Alpha Trading Ltd v Dunnshaw-Patten Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LAWTON,LORD JUSTICE BRANDON,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 11 November 1980 |
| Judgment citation (vLex) | [1980] EWCA Civ J1111-3 |
| Date | 11 November 1980 |
| Court | Court of Appeal (Civil Division) |
[1980] EWCA Civ J1111-3
Lord Justice Lawton,
Lord Justice Brandon and
Lord Justice Templeman
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Order of Mr Justice Mocatta:
Mr PATRICK MILMO (instructed by Lucien A. Isaacs & Co.) appeared on behalf of the Plaintiffs/Respondents.
Mr CHRISTOPHER SMITH (instructed by Ashurst Morris Crisp & Co,) appeared on behalf of the Defendants/Appellants.
The first Judgment will be delivered by Lord Justice Brandon.
This is an appeal by the Defendants from a judgment of Mr Justice Mocatta given in the Commercial Court on the 30th November, 1979.
The action was brought by the Plaintiffs to recover agency commission, or alternatively damages of an equivalent amount for being prevented by the Defendants from receiving such commission. The learned Judge found for the Defendants upon their claim for damages, and gave them judgment for US $25,000, with interest of $4,504.11, and costs. The Defendants now appeal against that judgment, asking that it be set aside, and that the Plaintiffs claim be dismissed.
Both the Plaintiffs and the Defendants carry on business as international merchants and dealers. The representative of the Plaintiffs who was concerned in the material transactions was a Mr Brodie. His opposite number on the Defendants' side was a Mr Marchant Lane.
Early in January 1978 the Plaintiffs were aware that a Dutch company called Mueller International were interested in purchasing about 10,000 metric tons of cement at a price of US $49.50. per metric ton & Bandarshapur or Khorramshar in Iran.
Mr Brodie was acting for the Plaintiffs in the matter and first contemplated that the Plaintiffs would buy the cement themselves, either from the Defendants or from other suppliers, and would then resell it to Mueller at a profit.
Early in January 1978 certain telexes were exchanged between the Plaintiffs and the Defendants on that basis, namely, that the Plaintiffs would buy the cement from the Defendants. Subsequently, however, Mr Brodie decided that it would be more convenient and more profitable if the cement were sold direct by the Defendants to Mueller through the agency of the Plaintiff In particular, this form of transaction would avoid the necessity of two letters of credit and two performance bonds. The basis of such transaction would be that the profit which the Plaintiffs would have made on a resale would be covered by the Defendants, in consideration of the Plaintiffs introducing Mueller to them as buyers, paying the Plaintiffs commission on the sale and also making certain other payments in connection with the demurrage payable at the port of discharge.
The Defendants were agreeable to this new arrangement and negotiations took place between them in January and February 1978 mainly by telex, but also in part by telephone conversations between Mr Brodie and Mr Marchant Lane. Simultaneously, further negotiations took place by telex between the Defendants and Mueller in relation to a contract of sale between them of which the Plaintiffs were kept informed.
In the upshot, two contracts were made. First, there was a contract for the sale of 10,000 metric tons of cement, & Bandarshapur, between the Defendants and Mueller. Secondly, there was an agency contract between the Plaintiffs and the Defendants under which the Plaintiffs were to be remunerated for introducing Mueller to the Defendants as buyers. This remuneration was divided into three parts.
First, the Plaintiffs were to receive a commission of $1.50 per metric ton of the cement sold. Secondly, they were to receive 25 per cent of the demurrage, namely, 40 cents per metric ton per day, payable by Mueller to the Defendants in respect of the first ten days of unloading. Thirdly, the Plaintiffs were to be paid half the difference, amounting to 5 cents per metric ton, between the rate of demurrage payable by the Defendants to the shipowners, and that payable by Muel1er to the Defendants after the first ten days of unloading had expired.
The terms of the telexes in which this agreement was reached are to some extent important. The terms which I have referred to were expressed in somewhat different language as regards the demurrage during the first ten days of unloading. The term was expressed in this way: "Value of ten days free time to be held at our disposal". Again, with regard to the commission, the words were: "$1.50 per metric ton commission to be held at our disposal". Those expressions were repeated in a later telex at the time when the contract was finally concluded.
The contract between Mueller and the Defendants provided, among other things, that Mueller should open a letter of credit for the price of the cement, and that the Defendants should provide Mueller with a three per cent performance bond. These two obligations on either side were duly carried out, but the contract of sale was never implemented by the Defendants. The precise cause of the Defendants' failure to perform the contract was not proved in evidence. There was evidence which showed that the Defendants had met a claim made against them byMueller by forfeiting the performance bond and paying a further sum of £21,000. The only reasonable inference from this is that the Defendants were either unwilling or unable to perform the contract and, accordingly, defaulted on it. Following this default in the performance of the contract by the Defendants, the Plaintiffs claimed that they were entitled, despite such default, to be paid the remuneration agreed under the agency contract. The Defendants rejected that claim, and the present action was brought by the Plaintiffs against the Defendants in consequence.
The Plaintiffs put their case in their Points of Claim in two ways. The first way they put it is set out in paragraphs 4, 5, 6 and 7. In paragraph 4, they said: "The said remuneration was due to the Plaintiffs upon mutual performance of the contract between Mueller and the Defendants".
Then, in paragraph 5: "It was an implied term of the said agreement between the Plaintiffs and the Defendants that the Defendants would do or cause to be done everything necessary to perform the contract with Mueller and/or would not do anything to prevent the Plaintiffs from earning the remuneration described in paragraph 5 above".
In paragraph 6 the Plaintiffs pleaded that the contract had been concluded between the Defendants and Mueller.
In paragraph 7, they alleged that, in breach of the said implied term, the Defendants failed to ship or arrange shipment of the said cement to Mueller. They went on to claim, by way of damages, the remuneration that they would have received had the contract of sale been performed by the Defendants.
That was, as I say, the first way that the Plaintiffs put their case. It can be described as the case based on an implied term of the agency contract.
In paragraph 8, they tried as an alternative what might be described as "rather a long shot". They pleaded: "Alternatively to the contentions set out in paragraphs 4, 5 and 7 above pursuant to the said agreement the Plaintiffs were entitled to the remuneration described in paragraph 3 above, amounting to $25,833, upon the Defendants entering into the contract with Mueller as described in paragraph 6 above". That alternative claim can be described as the direct claim for remuneration under the contract as compared with the other claim for damages for breach of an implied term of the contract.
The learned Judge dealt with these claims in reverse order. He began by rejecting the direct claim for commission, which was made in paragraph 8 of the Points of Claim. He said this at page 4 of his judgment, between and G-: "If one has regard to the terms of the agency agreement, it seems clear that commission could not have been due upon the making of the contract. The repeated references in the telexes at pp.9 and19 of 'to be held at our disposal1 indicate very clearly that payment was to be forthcoming from Muellers' letter of credit. Whilst it is true that no claim is made in the Points of Claim for the half share of the difference between 35 cents demurrage and 40 cents, which could clearly not have been ascertained until after discharge, this cannot affect the clear inference to be drawn from the other terms that the Plaintiffs had no right to or expectation of their commission until the Defendants had been paid under the letter of credit and were thus in a position 'to hold' the appropriate amounts for the Plaintiffs". I am not sure whether the learned Judge is right in sayingthat in the Points of Claim no claim had been made for the half share of the difference between 35 cents demurrage and 40 cents, for in the Amended Points of Claim, which have been included in our Bundle, there is an amendment making just that claim. Whatever may be the position about that, however, the Judge's conclusion is clear, namely that, having regard to the terms of the telexes in which the agency agreement was made, or by which it was evidenced, it was the intention of the parties that commission should only become payable when the contract had been performed, and the letter of credit had been drawn upon.
The learned Judge then directed his attention to what in the pleadings was the first way in which the Plaintiffs put their case, namely, on the basis of damages for breach of an implied term. On that part of the case, he concluded, that there was an implied term that, once the Defendants had entered into a contract with Mueller, they would not break it and thereby deprive the Plaintiffs of the remuneration to which, if the contract had been performed, they would have been entitled.
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