Rossetti Marketing Ltd and Another v Diamond Sofa Company Ltd
| Jurisdiction | England & Wales |
| Judge | The Master of the Rolls,Lord Justice Moses,Lord Justice Rimer |
| Judgment Date | 17 July 2012 |
| Neutral Citation | [2012] EWCA Civ 1021 |
| Docket Number | Case Nos: A2/2011/2720 and 3286 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 July 2012 |
[2012] EWCA Civ 1021
The Master of the Rolls
Lord Justice Moses
and
Lord Justice Rimer
Case Nos: A2/2011/2720 and 3286
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Mr Justice Cranston
Case No TLQ 10/1187
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Charles Samek QC and Mr David Uff (instructed by Betesh Partnership Solicitors) for the Appellants
Mr Nigel Jones QC and Mr David Lewis (instructed by Bankside Commercial Limited) for the Respondents
Hearing dates: 20 and 21 June 2012
This is an appeal from a decision of Cranston J, determining certain preliminary issues arising out of a dispute between (i) Rosetti Marketing Limited ('RML') and Solutions Marketing Limited ('SML'), and (ii) Diamond Sofa Company Limited ('Diamond'). It represents yet another cautionary tale about the dangers of preliminary issues. In particular, it demonstrates that (i) while often attractive prospectively, the siren song of agreeing or ordering preliminary issues should normally be resisted, (ii) if there are nonetheless to be preliminary issues, it is vital that the issues themselves, and the agreed facts or assumptions on which they are based, are simply, clearly and precisely formulated, and (iii) once formulated, the issues should be answered in a clear and precise way.
Outline of the facts
Diamond is a company whose operation is based in Thailand, where it manufactures leather upholstery. Its furniture is aimed at what the Judge called 'the middle of the market in quality and price' – [2011] EWHC 2482 (QB), para 6. Diamond's managing director is Panchanin Charoenyos, who set it up in 1999, after having worked in the upholstery business in the United States and the Far East.
SML was set up by Richard Willan and Martin Thomas in 2001 to represent Asian furniture manufacturers, and to assist them in penetrating the United Kingdom market. Mr Willan and Mr Thomas each had had considerable experience in that market, having worked for many years for a company called Christie Tyler, which was, as I understand it, the leader in the British furniture agency business.
In February 2004, following a meeting at a trade fair in Cologne the previous month, Mr Charoenyos orally agreed with Mr Willan that Diamond would appoint SML to act as its exclusive agent in connection with the sale of leather upholstery in the UK and Irish markets. While this arrangement was being negotiated, Mr Willan informed Mr Charoenyos that SML was already acting for two other manufacturers of upholstery known as Linkwise and ArtPeak. Mr Willan told Mr Charoenyos that the furniture range of each of those two companies did not 'clash' with Diamond's range (by which I understand that he meant that their furniture was not aimed at 'the middle of the market in quality and price', or, possibly, that their furniture was in some other way aimed at a discrete and different aspect of the retail leather furniture market from Diamond's furniture).
The agency arrangement between Diamond and SML was initially on a one year trial basis, but the parties thereafter continued it, not least because, as the Judge said, SML was 'remarkably successful on Diamond's behalf'— [2011] EWHC 2482 (QB), para 20. Diamond's UK turnover increased from just over $1m in 2004 to well over £15m in 2007.
In early 2008, the agency arrangement came to an end consensually, and Diamond appointed RML, which had been set up by Mr Willan to take over the clients of SML, in its place. Around this time, however, the parties were starting to fall out. Diamond was losing UK market share, at least in part because the Thai baht was appreciating against sterling. Mr Willan told Mr Charoenyos how he thought its product range could be improved, and Mr Charoenyos took the view that Mr Willan was trying to tell him how to run his business. As discussions progressed, the relationship deteriorated, to such an extent that Mr Charoenyos determined the agency arrangement on 4 June 2008. Subsequent attempts at reconciliation failed.
The present proceedings
RML then brought these proceedings against Diamond seeking compensation under regs. 7, 8, 15 and 17 of the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) ('the Regulations'). The Regulations were brought into force to comply with Council Directive 86/653/EEC on the co-ordination of the laws of member states relating to self-employed commercial agents (OJNo L382, 31 December 1986, p.17).
In its defence, Diamond contended, inter alia, that the Regulations did not apply to its agency agreement with RML. More importantly for present purposes, Diamond contended that, although it was unaware of its right (or the relevant facts giving rise to the right) at the time it determined the agency arrangement with RML, it had in fact had the right to put an end to the arrangement on the ground of RML's breach of duty. The alleged breach was that RML (and SML before it) had acted for two direct competitors of Diamond, namely a company known as Cassaredo and a company known as Creative.
I am not entirely clear whether it was accepted by RML and SML that Cassaredo and Creative did indeed compete with Diamond in the sense that their furniture range 'clashed' with that of Diamond, or whether it was to be left to be determined at the trial of the action whether the range of Cassaredo or of Creative competed with that of Diamond. I think that it must have been the former, as (i) it was put by RML's counsel to Mr Charoenyos in cross-examination that those two companies made 'essentially the same products' as Diamond, and (ii) the Judge appears to have proceeded on the basis that Diamond may have been entitled to determine the agency agreement due to RML's breach of duty.
In so far as it would otherwise owe any sums to RML pursuant to the Regulations, Diamond further contended that any liability was more than offset by the damages it could recover for breach of duty by RML (and SML) by acting for Diamond's competitors. Because SML had been the agent for most of the relevant period, it was also a party to the proceedings.
As the proceedings developed, it became apparent that there were a number of different issues between the parties. Diamond applied for security for costs against RML, which was in a position to find £100,000, which was paid into court. Largely because this was regarded by Diamond as insufficient security for a trial of all issues, the parties agreed that there would be a preliminary issues hearing.
The parties then agreed nine issues which were thought to be fit to be determined preliminarily to trial. Almost each issue included sub-issues, so that, in total, they raised over thirty-five separate questions. Issue 1 concerned the reasons Diamond engaged SML, and whether any representation was made by SML and relied on by Diamond. Issue 2 raised points about the duration of the agency agreement and the terms as to notice of determination. Issues 3 and 4 raised questions about SML's right to act for other furniture manufacturers, and Issue 6 concerned the connected question of whether SML owed Diamond a fiduciary duty. Issue 5 posed questions in connection with the applicability of the Regulations, and Issue 7 raised questions about the change of agent from SML to RML. Issue 8 was directed to SML's rights to sell Diamond's products, and Issue 9 included questions relating to the questions of breach of contract by SML and Diamond's right to determine the agency.
An order was made by consent on 15 April 2011 by His Honour Judge Yelton, sitting as a Judge of the High Court, directing that these issues were to be tried as preliminary issues. They came before Cranston J, who heard evidence and argument over five days between 8 and 14 June 2011. He subsequently gave his judgment on 3 October that year. In that judgment ('the first judgment'), he concluded that there was an agency agreement falling within the Regulations, initially for a term of a year, and thereafter on an indefinite basis. He held that the agent was initially SML, but that the agency was then 'assigned' to RML, at the suggestion of SML— [2011] EWHC 2482 (QB), paras 63–66.
In the first judgment, the Judge also found that 'there was no express term about [SML or RML] acting for competing principals', but that 'there was an implied term at the outset of the contract that SML would continue to act for Linkwise and ArtPeak'— [2011] EWHC 2482 (QB), para 56. In the next paragraph, he said that '[l]ater this implied term was varied by a course of dealing between the parties', and in particular that 'SML assumed agencies for Casserado and Creative; Diamond knew of this and did not object.' However, he said that 'nothing in the course of dealing meant that there was an implied term in the agency agreement enabling [SML or RML] to place orders with other principals at the expense of Diamond'. He then pointed out that the question whether that had happened was not one of the preliminary issues. Although the preliminary issues raised questions about the right of Diamond to terminate the agency, the Judge left those questions open, on the basis, as he put it in a later judgment on 25 November 2011 ('the second judgment') that the evidence he had heard 'narrows considerably any findings which will have to be made in relation to termination at a future hearing'.
The first judgment ran to sixty-eight paragraphs, and in those...
To continue reading
Request your trial
-
Ronald Peter Binstead v Zytronic Displays Ltd
...the outcome of this appeal it will now have to go back to the High Court to find the relevant facts.” 10 In Rossetti Marketing Limited and Another v Diamond Sofa Company Limited [2012] EWCA Civ 1021, Lord Neuberger MR (as he then was) said this at paragraph 1: “This is an appeal from a deci......
-
Skatteforvaltningen (Danish Customs and Tax Divisions) v Solo Capital Partners LLP (in special administration)
...(GC)Ras Al Khaimah Investment Authority v Azima [2021] EWCA Civ 349; [2021] 1 CLC 715, CARosetti Marketing Ltd v Diamond Sofa Co Ltd [2012] EWCA Civ 1021; [2013] Bus LR 543; [2013] 1 All ER (Comm) 308, CARutten v Cross Medical Ltd (Case C-383/95) EU:C:1997:7; [1997] ICR 715; [1997] All ER (......
-
Nicholas Hugh Brown v Tom Bower and Another
...Neuberger MR has called the "siren song" of agreeing or ordering preliminary issues which "should normally be resisted": Rossetti Marketing Ltd v Diamond Sofa Co Ltd [2012] EWCA Civ 1021 [2013] Bus LR 543 [1]. As is well-known, attempts at short cuts may lead to additional complexity, delay......
-
The Northampton Regional Livestock Centre Company Ltd v Richard Andrew Cowling and Another
...proposition an agent occupies a fiduciary position vis a vis his principal: see Rosetti Marketing Limited v Diamond Sofa Co Limited [2012] EWCA Civ 1021; [2013] Bus LR 543 at [20]. As to the content of the duty the agent owes what Millett LJ in Bristol & West Building Society v Mothew [199......