UT (Tax & Chancery) UT-2024-000044 - [2025] UKUT 00094 (TCC)

Mr Firth criticised that part of the FTT’s decision at [60], which states:

“Nevertheless, as set out above, the contractual rights and obligations in the actual contracts did not give Mr Thompson the right of refusal and did not require mutual agreement. The pragmatic and consensual approach taken to non-attendance does not detract from those contractual rights and there is no suggestion that there was any agreement that those contractual rights did not apply or were varied. Indeed, Mr Condron’s evidence was that he did not consider the terms of the Contract.”

He argued that this is simply not the right test. The test is not that one transposes the actual contract terms (irrespective of how absurd they are) unless there was a further agreement that those contractual rights had been varied or did not apply. Such a test makes even less sense where Mr Thompson’s understanding of his obligation to accept work, or lack thereof, was different to what the FTT decided the contract actually provided.

Mr Firth contended that the FTT needed to consider what would actually have been agreed in a hypothetical negotiation, with both parties understanding and accepting what they were agreeing. The way that both parties understood the arrangement to operate in practice was good evidence as to how that negotiation would have gone (and, indeed, combined with the 2005 agreement, the only evidence – none of which supported the FTT). It is possible that there might be reasons for concluding that even though the parties agreed to the arrangement in practice, one party would have insisted, and the other party would have accepted, something different in a binding contract. But that would need to be considered and a reasoned conclusion reached. The FTT erred in failing to carry out this exercise.