Mr Saccani’s behaviour was much the same, with a lot of screaming and yelling; and at one point she walked off the floor.  Towards the end he said that he was not going to any competition, but could do a tea or dinner dance; and then, that he would not go to the competition unless he saw £4 million on Monday morning.  This she refused. 

48.  Ms Wong further says that at this practice, Ling Nelson was abused by Mr Burns.  Ling was upset, and at the end the two ladies sat and talked together for some time.  Ms Wong then went home, and that evening made the long telephone call, of which we have a recording, to her friend Mr Howe, another financier.  In the course of this call, the first letter set out above was drafted. 

49.  The next day, Saturday, Ms Wong went to the studio.  According to her, she took the letter, and gave it to Mr Saccani, along with the bank remittance instructions.  He read it, and gave it back to her.  But according to her, the atmosphere in the studio was “very much in competition mode”.  Donnie and Ling were there; and there was much talk about the competition, the dresses and so on.  She had not intended to have any lessons that day, but she finished up by taking them.  

50.  At the studio, Ms Wong wrote out a cheque for $100,000 for the air fares for herself and the defendants to go to the upcoming competition.  According to her, Mr Saccani took her cheque book from her bag, and asked her to sign the cheque; though this is denied by Mr Saccani, and by Ms Fairweather and Mr Burns as well.  In any event, she thought about the matter, and decided not to go to the competition, so she stopped the cheque on the following Monday.  It was also on the Monday, according to Ms Wong, that she got Mr Howe’s messenger to deliver the second letter to Mr Saccani at the studio.  Statements cover this.  The messenger, who did not give live evidence, obtained a receipt chop for the letter, on what appears to be a copy of the front of an envelope addressed to Mr Saccani.  

51.  Mr Saccani denies abusing Ms Wong at the Friday practice, although he says that she danced badly from the start.  He admits sending the text message to Ms Wong earlier.  His explanation is that on the Wednesday, Ms Wong had blamed him for teaching Ling Nelson too well, so that she stole the limelight.  She had asked him how much money he wanted, in order to stop teaching Ling, but he had told her just to concentrate on her dancing.  On the Thursday, at the studio, Ms Wong had asked him and Ms Fairweather to stop teaching Ling.  He had told her not to ask that, because  she had not yet paid the £4 million which she was supposed to pay for complete exclusivity; and then she had said that she had £250,000 available.  So he had sent her the message.  But he had never said that he wanted the £4 million as a condition for competing in Miami that September.

52.  As to the letters, Mr Saccani denies receiving them at all.  He called Ms Margaret Tong, the studio receptionist, who told a strange story that the messenger came with an envelope, which she chopped, but then walked off with the envelope while her back was turned, as she went to replace the chop in the cupboard in another room. 

53.  So far as the other witnesses are concerned, those called by Ms Wong support her, and indeed provide more detail on some points than she has provided.  Mr Redmond says that on the Wednesday he was trying mainly to watch Mr Burns dance but found his eyes drawn to Ms Wong and Mr Saccani who were obviously having problems.  He describes Saccani’s actions in trying to fix Ms Wong in position as being abnormal; he says that Mr Saccani’s voice grew louder as the dancing wore on and that he used a lot of foul language; that he had “killer eyes” and that at one stage he threatened, verbally, to smash Ms Wong’s head against the far wall.  Ms Wong retreated more and more into herself.  Mr Redmond did not see her cry, but at the same time he did not see her leave.  As to the Friday practice, Mr Redmond describes Mr Saccani’s behaviour as being the same as on the Wednesday.  He confirms that on that day, after the dancing, Ms Wong stayed at her table, talking to Ling.  In Mr Redmond’s view, Mr Saccani’s behaviour might have been acceptable as between professional partners was entirely unacceptable when coming from a teacher to his student.  

54.  Mr Jordan is, it appears, Ms Wong’s current dance teacher; she is paying him $165,000 per month for his services.  He was present at one of the two dance practices; he thinks it was the Friday because he remembers that Ms Wong and Ms Nelson stayed behind at the end.  He also gives evidence that Mr Saccani behaved aggressively and raised his voice to Ms Wong on the dance floor, though he did not hear what was said.  Ms Wong remained emotionless and tried to do things over again.  In addition Mr Jordan says that at one point when Mr Saccani led Ms Wong off the floor, as they passed some water containers, Mr Saccani indicated the containers and said “If you do that again, I am going to smash that over your fucking head.”

55.  Mr Foster is another young dance teacher.  He was for some time Ms Wong’s instructor, in the early stages of her interest in dancing, and before she took lessons from the defendants.  He says that he was at one of the dance practices but cannot remember which.  On that occasion, he noticed that “things became loud” between Mr Saccani and Ms Wong.  To him, that was not unusual in the run-up to a competition, but Mr Saccani’s behaviour became progressively more aggressive and his voice louder, throughout the afternoon.  At one stage Mr Foster, passing by the couple as they practised in a small area off the dance floor, heard Mr Saccani say “If you don’t get it fucking right, I’ll throw you out the fucking window.”  Ms Wong did not react to Mr Saccani’s behaviour throughout the afternoon though she appeared to become more subdued as time went on. 

56.  Mr Foster also gave evidence of a dinner party given by Mr Saccani and Ms Fairweather, which he and his wife Lisa attended.  They were invited back to the couple’s flat after dinner, and there Mr Saccani talked about the court action.  He told Mr Foster of his intention to defend, and “take it all the way”, and also said Ms Wong had misunderstood him.  At some point he had nearly tripped, and had sworn at his own lack of balance; he had not been swearing at Ms Wong.  Mr Foster now says that this was not what he remembered, but at the time he did not wish to say that his host was in the wrong, so he kept quiet. 

57.  Later, according to Mr Foster, Mr Saccani contacted him on two occasions and asked him to make a statement.  The first time, he refused, saying that he did not want to be involved; and the second time, Mr Saccani said that it would be made “financially advantageous” for him to do so; but still he refused. 

58.  Mr Foster also says that he was brought in as a witness at the request of Ms Wong.  He was asked early on, but said that he did not want to be involved.  Later, however, he was told of an untrue allegation that Ms Wong had stopped employing him as her teacher following a dispute over unpaid fees for a competition.  He was told that he was involved anyway, and so had agreed to give evidence. 

59.  Mrs Foster also gave evidence.  She was not present at either of the dance practices.  Her evidence concerned the later meeting at Mr Saccaní’s and Ms Fairweather’s flat.  She remembers nothing specific save that Mr Saccani talked about the case, became excited and called Ms Wong a “fucking bitch”, but then Ms Fairweather chided him, and calmed him down. 

60.  The specific incidents spoken to by these supporting witnesses do not appear in Ms Wong’s own evidence.  She says that she does not remember specifically all that was said to her.  Mr Saccani for his part denies the allegations made by these witnesses.  He did however explain under cross-examination that he had on one occasion tripped and fallen, and had sworn about that.  He had explained as much to Mr Foster later, after the dinner party; and Mr Foster had agreed with him that that was what happened. 

61.  Turning to the defence evidence, I think I have already largely covered the salient points in that of Mr Saccani.  So far as the situation prior to the two incidents in August 2004 goes, his position is that he never pressed Ms Wong to pay more money, or to commit to longer periods; she pressed him more and more for priority and exclusivity, which caused his studio to lose students.  In exchange for granting her demands Ms Wong was prepared to make long-term commitments and pay more. 

62.  So far as the incidents at the dance practices are concerned, Mr Saccani’s position is as I have outlined it above.  In general his position is that he was doing no more, in terms of using motivational language, than he normally did.  He denies having gone further than that.  He denies having said that he would stop teaching, or pay back the money already paid.  He denies having demanded advance payment of the rest of the fees for the third package, before he would accompany Ms Wong to Miami in September 2004. 

63.  Ms Fairweather’s evidence was generally in agreement with that of Mr Saccani.  So far as the Wednesday practice is concerned, she says that Ms Wong completely lost focus because of the attention and applause for Mr Burns and Ms Nelson.  Mr Saccani tried to correct matters, and to lift her performance by shouting at her to move, to “shift her arse” and the like, and using epithets like “lazy cow”.  But he did not use foul language, and overall he used no more than his normal motivational tactics.  Ms Fairweather confirmed the distressed state of Ms Wong at the end of the practice and the words spoken by her, that she was an old fool and the like, and that she had to be taken away, sobbing and shaking. 

64.  Ms Fairweather says that she heard nothing of any proposal to stop dancing and repay money although she was present with Mr Saccani when he spoke on the telephone to Ms Wong that evening.  As to the lessons on the Thursday, she says in effect that all went normally.  As to the Friday dance practice, her evidence is, again, that Mr Saccani used no more than his normal motivational speech and tactics.  She denies that there was ever any threat of violence at either practice. 

65.  So far as the incidents on the Saturday go, again it was “business as usual”.  Ms Fairweather agrees that Ms Wong paid $100,000 by cheque but confirms that there was no question of Mr Saccani taking the cheque book from her handbag.  She says that he knew nothing of any letter being given or sent to Mr Saccani by Ms Wong.  

66.  I have already mentioned the evidence of the receptionist.  The other major witness for the defendants was Mr Burns.  Again he was present at both the dance practices, and at the dinner on the Wednesday night when Mr Saccani spoke to Ms Wong on the telephone.  He was also at the studio on the Saturday.  His evidence is entirely supportive of that of the defendants.  Indeed he paints an even milder picture of Mr Saccani’s behaviour at the dance practices than does Mr Saccani himself. 

67.  Finally there was Mr Bradbury.  He was only present on the Friday.  He too says that Ms Wong was watching the other couple, and that she looked unhappy; but so far as Mr Saccani’ behaviour goes he denies that there was anything aggressive in it, and says that he heard no raised voices. 

68.  Mr Westbrook, in cross-examination of the defendants and subsequently, placed much reliance on their own accounts and appointment book, to attack their credibility generally and in particular on the questions of exclusivity and priority, and how much business they lost by concentrating on Ms Wong.  I will return to that in due course.  However I should also mention here the last and perhaps most important document, which is the transcript of Ms Wong’s telephone conversation with her friend Mr Howe on the Friday evening.  The live recording was also available, and though it was not played in court, I have listened to it. 

69.  The telephone conversation is not, strictly speaking, evidence.  It is or contains prior statements of Ms Wong.  It was brought in at the instance of the defendants for the purpose of cross-examination of Ms Wong, in order to attack her consistency and credibility.  However, it is, and there is no dispute about this, admissible for all purposes, both to confirm as well as to contradict Ms Wong’s evidence in court.  See R v Riley, (1866) 4 F&F 964.  It is noted that Mr Howe recorded all calls made to his office, but (as is clear from the recording itself), Ms Wong did not know that, until Mr Howe told her so in the course of the conversation. 

Evaluation

70.  I will of course comment on the demeanour of witnesses, but demeanour is often said to be an uncertain guide to truthfulness.  Rather the live evidence has to be assessed against the undisputed or indisputable facts, the inherent probabilities of the situation described, and the contemporaneous documents and records. 

71.  Ms Wong herself appeared to be quite straightforward.  She was unemotional, which is a description given to her by many of the witnesses.  Certain minor discrepancies came out in cross-examination, such as her assertion that she did not win the Top Gold Lady Award, and the absence of matter in her Mareva affidavit concerning having been, apparently, pushed into writing the cheque for the air fares, but these are pretty much matters of peripheral detail.  The award is peripheral, and so is the cheque book, given that there is no dispute that she signed the cheque.  I do not see that it needed any mention in connection with the Mareva injunction; ample grounds were put forward and accepted by the judge.  I do not see that these matters detract from the rest of her evidence. 

72.  It is suggested that she has embellished or exaggerated various aspects of her case, or simply made them up; and reference is made to various aspects of her evidence in this connection.  It is also suggested that her “desire to paint herself as a financial pushover” is at odds with her extensive financial experience and her position at work. 

73.  On this last point, there was extensive reference, in cross-examination and argument, to what Ms Wong had said about herself in a magazine interview.  I have recently had newspaper and magazine articles put before me in other cases, and I have to say that I do not approve of this practice.  It is all very well to point to what is said by a witness to a newspaper reporter in an interview, but one has to remember that what is written is filtered through the mind and the pen of the reporter before it gets to the printed page.  But that is by the way.  What is clear in this case is that Ms Wong was affected very much by her obsession for dancing.  It is common enough for any professional person to act, in private life, in a way which one would not expect him to act professionally.  That is particularly so when the person is acting in pursuit of some private matter which concerns him or her obsessively. 

74.  The telephone conversation with Mr Howe is, in my view, very important in assessing Ms Wong’s credibility and accuracy.  It was put in to attack her, but that has rebounded.  Mr Coleman has referred to various passages which indicate incredibility, and in particular an attempt to trick Mr Saccani in later recorded telephone conversations.  He also argues that the transcript does not reveal any belief by Ms Wong that the contractual arrangements had been terminated by agreement.  Conversely Mr Westbrook has referred to a large number of passages which, according to him, support Ms Wong’s evidence. 

75.  I will not set out the passages verbatim.  Mr Westbrook has listed them, and they can and no doubt will be referred to elsewhere if the need arises.  It is necessary to bear in mind that Ms Wong is speaking quite unguardedly to her friend, not knowing that what she said was being recorded.  Nor, sometimes, does she speak entirely coherently or clearly.  But on various points she was quite clear, and what she says is entirely consistent with her evidence. 

76.  In particular, it is consistent with her evidence that:

· there were separate contracts; that Mr Saccani had nagged her, or induced her with threats to stop dancing, to take on the second and third contracts and to pay more money;

· that although she accepted shouting and screaming during teaching, this time there had been a complete breakdown, as a result of which she felt she could not continue with him, because the relationship was not going to work;

· that Mr Saccani had told her on the telephone that he would stop teaching her and repay her money according to her bank instructions, and that she had been ready to give him the bank instructions for the repayment, and had them in her locker at the studio on the Thursday;

· that she now expected Mr Saccani to say that it was she, rather than he, who wanted out of the arrangements;

· that he had said to her on the Friday that he would not compete with her any more, but would continue to teach her for tea and dinner dances; and that ultimately he had demanded that she hand over £4 million by the following Monday, or he would not go to the competition. 

77.  There is even to be found in the telephone conversation some explanation for what might have prompted Mr Saccani to send a message asking for £250,000, and why she suggested repayment of half the money on the Thursday. 

78.  It is also obvious from the recorded telephone conversation on 30 August 2004 that Mr Saccani was not denying the complaints made against him.  Rather he is saying that he did not mean what he said; he was only saying the words for motivational purposes.  Again, Mr Westbrook detailed the admissions in argument and it is not necessary to repeat them here.  Suffice it to say that what Mr Saccani said on the telephone is much more consistent with Ms Wong’s evidence than with his own. 

79.  It is also clear from that telephone conversation that Mr Saccani must have received either the letter of 28^th or the letter of 30^th August or both, because he knew that Ms Wong wanted him to pay the money by the following Wednesday.  This gives the lie to his evidence that he never received either letter.  It also gives the lie to Ms Tong’s evidence of the messenger taking away the evidence for which the receipt had been chopped.  That evidence is incredible in any event, because there was no possible reason for Ms Wong or Mr Howe or anyone in his organisation to arrange to take away the letter which was intended to reach Mr Saccani that day.  The fact that the evidence was given suggests that the defendants have put their witness up to giving it, which has an obvious negative effect on their credibility.

80.  Turning to the other prosecution witnesses, it is true that they give detail of specific physical threats, which Ms Wong does not mention, but she did say that she could not recall the exact words used.  It is true that she said in cross-examination that Mr Saccani did not threaten to strike her but that was in the context of her saying that he looked fierce, and as though he wanted to do so. 

81.  Mr Redmond was a straightforward and apparently credible witness.  So was Mr Jordan.  Mr Foster was obviously reluctant and he gave a rather silly answer when I said that I could not hear him properly, but I put that down to nervousness.  Mrs Foster was also apparently credible, but really her evidence was not of much assistance one way or the other.

82.  It is suggested that the witnesses are not credible because they might have discussed their evidence beforehand and it has become exaggerated in the re-telling.  Further it is said that Mr Jordan, by reason of his present employment by Ms Wong, has good reasons to give to support her.  I have duly taken these points into account.  But overall there is nothing to make me suspect that these apparently credible young men might not be telling the truth.  If they are not, it means that each of them has made up a different story of a threat, made by Mr Saccani at different times and in different circumstances.  Now while they did come in late, and for various reasons which they have explained, and while it is always possible that exaggeration can creep into the memory, there is really nothing to explain why they should all go in for independent perjury. 

83.  Turning to the defence, Mr Saccani himself was a poor witness.  Apart from admitting to having screamed at Ms Wong, as I have already mentioned, he was constrained to admit to a great deal more than that.  He could not explain away what he said on the telephone.  He was quite unable to give any sensible explanation of the rather ridiculous figures in his company accounts, and it became apparent that his story of having lost nearly all his other students because of Ms Wong’s excessive demands for priority and exclusivity simply did not agree with his own records. 

84.  The same description applies to Ms Fairweather.  Again, she was pretty well demolished in cross-examination.  She kept trying to assert the unassertable, such as that her husband did not use the word “fucking” when it is quite clear from the telephone recordings that he uses it with the frequency of a labourer.  She tried to paint a picture of his behaviour at the practice sessions which did not agree with his own admissions.  Like him, she too could not explain the discrepancy between her own records and her story that she had started off with many students but had been reduced to having very few. 

85.  As to Mr Burns, his demeanour was very good.  He delivered a superb “exit line” at the end of cross-examination, when, his voice ringing with sincerity, he said that he “would not come all the way from London or anywhere else and perjure himself in court for anybody or anything”.  No doubt he is telling the truth as he sees it.  However, his evidence as to what happened on the Thursday and the Saturday does not assist much.  As to what happened at the dance practices, he paints a picture which does not really agree with Mr Saccani’s own admissions.  For instance he did not hear the screaming which Mr Saccani admitted.  Mr Burns was himself heavily engaged in dancing to competition standard and this would affect the amount of attention he could pay to other matters.  He said, indeed, that Mr Saccani might have screamed whilst he was not paying attention or was too far away.  Further, it must be remembered that he is very closely connected, over the years, with Ms Fairweather, and he was in court, in his own words, because “the integrity of us all has been called into question”.  Unconscious bias cannot be ruled out.

86.  Mr Bradbury likewise told a story which simply does not accord at all well with what all the plaintiff’s witnesses say and with what Mr Saccani admits.  He claims quite simply not to have seen any angry or aggressive behaviour.  That simply cannot be right.  

87.  A minor point on which Mr Bradbury agreed as, I think, did all the prosecution witnesses who were present, is that at the end of the practice on the Friday, Ms Wong and Ms Nelson sat and talked together for some time.  This agrees with what Ms Wong herself says.  This cannot be reconciled with the defendants’ story of extreme jealousy felt by Ms Wong for Ms Nelson, such that it would cause her to dance badly and ultimately reduce her to a sobbing, shaking wreck.

88.  Overall, I find the plaintiff’s version of events much more believable than that given by the defendants.  Where there is a conflict, other things being equal I prefer the evidence of Ms Wong and her witnesses to that of the defendants and theirs.  With this in mind I will return to the issues as set out in the pleaded bases of Ms Wong’s case.  However, before doing so it is necessary to establish how many agreements there were.

Three contracts or one?

89.  This is important primarily in relation to the plaintiff’s claim for restitution of the price of what she calls the second and the third agreements and in respect of which she claims total failure of consideration.  If there was only one agreement, there was at most partial failure of consideration and, while damages may be appropriate, there would be no ground for restitution.  It is less important in connection with repudiation; if Mr Saccani repudiated, he repudiated everything, whether there were three contracts or one.  So far as the implied term is concerned, this would really only come into the picture if there was one contract rather than three. 

90.  There was some suggestion that the question of whether the second and third packages, as they have been called in evidence, represented separate contractual agreements, or agreements to vary the contract for the first package, was a question of law for the court to decide.  I do not think that it right.  It is not a matter of interpretation; it is a question of fact.  Did the parties agree to bind themselves for three separate periods, or did they start off with one period and then extend it twice? One has to look to the evidence of Ms Wong and Mr Saccani, for Ms Fairweather, it appears, did not concern herself with the financial and contractual side of the business.  

91.  It is true that the agreements were made orally and such records as were made were made later in the form of receipts.  The receipts do not record all the terms; in particular they do not record the total price.  This does not mean that they are to be disregarded, however.  They record the basic terms, and Mr Saccani signed them.  Each of these receipts refers to a “package” which runs for a specific period, although the total contract price is not recorded.  The later receipts do not incorporate the three packages into one.  On the face of these documents, there are three separate and distinct agreements.

92.  Ms Wong and Mr Saccani in their written statements refer respectively to a series of three agreements and to one agreement with variations.  The witness statements are, of course, written by lawyers, but the general tenor of both witnesses’ evidence in chief was to the same effect.  As I have indicated, there is matter in the telephone conversation with Mr Howe which clearly shows that Ms Wong understood there to be three separate contracts, before any lawyer could interpret the situation in his client’s favour.  Lengthy cross-examination of Ms Wong, as to how and when the various agreements came into being  produced no significant admission that the parties ever made anything but three separate agreements.  Lengthy cross-examination of Mr Saccani produced an assertion that the number of agreements had been discussed, but he could not be more specific.

93.  Mr Coleman says that if some of the benefits of what Ms Wong calls the second and third contracts were provided prior to the expiry of the first contract, there could not have been discrete agreements.  In particular he relies on the agreed fact that the existing arrangements were varied by introducing the further requirement that Mr Saccani would not partner any other student in competitions without Ms Wong’s consent.  This, he says, is inconsistent with discrete agreements and the variation is consideration for which subsequent payments were made, so that there can be no failure of consideration.

94.  However, it is agreed that the agreement for the 2004 - 2007 package was made in early 2003.  The first receipt is dated 23 April 2003.  The agreement for exclusive partnering at competitions came later, after Mr Saccani had partnered both Ms Nelson and Ms Wong at the competitions in September 2003.  It only appears in writing in the second receipt dated 23 May 2004.  It cannot be inferred from these facts that the exclusive partnering variation was entered into as part of the consideration for the 2004 –2007 package which had not yet commenced. Nor indeed can any reliance be placed on the fact that the number of lessons per week increased; that increase also came into being in late 2003.  The fact is that parties may vary a contract by mutual agreement (See Chitty on Contracts, para. 22-032).  This the parties did, during the currency of the first agreement.

95.  It is true that a variation requires consideration.  The learned authors of Chitty at paragraph 22-035 refers to a “line of authority of respectable antiquity” that an agreement without consideration is not effective to vary the contract, though they also refer to the more liberal recent approach to finding consideration.  But I do not think this matters.  If a variation is supported by consideration it will be enforceable; if it is not supported, it will not be enforceable.  The courts will often go out of their way to find some form of consideration, however notional, in order to give effect to an agreement.  But it does not follow from the fact that parties in fact agreed a variation between themselves, that there must have been consideration for it.  What is at issue here is whether it follows from the fact that the parties agreed to exclusive partnering and more lessons, and executed that  agreement, somewhere in the course of the first package, and after the second package was agreed on but long before its performance started, that there was one single contract, or that the agreement for exclusive partnering must have been part of the consideration for the second package.  I do not see that this follows. 

96.  It is also argued that in return for more money and longer security, the defendants agreed to make their current obligations more onerous; and therefore there was only one contract.  It is true that that the defendants’ obligations became more onerous over time; the number of lessons per week increased; but as I have indicated, that cannot be taken as linked to the second package. 

97.  There is also an attempt to bring in the waiver of the remaining US$500,000 for the 2004 – 2007 package as part of the consideration for the 2007 – 2012 package.  I do not see that this is right either, because when that waiver was granted, neither of the packages had yet begun and no services had been provided under either of them. 

98.  I have set out my views on the relative credibility of Ms Wong and Mr Saccani.  Where there is a dispute, on this point, I prefer the evidence of Ms Wong.  Her evidence accords with the terms of the documents.  It seems to me that the notion of a single agreement is a lawyers’ construct rather than something actually agreed between the parties.  I find, therefore, that there were three separate agreements.  The only consideration Ms Wong gave for the second and third agreements was the money she paid for them in advance.  She received no consideration in return for those payments, and necessarily would not do so until performance of those agreements began on their agreed dates of commencement.

99.  I am also satisfied on Ms Wong’s evidence that she entered into these separate agreements from time to time because of pressure by Mr Saccani, rather than in return for any specific extra benefit such as extra lessons per week or exclusivity in partnering at competitions.  I realise that there is no issue as to voluntariness, but that does not mean that there was no pressure in fact. 

100.  As to the defendants’ contention that it was agreed that on payment in full for the third package, the defendants would cease to teach any other dance students, I do not believe this.  No doubt the defendants would have liked to have it; what professional person would not want a single client, especially one spending a third of her time out of the territory, to put up something like £8 million, for 8 years’ work? It is practically a retirement fund.  No doubt that is what Mr Saccani was seeking when he demanded the balance of  £4 million to go to the competition.  But even on the defendants’ own pleaded case, they were not due to receive the full balance, and in return to give full exclusivity, until February 2009.

101.  Having heard the witnesses, I do not believe that it was ever agreed.  I believe Ms Wong’s evidence that there was never any agreement for total exclusivity.

The first issue – termination agreement

102.  Ms Wong’s pleaded case is in the telephone conversation on 25 August 2004, the telephone conversation the same evening he said words to the effect that the defendants were bringing the contractual arrangements to an end.  In the course of that conversation it was agreed that the defendants would repay the money paid for the second and third agreements in accordance with Ms Wong’s remittance instructions and the defendants would perform the remainder of the first agreement (paragraph 11).

103.  I accept Ms Wong’s evidence that Mr Saccani said words at the dance practice to the effect of “I never want to see you again” and later “Why are you here?”

104.  I also accept Ms Wong’s evidence that Mr Saccani later said words on the telephone to the effect of “Everything’s off, no more lessons, no more competitions, I will give your money back”, and that thereafter it was agreed that he would pay in accordance with bank instructions which Ms Wong would provide.  Just what money was to be paid back is not clear, however.  What is clear is that the lessons were to continue next day.  Ms Wong seems to have inferred from this that the first agreement was ongoing, but the others would not start, and that seems a reasonable inference.  The problem is that she does not say clearly that this is what was agreed. 

105.  The following day, again on Ms Wong’s evidence, she said to Mr Saccani words to the effect of “ why do you not give me back half the money and we will call it a day?”.  Mr Saccani refused, and said that she would be out when he said so.  There is some difference between this and what she reported to Mr Howe of that conversation, (“maybe we should stop this”).  I am not much concerned about that, for one cannot expect absolute agreement between the evidence and the conversation, but both in cross-examination and re-examination Ms Wong explained (as she had also told Mr Howe) that she made the later suggestion of paying half because did not think Mr Saccani would honour his words of the evening before.  As we know, she was not wrong. 

106.  Looking at the averments of a termination agreement, however, it seems to me that even on Ms Wong’s own evidence it is not clear that during the telephone conversation, the parties had made a binding agreement to terminate their contractual relationship after the end of the current contract.  The necessary certainty and unambiguity is lacking.

The second issue - repudiation

107.  This is pleaded under two heads.  The first is that Mr Saccani evinced an intention not to be bound further by any of the three agreements (paragraph 10 of the Amended Statement of Claim); in other words, an oral renunciation.  The second head, pleaded in paragraphs 10A and 10B, is that Mr Saccani’s conduct on 25 and 28 August at the dance practices amounted to a breach of the implied term pleaded at paragraph 9A and was a repudiatory breach of all three agreements.  At paragraph 13 it is pleaded that  Ms Wong accepted the defendant’s repudiation of the second and third agreements.

108.  The implied term pleaded is that the parties would act towards one another in a manner consistent with the maintenance of the mutual trust, confidence and respect necessary for the proper functioning of the teacher and student and dancing partner relationship between the parties. 

109.  In their Amended Defence and Counterclaim at paragraph 18 the defendants deny that the parties’ contractual relationship included this implied term.  However in argument, Mr Coleman accepted that such an implied term would be necessary and appropriate.  Applying the principles set out in the BP Refinery case (see below), I have no doubt that this term is to be included. 

110.  There is also Mr Saccani’s demand on the Friday for £4 million as a condition for going to the competition.  The words quoted by Ms Wong are “Well, not going to any competitions, I can do a tea dance, a dinner dance”, and  “Not going to the competition unless I see 4 million pounds on Monday morning.”  This is not pleaded as part of the repudiatory breach but I have no doubt that it could be so regarded, whether as a separate verbal repudiation or as part of the breach of the implied term as to maintenance of mutual trust and confidence.

111.  There is no dispute that proof of a party’s intention not to perform requires an investigation of, inter alia, the nature of the contract, the attendant circumstances and the motives which prompted the breach: Heyman v Darwins Ltd, [1942] AC 356; Spettabile Consorzio Veneziano v Northumberland Shipbuilding Co., [1918-1919] All ER 963; Woodar Investment Ltd v Wimpey Construction Ltd [1980] 1 All ER 571.

112.  It is further not in dispute that an ambiguous statement will not do, nor will a statement which casts doubt, even grave doubt, on the party’s willingness to perform; see Jaks (UK) Ltd v Cera Investment Bank SA, [1991] 2 Lloyd’s Rep 89.

113.  As to whether the words spoken at the dance practice amounted to repudiation, the obvious implication of the words is that the whole relationship is at an end, so far as Mr Saccani is concerned.  They might have simply been “wild and whirling words”, to use the language of the criminal law, but although Mr Saccani said later on the telephone that he had said words he did not mean, he did not say that in evidence; he denied saying the words at all.  I do not believe his denial that the words were said.  When one takes them in context with what he said later on the telephone it is clear that, on the Wednesday, he did not intend to be bound further, and he evinced that intention.  There is no ambiguity there.  Subsequent conduct by Mr Saccani, in particular offering lessons the next day, would show that he did not intend to end the first agreement, which was being performed.  It would not show ambiguity as to the intention end the second and third agreements and pay back the money. 

114.  The next question is whether Ms Wong accepted the repudiation.  I have no doubt that she did, either by the first or at the latest, the second letter.  I do not think her actions in between affect the position.  She would have a reasonable time to make her mind up; see below.  In any event, one cannot look at the oral renunciation in isolation.  Mr Saccani’s conduct was all part of the same ongoing process that started on the Wednesday and went on through the Friday. 

115.  I turn to the question of whether the conduct of Mr Saccani breached the admitted implied term of mutual trust and confidence.  The defendants’case is that normal “motivational” language was used.  I do not believe that.  I have accepted Ms Wong’s evidence and that of her witnesses and find that the conduct went much further than the kind of motivational language she had accepted in the past.  Further, this was not in the studio; it was at two public performances.  I accept that Ms Wong was humiliated by Mr Saccani’s treatment of her.  I have no doubt that Mr Saccani breached the implied term on both occasions. 

116.  I have also found as a fact that he demanded £4 million by the Monday morning.  He was not, by any stretch of the imagination, entitled to that; even on his own pleaded case, it was payable by instalments starting in 2005.  I have not accepted his story that there was an agreement that it should be paid in advance, in consideration of exclusivity.  It is interesting to note his reactions on this matter during the telephone conversation on 30 August 2004.  At first he said that he was “just pissed at you to make you dance properly”.  Later, that he was “just trying to get some guts on the bleeding floor…trying to get the best out of you”.  Later he denied asking for money at all, and when that was disputed, said that he “would just like to get my payment sooner, I can get rid of my cows”.

117.  In the first place, there is no assertion in that conversation that the £4 million was payable in return for exclusivity; only that that is what Mr Saccani wanted, as I have no doubt he did.  In the second place, the demand could not by any stretch of the imagination be regarded as motivational.  It was quite unwarranted and it was backed by a threat not to attend the competition, i.e. to breach an agreed term of the existing contract.

118.  It is argued that Ms Wong cannot rely on the threat as repudiatory.  The contract was in the course of performance and the same rule applies as with anticipatory breach, namely that the party in breach has an opportunity before the repudiation is accepted to cure it by withdrawing the threat not to perform.  See Harrison v Norwest Holst Group [1985] IRLR 240.  In that case the employer wrongly threatened to revoke an employee’s status as director in 14 days’ time.  The employee could have, but did not, accept the repudiation.  It was held that it remained open to the employer to withdraw the threat, which it did.  No doubt that would also apply to the oral renunciation.

119.  There might have been a withdrawal of the oral renunciation on the Thursday.  But this does not help the defendants.  There was never any withdrawal of the demand for £4 million with the associated threat; there has only been denial that it was ever made.  If Mr Saccani had said on the Saturday morning, when Ms Wong paid over the cost of the air tickets, that he was sorry he ever said that he wanted £4 million from her, and did not in fact want it by Monday morning, that might be a different matter.  But he did not.  The threat, which was clear enough on the Friday night, was left hanging.  Further, there was never any attempt to mend fences in respect of the behaviour at the two dance practices. 

120.  It is also said that the threat, if repudiatory, was not to perform the obligation to go to Miami under the first contract, which Ms Wong affirmed.  Viewed in isolation that is no doubt right, but when one looks at the threat as part of the overall conduct giving rise to a breach of the implied term, it would necessarily also amount to an anticipatory breach of the second and third contracts.

121.  Mutual trust and confidence would quite obviously be destroyed by conduct such as that of Mr Saccani, at both the practices, and indeed by the oral renunciation and the subsequently withdrawn promise to repay.  It would also be destroyed by the unwarranted demand for £4 million and the supporting threat.  Destroyed it obviously was.  Ms Wong says so, and what she says is backed up by various passages in her conversation with Mr Howe. 

122.  I find, therefore, that the conduct of Mr Saccani amounted to a repudiatory breach of the first contract.  It must also be taken as an anticipatory breach of the second and third contracts, which had no yet started. 

123.  It seems to me that Ms Wong could elect to accept the repudiation or affirm the contract, in respect of any or all of the three contracts.  I turn to the question of whether or not she did.

124.  Having taken Mr Howe’s advice, Ms Wong wrote the first letter (at his dictation).  The purport of the letter is to accept repudiation of the second and third, but not the first contracts.  She says that she handed this letter to Mr Saccani on the Saturday morning.  He looked at it and handed it back.  Then the lessons went on as normal and everyone acted as if the parties would go to the competition, and carry on with the first contract, as the letter indicated.

125.  Although an innocent party must elect whether to accept repudiation or affirm the contract, he is not necessarily required to do so immediately.  In the words of Rix LJ in Stocznia Gdanska SA v Latvian Shipping Co. (No. 2) [2002] 2 Lloyd’s Rep. 436 at paragraph 87, there is a middle ground between acceptance of repudiation and affirmation of the contract, and that is the period when the innocent party is making up his mind what to do.  It seems to me that Ms Wong was entitled to take some time to decide. 

126.  Even if Mr Saccani did not properly read or properly understand the import of the Saturday letter, I have no doubt that he received the Monday letter, for the reasons given above; he knew that Ms Wong wanted her money by the following Wednesday, so he must have seen one or both letters.  So the acceptance of repudiation was communicated to him, by Monday morning at the latest.  Given the close personal nature of the agreement, and what was at stake for Ms Wong if she repudiated it, I think the time taken is entirely reasonable.

127.  It is of course possible for a party in anticipatory breach to cure the breach before it is accepted; see Harrison, above.  But the defendants did not cure it.  As I have said, there was no apology for the conduct.  The unwarranted demand was not withdrawn and neither was the threat not to go to Miami.  They were left hanging.  The earliest we see any kind of apology or withdrawal is the Monday evening.  By then it was too late. 

128.  I find, therefore, that the defendants were in repudiatory breach of all three contracts and that Ms Wong accepted their repudiation in respect of the second and third.  If I am wrong in my finding that there were three contracts, and there was in fact only one, it would make no difference, because there was in any event a repudiatory breach by the defendants which was accepted by the Ms Wong. 

The third issue - implied term as to termination on notice

129.  The plaintiff pleads that it was an implied term of the second two agreements that either party could terminate on reasonable notice, being 2 weeks or such other period as the court may determine.  She says that by her conduct she gave such notice of termination.  The defendants deny that any such implied term was necessary and say that such a provision cannot be implied into a fixed term contract.  They would not have agreed to such a provision and would be prejudiced by its inclusion as an implied term.

130.  I have found that there were three separate contracts.  If that is right, then logically, since in two of them performance had not yet begun, termination on reasonable notice would not come into the picture.  Of course it would, if there was only one contract as the defendants say.  I approach this question, therefore, in case I am wrong, and contrary to my finding above, there was a single contract.

131.  The law on implied terms is set out in the well-known passage from the judgment of Lord Simon in B.P. Refinery (Westernport) Pty. Ltd v President, Councillors and Ratepayers of Shire of Hastings [1978] 52 ALJR 20:

“Their Lordships do not think it necessary to review exhaustively the authorities on the implication of a term in a contract which the parties have not thought fit to express.  In their view, for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”

132.  Mr Coleman argues that the implied term contended for fails on all these conditions.  He says that the parties agreed to contract for a fixed term, and the implication of a right to early termination would undermine the financial and vocational security of the defendant’s and Ms Wong’s guarantee of their services for that fixed term; such an implied term would therefore neither be reasonable nor equitable.  It was not necessary to give business efficacy to the contract.  While it is capable of clear expression, it was not clear, as may be seen from the plaintiff’s equivocation as to whether the notice period should be two weeks or two months, either of which would be inadequate.  Finally, it contradicts the express terms of the contract as to time. 

133.  Reliance is placed on a passage in the judgment of Lord Pearson in Trollope & Colls Ltd v North West Metropolitan Regional Hospital Board, [1973] 2 All ER 260  at 267-268 on implied terms generally,  and on the case of Reda & Anor v Flag  Ltd [2002] IRLR 747.  In that case, in dealing with an argument that all contracts of employment are, as a matter of law, subject to an implied term that they are terminable on reasonable notice, Lord Millett said at paragraph 57:

“In their Lordships’ view, there is no such rule.  The true rule, which is not confined to contracts of employment but applies to contracts generally, is that a contract which contains no express provision for its determination is generously (though not invariably) subject to an implied term that it is determinable by reasonable notice: see Chitty on Contracts (28^th edn.) at 13-025.  The implication is made as a matter of law as a necessary incident of a class of contract which would otherwise be incapable of being determined at all.  Most contracts of employment are of indefinite duration and are accordingly terminable by reasonable notice in the absence of express provision to the contrary … But there is no need for the law to imply such a requirement in a case where the contract is for the fixed term.”

134.  Here Lord Millett appears to have been dealing with an argument on an implied term to be implied by law where certain terms will be implied, unless they would be against the express terms of the agreement (cf. Liverpool City Council v Irwin [1977] AC 239, 253-254 ) rather than one to be implied from the presumed intention of the parties.  He is not saying that there can never be an implied term for reasonable notice, in a fixed term contract of employment.  Fixed term employment contracts very often contain provisions for termination on notice; the two are not exclusive.  I think this case has to be approached on the latter basis, i.e. by looking at the presumed intention of the parties.  Indeed in deciding matters of interpretation of contractual terms, including implied terms, every contract has to be looked at in the light of its own special circumstances.

135.  Reference was also made to the cases of Kirklees Metropolitan Borough Council v Yorkshire Woollen District Transport Co. [1978] 77 LGR 44 and The Power Co. Ltd v Gore District Council,  [1997] 1 NZLR 537, both cases in which the court refused to imply a term for termination on reasonable notice.  In Kirklees, the agreement was for 99 years and in the New Zealand case, it was “for all time hereafter”.  In my view these cases are of no real assistance.  They dealt with contracts between legal persons, which by their nature do not get old and die naturally as human persons do, and they were not, as here, for personal services between humans, one of them no longer young.

136.  This was a contract for personal services in a field of intense physical activity; one which has been accepted as a sport by the International Olympic Committee.  In her witness statement dated January 2005 Ms Wong gave her age as 59 years.  At the time when the 2^nd contract was entered into she would therefore have been have been about 57.  She was then agreeing to an extension which would take her to the age of 60 and later, in 2004, to a further extension which would take her up to the age of about 66.  This is past the normal retirement age for most kinds of work, and well past the retirement age for most sports.  Ms Wong is a very fit and youthful woman, and has demonstrated her ability to succeed in competition with younger dancers; but inevitably the question must arise as to whether she would be able to continue competitive dancing at the same level up to the age of 66.

137.  If Ms Wong became medically so unfit as to be unable to dance before the end of 2012, or indeed if Mr Saccani himself became unfit (he complained in the telephone conversation referred to above that his “hip was dropping him”) the question of frustration of the contract might have arisen.  But necessarily the parties would have to be taken as having in mind the question of their, and especially Ms Wong’s general ability to continue, short of being declared medically unfit, if not when the agreement was made in 2002, at any rate once the extension was made in 2003, and this would affect what they must have intended.

138.  It is also the case that Ms Wong wanted to reach the top.  It was, as she put it, her “last chance of glory” before she became too old.  The defendants knew of her ambitions; Mr Saccani says in his statement that she made them expressly clear.  It should obviously have been in both parties’ contemplation that, once she had achieved her goals, a woman of her age might well want to stop; or if not, that once she had achieved them, the services needed from the defendants would radically change. 

139.  In the circumstances, it seems to me that an implied term for reasonable notice must be regarded as reasonable and equitable.  It is necessary to the contract because it gives both parties the possibility of escape so that neither is locked into performance which may no longer be possible or necessary.  Obviously, what constitutes reasonable notice is capable of clear expression; and what would constitute it where the term is implied is a matter for the court.  It also seems to me to be obvious.  If the “officious bystander” had asked, “You are contracting for years to come; what happens if one of you wants out, can that be done on reasonable notice?” the answer would necessarily have been “Of course”.  Finally, I do not see any contradiction between a fixed term, and an agreement for termination on notice.  As I have said above, express terms are often agreed.  One need only think of the standard domestic helper contract.  If the express term is not contradictory, the implied term should not be contradictory either. 

140.  I find, therefore, that if there was a single contract with extensions, it contained an implied term for termination on reasonable notice.  Given that Ms Wong had not, as the defendants contend, taken up all of their business – on their own records they were still teaching plenty of other students – there would be no need for a long period to enable them to rebuild their business.  Further, since Ms Fairweather was a world champion and obviously well known as such in ballroom dancing circles in Hong Kong, it would not take long for the defendants to attract new business.  I think the period of 2 months now contended for, i.e. the period up to the commencement date of the second contract, is reasonable.  I have no doubt that Ms Wong’s letter of 30 August would have constituted notice. 

The fourth issue – restitution

141.  On my findings, performance of the second and third contracts never commenced.  There was total failure of consideration.  Ms Wong is entitled to her money back and the defendants have no further claim.

142.  The defendants argue that even if the contractual arrangements came to an end in August 2004, as I have found that they did, there was still no total failure of consideration.  Ms Wong’s entitlement to the return of the advance payments depends on whether there has been a total failure of consideration.  Even if there were three contracts, as I have found, consideration for the payments under the second package included the exclusive partnering agreement after September 2003, and consideration for the third included the discount of $500,000.  The analysis is no different if the contractual arrangements are regarded as one divisible contract.  The payments are tied to performance, and therefore there is no partial failure of consideration.

143.  I have considered and rejected these arguments above.  I do not accept that the defendants gave any consideration for the early payments.  If there were three contracts, consideration for the second and third has totally failed.  But even if there was one contract, it was obviously divisible; it was divided into three discrete packages and there was no performance of the second two. 

144.  If I am wrong in my finding of repudiation, however, the defendants say this; Ms Wong repudiated the agreement or agreements but they did not accept the repudiation.  They treated the contract or contracts as continuing.  They have been throughout ready to perform; so they are entitled to the full contract price including what is still unpaid. 

145.  It is prudent, therefore, to consider briefly what the position would be if Ms Wong were found to be the guilty and Mr Saccani and Ms Fairweather the innocent parties; i.e. that she had she had no grounds for repudiation.

146.  Mr Westbrook argues that even in this situation, the defendants cannot keep the money and have no counterclaim.  This is a contract for personal services.  At best they would be entitled to damages, which Ms Wong would have to mitigate; and they have not claimed damages.

147.  If a person employed under such a contract is dismissed, his claim is for damages.  Per Salmon LJ in Denmark Productions Ltd v Boscobel Productions Ltd [1968] 3 All ER 513:

“It has long been well settled that if a man employed under a contract of personal services is wrongfully dismissed he has no claim for remuneration due under the contract after the repudiation.  His only money claim is for damages for having been presented from earning his remuneration: Goodman v Pockok (1850) 15 QB 576; French v Brookes (1830) 6 Bing. 354 and Fewings v Tisdal (1847) 1 Exch 295.  A managing director, for example, engaged at £10,000 a year who has ten years of his service agreement to run is dismissed without cause.  He cannot sit in the sun for ten years drawing his salary on the basis that he is ready, willing and able to serve as managing director if only the company would allow him to do so.  His sole money claim is for damages and he must do everything he reasonably can to mitigate them.”

148.  It is possible, where an innocent party elects to affirm a contract following breach, for that party to insist on holding the other to the bargain and to continue to tender performance.  See White and Carter (Councils) Ltd v McGregor [1962] AC 413.  The pursuer (it was a Scottish case) contracted for advertising but then repudiated; the defenders refused, placed the advertisements and sued for their fees.  It was held that they were entitled to carry out the contract and claim the full price, and were not obliged to accept the repudiation and sue for damages.  Lord Reid, however, considered that the right to complete the contract and claim the price would not apply if it can be shown that a person has no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages” (at p. 431).

149.  Lord Reid also said (at p.429):

“Of course, if it had been necessary for the defender to do or accept anything before the contract could be completed by the pursuers, the pursuers could not and the court would not have compelled the defender to act, the contract would not have been completed and the pursuers’ only remedy would have been damages.”

150.  The situation here is vastly different from that of an advertiser who can put up advertisements with or without the co-operation of the other party.  Here the defendants could not provide the personal services to Ms Wong unless she took them up.  As Mr Saccani accepted, she was never going to do that; which must have been obvious enough, indeed, once she raised her action.  Further, she could not be compelled to do so. 

151.  The defendants, in August 2004 were not reduced to having no business at all; they still had about 50% of their capacity available for other clients, while teaching Ms Wong.  Once she left, they had 100% capacity.  I do not see how it could be said that they had any legitimate interest in performing the contract, i.e. keeping open their dance studio and doing nothing, or doing nothing for 50% of the time, in the hope that Ms Wong might turn up, rather than claiming damages.

152.  It seems to me, therefore, that even if Ms Wong was in breach of contract, and the contract, or series of contracts, remained alive, the defendants’ only remedy would have been to claim for damages, which of course would have involved questions of mitigation.  They certainly have no counterclaim for the balance of the price.

153.  In support of their arguments that the defendants, as innocent parties, would be entitled to retain the payments already made, they rely on the local case of Shum Kit Ching v Caesar Beauty Centre Ltd, HCSA 38 of 2002, unreported, a small claims appeal heard by Mr Registrar Edward Chan SC.  In that case, the  appellant plaintiff  paid $48,060 for 267 beauty treatments plus some added benefits.  She repudiated but the defendant did not accept the repudiation.  It remained ready, willing and able to provide the treatments, if she would only turn up for them.  The plaintiff claimed her money back.  The case was primarily concerned with questions of an unconscionable contract, which are not relevant here, but the learned Recorder, having observed that the defendant’s right was to damages, held that the contract was still alive for the ground for the benefit of both parties, and therefore the plaintiff had no ground to recover her payment.

154.  If I understand him correctly Mr Westbrook argues, in relation to Shum Kit Ching, that if the plaintiff wrongfully repudiated, the defendants could either accept that, and sue for damages, or else treat the contract as subsisting until the plaintiff breached it, and then sue.  There was a locus paenitentiae in which the plaintiff could have changed her mind.  See Shindler v Northern Raincoats Ltd [1960] 1 WLR 1038.  The learned Recorder confused this with a right to treat the contract as subsisting throughout its duration and his judgment should not be followed. 

155.  I am not sure that this assists, or that Shum Kit Ching assists either.  In that case the appellate court could not find any ground for restitution.  The question is whether, if the plaintiff here is in default, does she have a restitutionary claim?

156.  It is argued for the plaintiff that even if she was in default, this is no bar to a restitutionary claim; see Dies v British and International Mining and Finance Corporation, [1939 1 KB 724, where the party in default was able to recover advance payments against goods which were not delivered as a result of his own default.  Mr Westbrook also refers to the observations of Denning LJ in Stockloser v Johnson [1954] 1 QB 476 at 489:

“These illustrations convince me that in a proper case there is an equity of restitution which a party in default does not lose simply because he is not able or not willing to perform the contract.  Nay, that is the very reason why he needs the equity.  The equity operates, not because of the plaintiff’s default, but because it is in the particular case unconscionable for the seller to retain the money.  In short, he ought not unjustly to enrich himself at the plaintiff’s expense.”

157.  For my own part, I do not see why, even if the plaintiff was in default, she should not have her money back, subject to any claim for damages which the defendants might have.  They took her money, for services in the future which she would never take up.  If she wrongfully dismissed them, their claim is for damages.  They have no right of forfeiture in respect of the payments made, which were not paid as deposits but as part payments.  If they had claimed damages, the payments made would have to be set off against the damages.  If the damages amounted to more than the payments, well and good; but if they amounted to less, then any excess retained would unjustly enrich the defendants at the plaintiff’s expense.  That would be unconscionable.  It would be equally unconscionable for the defendants to retain the payments, without making any claim for damages. Of course they could have made such a claim if they had a valid one. They have by now had ample time to quantify such a claim.

158.  Mr Coleman says that the defendants do not seek a windfall.  However, on any basis, to seek to be paid £4 million for services which will never be taken up is precisely that.  Even if the plaintiff is in default, to seek to hold on to the moneys paid, without making any attempt to establish the claim to which the defendants are really entitled, i.e. damages, is also precisely that. 

159.  Even on the hypothetical basis that I am wrong, and Ms Wong is the defaulting party, therefore, I would have no hesitation in dismissing the counterclaim and ordering restitution of the sums paid. 

Result

160.  The result is that the plaintiff succeeds.  There will be judgment in favour of the plaintiff for

(1) restitutionary damages of US$1,940,000 and £3,217,590.93;

(2) a declaration that the 2004-2007 agreement and the 2007-2012 agreements have been determined by repudiatory breach by the defendants;

(3) interest on the sums awarded at prime rate plus 1% from the date of the writ until the date hereof and therefore at the judgment rate until payment;

(4) costs of the action, including the costs of the Mareva injunction, to be taxed if not agreed.

161.  As indicated, the Mareva injunction was discharged on payment into court of the sums of US$1,940,000 and £3,217,590.93 or the Hong Kong dollar equivalents to be held on interest bearing account.  The sums held in court may be paid out to the plaintiff forthwith, including interest.  As discussed with counsel at the end of the trial, the awards of interest will be nisi.  This will allow any necessary adjustment to be made in respect of interest at a later date.

162.  Also as noted at the end of the trial, the award of costs is nisi.