Donald (Craijan Ltd) v Worcester Marine Windows Ltd [2013] EW Misc 41 (CC) (11 January 2013) [2013] EW Misc 41 (CC)

EWMISC
Donald (Craijan Ltd) v Worcester Marine Windows Ltd [2013] EW Misc 41 (CC) (11 January 2013)
[2013] EW Misc 41 (CC) · 2013-01-11
[29]The Claimant’s counsel referred me to authority applicable to the present case. For the purposes of this extempore judgment I shall merely refer to this authority as the judgment of the Court of Appeal delivered by Lord Justice Morritt in the case of Parks v Esso Petroleum Limited [2000] ECC 45 and the judgment of Mr Justice Fulford in the case of PJ Pipe and Valve Co Ltd v Audco India Ltd [2005] EWHC 1904 , which latter judgment contains this passage, important in my judgment for the purposes of the present case and the decisions I have to make:
‘The purpose of the Directive, in my view, was to provide protection to agents by giving them a stake in the goodwill which they have generated for the principal, and as a result the courts should avoid a limited or restricted interpretation of the word “negotiate” that would exclude agents who have been engaged to develop the principal’s business in this way, and who successfully generated goodwill to the manufacturer, to the latter’s benefit after the agency terminated.’ 30. It is plain that the regulations exclude self-service and telephone sales, among other exclusions necessary to achieve the purpose which Mr Justice Fulford identified. The circumstances of the present case are very different indeed from these exclusions. The first payment fell within the proper broad interpretation of the word ‘negotiate’
. He dealt with the customers, conducted the relationship with them and exercised his skill and experience in doing so. His role was to build up the goodwill of the business. He acquired a large number of new customers and encouraged existing customers to switch from regular windows to the more profitable S-type windows. 31. As to the particular factors in the schedule to the Regulations I accept that the factors in paragraphs (2), (3) and (4) are indicative and that the importance to be attached to each one should be weighed by the judge. First, therefore I must notice that the relationship was not described as commercial agency and of course no reference was made to the Regulations. In the overall circumstances of the relationship I regard that deficit as entirely irrelevant. The law looks at substance, not label, but in saying that I intend no disrespect to the presence of the indicative criterion as to the use of the term ‘commercial agency’ in the Regulations of course. 32. The first Claimant satisfies the test in the schedule. The Defendant’s business is the sale of windows that are normally individually negotiated. Sales are cumulative. Each one is likely to lead to further transactions. That is the nature of a comparatively small market population and the position within it which the Defendant prestigiously occupied and it was the first Claimant’s purpose to develop. Mrs Crippin made a serious and well argued point about distinctions between the first Claimant’s work and function and the terms of the Regulations. She made this point in various ways. 33. As to paragraph (3)(d) she disputed that the goods are not normally available in the market in question other than by means of the agent. There are indeed the other separate manners of marketing to which I have referred. However, the first Claimant was intimately involved to the extent of what he did do, including making use of the promotional video and attending trade shows and, importantly, it was the essence of his function to go on the road, so to speak, having researched potential customers and familiarised himself with existing customers. 34. I am bound to conclude that paragraph (3)(d) read alone and in the context of the other indicative and non-indicative criteria is overwhelmingly in favour of commercial agency, not contradictory of it, particularly in the overall balance of the factors generally being either indicative or not indicative as the Regulations particularly prescribed and that the importance to be attached to each one should be weighed by the judge. I recognise the significance of brochure and website contact, but in my judgment that does not displace the overall impact of the first Claimant’s involvement. 35. Similarly, none of the matters on which the Defendant particularly relies in its defence represent, severally or together in the overall balance, any reason why the overwhelming hallmark of commercial agency should not be applied in accordance with the Regulations in this case. In my judgment and on the evidence I have the Defendant’s investment in the first Claimant’s familiarisation with the business by way of the payment of the retainer was entirely consistent with commercial agency, indeed arguably indicative of it. The fact that the first Claimant presented himself as a representative of the Defendant is entirely consistent with commercial agency. Similarly, provision by the Defendant to the first Claimant of a PDA and contribution to fuel bills. 36. Also, the restriction of the first Claimant to the Defendant’s specified prices is consistent with agency, albeit not of course consistent with what I fear may be Mr Munn’s misplaced application of the double principal arrangements to which I have already referred. Absence of evidence as to enduring personal customer loyalty to the first Defendant is not in the overall run of the case in my judgment contradictory of commercial agency. I find unhesitatingly on the evidence which is available to me that this was a relationship of commercial agency within the Regulations. I return, in conclusion, to Regulation 2 itself. It is clear to me that by reference to Regulation 2, the governing provision, that this was a case of commercial agency in the sense of a self-employed intermediary who had continuing authority to negotiate the sale of goods on the Defendant’s behalf. 37. The issue next arises as to whether the Defendant was entitled to terminate the relationship, which I find to be that of commercial agency. I unhesitatingly conclude that the Defendant was not so entitled. The burden of proof of entitlement rests on the Defendant. The Defendant fails entirely to discharge this burden on the evidence which he has made available. As to Regulation 3, there is simply no evidence at all that the first Claimant failed to carry out even part of his obligations under the contract. Similarly, there was no repudiation of the Defendant’s interests, nor breach of good faith, as would entitle termination under Regulation 3. It was noticeable that to his very great credit Mr Munn did not dispute these matters in the evidence which he chose to give. 38. The reason which Mr Munn gave orally on the 22 nd March 2010 for terminating the relationship related to some customer and staff complaints, which he has expanded in the defence and in his evidence. He relies on complaints about the first Claimant’s attitude and behaviour at Evesham Marina and Orchard Marine. He says that the Orchard Marine issue was the last straw. There is no admissible or credible evidence of what these complaints were. 39. By failing to engage in the court proceedings the Defendant has deprived itself of the opportunity to produce evidence of these complaints and of their potential seriousness, but even taking what amounts to no more than hearsay complaints at their highest, these fall a long way short of the seriousness required as a matter of law to entitle the Defendant to terminate this commercial agency, nor does any complaint, separately or together with any other of the complaints, including by staff, come within a measurable distance of such entitlement. In what I have just said I borrow in each case words used by judges of the High Court in other cases. 40. I now address the remaining issue, the quantification of the claim. I assess the first Claimant’s claim in the sum of £59,576.47, which the first Claimant claims. This claim is reasoned in paragraph 88 of his counsel’s skeleton argument. I accept this reasoning and its conclusion for all the reasons which the Claimant’s counsel advanced in his closing speech and sets out in detail between paragraphs 69 and 87 of that document. This is in my judgment a meticulous and proper reasoning of each of the claims for which Regulations 17, 15 and 8 respectively provide in principle, and I identify those provisions in that sequence for obvious reasons of logical priority. 41. In particular, but without in this extempore judgment going into any more detail than is necessary to reason my decision, the Defendant’s statement in the defence to the effect of the continuing turnover, which on the November to November accounting year basis is to November 2011, some 20 months after the termination of the agency, suggests that snapshotting value at March 2010 there was no reason to predict the adverse financial circumstances which the Defendant now asserts, albeit without any evidence, so that the first Claimant’s submission as to a multiplier of 3 is perfectly reasonable in my judgment. The multiplicand is also in my judgment unarguably correct. 42. The first Claimant has properly deducted the level of net income less VAT, together with some 25% for the risk of termination in any event, and lawful termination at that, and has made proper concessions as to attributability of some of his expenses to other uses, including his work for someone called Keith Hunt, albeit that that does not appear to have been any more than a minimal commitment of his time and for social use. In any event, as the Claimant’s counsel properly pointed out in his closing speech, the deductions issue works in the Defendant’s favour in reducing the claim and the first Claimant has in my judgment properly and rationally accounted throughout in each relevant way as to this credit. It is neither too much nor too little. I should add that against the claim as a whole the first Claimant has properly given credit for what was paid on termination. 43. Lastly, as to the Regulation 15 and Regulation 8 claims, I find that the sum of £3,121.78 claimed as Regulation 15 statutory notice is properly claimed for the reasons given and the Regulation 8 claim to the commission on transactions concluded after the agency was terminated is reasonably claimed in the sum of £5,000 as a fair estimate based on the evidence which is available, which of course does not include evidence which the Defendant has failed to disclose, so the first Claimant must do his best on what is known, as must I. 44. As to interest, I prefer the Claimant’s counsel’s alternative lesser calculation based on 3% over base rate, i.e. 3.5% total, as being the rate at which a small business might borrow capital during the relevant period. I would apply such an approach in any quasi-commercial case of this kind, and the alternative higher claim based on statutory interest is in my judgment inappropriate. Therefore interest in my judgment totals £5,838.49. I therefore give judgment for the first Claimant against the Defendant in the sum of £59,576.47, together with interest which I assess at £5,838.49. End of Judgment.