Mr Page was a sole trader in essential oils. Since 1990 he had acted as agent for Combined Shipping & Trading Company Limited. In 1995 the parties had entered into a written agency contract which was for an initial term of 4 years.
Only five months after the agreement was signed, following a decision by the parent company, Combined Shipping wrote to Mr Page advising that it would no longer be continuing operations. Mr Page wrote back accepting the conduct of Combined Shipping as a wrongful repudiation of the agency contract.
Mr Page claimed that he was owed money as a result of the contract being breached by Combined Shipping. At first, he managed to keep hold of £300,000 of goods belonging to Combined Shipping, but then agreed to release them back to the company. Combined Shipping deposited the sum of £300,000 into a bank account and Mr Page applied to the High Court for an injunction to prevent Combined Shipping from using the funds until Mr Page’s case for damages could be heard.
The High Court refused to grant Mr Page the injunction on the basis that under English common law the terms of this particular contract allowed Combined Shipping to elect how much business Mr Page could undertake, and therefore Combined Shipping could lawfully set the level of Mr Page’s earnings at nil. Mr Page appealed the decision to the Court of Appeal.
The Court of Appeal recognised that the European Council Directive which gave rise to the Commercial Agents (Council Directive) Regulations 1993 was designed to achieve two things. The first was the harmonisation of the law of EU Member States so that people within the EU should compete on ‘a level playing field’. Therefore it should not make any significant difference whether a commercial agent is employed in one State or another. The second objective was in recognition that commercial agents are a “down-trodden race” and should be afforded protection against their principals.
The Court held that the Regulations gave Mr Page the right to claim a substantial sum by way of compensation for commissions lost to him which the “proper performance” of the agency contract would have procured for him. That signalled a departure from the common law position on ordinary contracts, which assumed that Combined Shipping would have exercised the remainder of the contract in a way which most reduced the sum it would have to pay in damages.
The Court of Appeal therefore held that Mr Page had a good arguable case which justified his application seeking to restrain Combined Shipping from using the £300,000 until Mr Page’s case against Combined Shipping was determined.
This was a landmark case for commercial agents giving judicial recognition to the social policy motivating the Council Directive and the Regulations which implement the Directive into English law.
This briefing note is for general information. For advice in applying this general information to your specific circumstances, please contact John Greager or any member of the Fox Williams’ agentlaw team.(www.agentlaw.co.uk)
Written by John Greager
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