Crane v Sky in-Home Service Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Briggs |
| Judgment Date | 26 January 2007 |
| Neutral Citation | [2007] EWHC 66 (Ch) |
| Court | Chancery Division |
| Date | 26 January 2007 |
| Docket Number | Case No: HC05C04068 |
[2007] EWHC 66 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Briggs
Case No: HC05C04068
Mr Ashley Roughton (instructed by Johnson Sillett Bloom) for the Claimant
Mr Jasbir Dhillon (instructed by Herbert Smith LLP)) for the 1 st Defendant
Mr Jonathan Crow QC and Mr Jason Coppel (instructed by The Treasury Solicitor) for the Secretary of State
Hearing dates: 7 – 10, 13 – 16, 20–24 & 27 November 2006
January 2007
Approved Judgment
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.
This is the second of two judgments arising from the simultaneous trial of two related claims between parties including John Harold Crane (“Mr Crane”) and Sky In-Home Service Ltd (“SHS”). The first claim, by SHS and other members of the group (“the Sky Group”) including British Sky Broadcasting Ltd (“BSB”), alleged passing off by Mr Crane and a number of other defendants by reason of the sale of extended warranty contracts and repair services relating to the reception equipment (“the Hardware”) used by subscribers to the Sky Group's satellite broadcasting service (“Sky Digital”). The second claim, to which this judgment relates (“the agency claim”), is by Mr Crane against SHS for compensation or indemnity under the Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”) by reason of the termination by SHS of an agreement between them relating to the sale by Mr Crane of part of the Hardware. The trial of this claim had been confined to liability only.
It is common ground that Mr Crane and SHS made an agreement in writing dated 15 th December 2003 and entitled Customer Offer Purchase and Agency Agreement (“COPA”) as part of a package of related agreements of even date, that it related to the sale of part of the Hardware, defined therein as “the Box Package”, and that it was terminated by SHS on 14 days' written notice by letter dated 4 th February 2005.
The issues which I have to determine may be summarised as follows:
i) Whether COPA (together with a side letter of even date) sets out the whole of the relationship between the parties with regard to sale of part of the Hardware, or whether as Mr Crane contends it was extended to apply to what are called Sky+ boxes, and if so, on what terms;
ii) Whether the relationship thus created constituted Mr Crane a “commercial agent” within the meaning of reg.2(1) of the Regulations;
iii) If it did, whether Mr Crane's activities as a commercial agent are to be regarded as “secondary” within the meaning of reg.2(3), as amplified by the Schedule thereto, with the consequence that he is not entitled to compensation or indemnity by reason of reg.2(4);
iv) If not, whether SHS terminated the agreement because of default by Mr Crane which would justify immediate termination within the meaning of reg.18(a), with the consequential loss of the right to compensation or indemnity;
v) If Mr Crane succeeds thus far, whether his entitlement is to compensation or indemnity. Save where dealing specifically with this issue, and in the interests of economy, I shall refer to Mr Crane's claim as a claim for compensation in the general sense, so as to encompass either compensation or indemnity in the strict sense.
It emerged for the first time from reading the skeleton argument of Mr Ashley Roughton who appeared for Mr Crane that he wished to contend (as an insurance against the risk of being unsuccessful on issue (iii) above), that regs.2(3) and (4) of, and the Schedule to, the Regulations are ultra vires, being outwith the authority to make secondary legislation conferred by S.2(2) of the European Communities Act 1972. By way of riposte, early in the trial Mr Jasbir Dhillon who appeared for SHS notified his intention to submit if necessary that if (which he disputed) regs. 2(3) and (4) and the Schedule were ultra vires, then so must be the whole of the Regulations, on the ground that regs.2(3) and (4) and the Schedule could not be severed from the remainder.
There is no authority directly decisive of the ultra vires issue, and it plainly raises a question of general public importance. With the parties' concurrence I permitted the Secretary of State for Trade and Industry, whose predecessor had made the Regulations, to intervene, and gave case management directions for that purpose on 16 th November 2006, the seventh day of a trial originally estimated for six days, the smooth progress of which had already been disrupted by late disclosure of important documents. 16 th November was the earliest date by which the Secretary of State could have been expected to respond to the very late invitation to consider intervention. The result was that, pursuant to those directions, the ultra vires issue had to be argued at a later date, after the end of the trial, causing further disruption which ought to have been unnecessary. It is also the reason why this judgment on the agency claim is being given separately from, and considerably later than, my judgment on the passing off claim.
This important issue ought to have been focussed upon in good time for its implications to have been addressed, at the latest, at the pre trial review which took place before Lewison J. on 17 th October 2006. That would have enabled the issue to be accommodated within the trial itself, and might have avoided the delay and additional expense which its separate treatment has caused.
The general factual background to this claim may be found in my judgment in the passing off claim, as will my conclusions about the reliability of the witnesses. I shall adopt the definitions and abbreviations used therein, save that I shall not refer to Mr Crane as John Crane, there being no present need to distinguish him from his brother Peter.
Save in one respect, the issues in the agency claim do not turn upon the outcome of any seriously disputed factual questions, but rather upon the construction of the Regulations and the relevant contractual framework, and the application of the Schedule to the background facts which are mainly undisputed. The exception arises from issue (iv), namely the extent of any breaches of his agency agreement by Mr Crane, and the reason why SHS terminated it.
For reasons which will in due course appear, SHS relied in closing submissions only upon that part of its original case of breach which alleged passing off by Mr Crane, on the basis that this amounted to a breach of his implied agency duty to look after the interests of his principal and to act dutifully and in good faith: see reg 3(1). I have in my judgment in the passing off case dealt fully with the allegations of passing off by Mr Crane. It was for that reason that the two claims were tried together. I refer in particular to paragraphs 230 to 233 of that judgment. It was unnecessary for me to address in that judgment the precise reasons why SHS terminated Mr Crane's agency, and I shall address that question when dealing with issue (iv).
The only further introduction of the relevant facts which needs to precede my addressing the individual issues is a summary of the contractual structure regulating Mr Crane's status as an Authorised Sales Agent of the Sky Group, generally abbreviated as an ASA. That status is in general, and was for Mr Crane, founded upon and regulated by a set of five agreements and a side letter, all of even date, but not all between the same parties. They were, in no particular order, COPA itself, between (1) SHS, (2) Marketing Contributions Limited (“MCCo”) and (3) Mr Crane trading as Indigital Satellite Services (“Indigital”). I shall return to its detailed terms below. Secondly, there was a Sky Digital Sales Agency Agreement (“SDSA”) between BSB and Mr Crane, again trading as Indigital. The third was an Approved Sky Digital Retailer Registration agreement, again between BSB and Mr Crane, and the fourth was an Authorised Sky Digital Installer Registration agreement between the same parties. Finally there was a self-billing agreement which regulated the administration of payments to be made pursuant to the other agreements. Nothing turns on the terms of the Side Letter, or for that matter upon the terms of the third, fourth and fifth agreements.
The purpose of the SDSA was to regulate the terms upon which Mr Crane was to act as BSB's non-exclusive commission agent in respect of the sale of subscriptions to BSB's Sky Digital satellite broadcast service. It is common ground that this did not qualify as a commercial agency within the Regulations because it was concerned with services rather than goods. It made reference to COPA, required Mr Crane to obtain BSB's approval of any advertising marketing or promotional material used by him in selling subscriptions, and incorporated standard terms and conditions which sought to protect BSB's intellectual property rights in the name Sky and associated trade marks.
The purpose of COPA was to regulate the terms upon which, as SHS's agent, Mr Crane was to supply Customer Offers to Customers. A Customer is defined as a person acquiring a Box Package for use in a Home. A Box Package is defined as including a set top box and a Dish package. A Dish Package is defined as including a dish aerial and a low noise block converter. A Customer Offer means the supply to, and installation for, Customers of a Box Package. Clause 2.4 expressly excludes Sky+boxes from forming part of a Box package.
Issue (i) – Whether Mr Crane's agency extended to the sale of Sky+ boxes.
It will be immediately apparent that COPA contains express terms...
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