Alan Ramsay Sales & Marketing Ltd v Typhoo Tea Ltd
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Flaux |
| Judgment Date | 08 March 2016 |
| Neutral Citation | [2016] EWHC 486 (Comm) |
| Docket Number | Case No: 2014 Folio 595 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 08 March 2016 |
[2016] EWHC 486 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
The Honourable Mr Justice Flaux
Case No: 2014 Folio 595
Mr Oliver Segal QC (instructed by Bankside Commercial Ltd) for the Claimants
Mr Robert Thomas QC (instructed by Fox Williams LLP) for the Defendants
Hearing dates: 9 th, 10 th, 11 th & 12 th February 2016
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant is a commercial agent run and largely owned by Mr Alan Ramsay, who worked between 1978 and 2001 for what was then Cadbury Typhoo/Premier Brands, before setting up his own company. For the last fifteen years, the claimant has operated in the food and drink sector, predominantly in the cash and carry and wholesale areas of that sector. The claimant acts for a number of principals, with non-competing products. From about 2006 until May 2013, these included the defendant, the well-known producer of Typhoo and other teas.
The present dispute concerns the circumstances in which the agency agreement between the parties came to be terminated on 11 May 2013. The claimant brings claims for damages for breach of contract and under the Commercial Agents (Council Directive) Regulations 1993, as amended ("the Regulations"), for the termination of the agency on insufficient notice and for compensation under Article 17 of the Regulations.
The claimant's case is that the relevant agency agreement provided for 12 months' notice of termination but the defendant gave notice of termination with effect from 11 February 2013, to terminate on 11 May 2013, by two emails dated 18 and 26 March 2013 and was thereby in repudiatory breach of contract, which repudiation the claimant accepted as bringing the agency agreement to an end by its email of 28 March 2013. However, without prejudice to that termination, the claimant offered to continue to work under the agreement for the remainder of the stipulated notice period until 11 May 2013 if the defendant preferred. The claimant contends that the defendant accepted that offer by its conduct and/or affirmed the agency agreement and that the agency agreement continued until 11 May 2013, when it terminated.
The defendant's case is that the two emails of 18 and 26 March 2013, both marked "Without Prejudice", were part of a series of without prejudice negotiations to settle a dispute as to termination of the agency and that, as such, they cannot be relied upon by the claimant as repudiatory and are inadmissible in evidence, from which it follows that the claimant's email of 28 March 2013 purporting to rely upon those emails as repudiatory was itself a repudiation of the agency agreement. The defendant contends that it accepted that repudiation as terminating the agency agreement by its conduct, although it is fair to say at the outset that, despite the ingenuity of Mr Robert Thomas QC for the defendant, it remained unclear at the end of the trial exactly how and when the defendant had accepted the claimant's repudiatory breach as bringing the agreement to an end. In those circumstances, the defendant contends that it is the claimant which brought the agreement to an end, so that the claimant was entitled neither to damages nor to compensation under the Regulations. The defendant also contends that to the extent that the claimant performed work between 28 March 2013 and 11 May 2013, this was not pursuant to the original agency agreement, but pursuant to a fresh ad hoc agreement.
In response to that case, the claimant contends that, although marked "Without Prejudice", the two emails were not on a proper analysis protected by without prejudice privilege because there was no extant dispute and they were not part of any attempt to settle a dispute but a statement of intention in mandatory terms. If the claimant is wrong about that, it submits that its offer to continue working until 11 May 2013 was an offer made under the existing agency agreement, not some new ad hoc agreement, which was accepted by the defendant, thereby affirming the original contract so that the claimant's entitlement to claim damages and/or compensation in contract and under the Regulations was not lost.
The defendant originally had a counterclaim for damages for alleged poor performance of the agency agreement by the claimant. That counterclaim was discontinued by the defendant on 14 January 2016. Mr Thomas QC informed me that the counterclaim was discontinued because the claimant was balance sheet insolvent and not worth pursuing as a consequence.
It can be seen immediately that the principal issue in dispute which the court has to determine is whether the emails of 18 and 26 March 2013 were protected by "without prejudice" privilege and thus inadmissible. If they were not, then the question remains whether those emails constituted a repudiatory breach of the agency agreement, which the claimant was entitled to accept and did accept by its email of 28 March 2013.
If the emails were without prejudice and inadmissible, so that the claimant's email of 28 March 2013 was repudiatory, the next issue is whether the defendant accepted that repudiatory breach as bringing the agency agreement to an end. It is not suggested that there was any express acceptance, so this issue turns on whether there was an acceptance by conduct. The related issues are (i) whether the work which the claimant carried out after 28 March 2013 was pursuant to the original agency agreement or to a new ad hoc agreement and (ii) whether the defendant affirmed the original agency agreement, notwithstanding the claimant's repudiatory breach.
In addition to these liability issues, there are hard fought issues of quantum of any loss, in relation to which both parties called expert forensic accounting evidence. The defendant's primary case is that the claimant's agency for the defendant was loss-making so that the claimant is not entitled to recover anything by way of damages or compensation. Alternatively, the defendant contends that the profitability was marginal, so that any damages or compensation should be far less than the claimant's revised claim based on the evidence of its expert.
I propose, after setting out the relevant Articles of the Regulations with which the case is concerned, to address first the law on without prejudice communications and negotiations, since that inevitably informs the analysis of the factual evidence.
The Regulations
The relevant provisions of the Regulations are as follows:
Minimum periods of notice for termination of agency contract
15(1) Where an agency contract is concluded for an indefinite period either party may terminate it by notice.
(2) The period of notice shall be—
(a) 1 month for the first year of the contract;
(b) 2 months for the second year commenced;
(c) 3 months for the third year commenced and for the subsequent years;
and the parties may not agree on any shorter periods of notice.
(3) If the parties agree on longer periods than those laid down in paragraph (2) above, the period of notice to be observed by the principal must not be shorter than that to be observed by the commercial agent.
(4) Unless otherwise agreed by the parties, the end of the period of notice must coincide with the end of a calendar month.
(5) The provisions of this regulation shall also apply to an agency contract for a fixed period where it is converted under regulation 14 above into an agency contract for an indefinite period subject to the proviso that the earlier fixed period must be taken into account in the calculation of the period of notice.
Entitlement of commercial agent to indemnity or compensation on termination of agency contract
17. (1) This regulation has effect for the purpose of ensuring that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraphs (3) to (5) below or compensated for damage in accordance with paragraphs (6) and (7) below.
(2) Except where the agency contact otherwise provides, the commercial agent shall be entitled to be compensated rather than indemnified.
(3) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to an indemnity if and to the extent that—
(a) he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers; and
(b) the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers.
(4) The amount of the indemnity shall not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent's average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question.
(5) The grant of an indemnity as mentioned above shall not prevent the commercial agent from seeking damages.
(6) Subject to paragraph (9) and to regulation 18 below, the commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with his principal.
(7) For the purpose...
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