| AGENCY — Termination — Compensation — Agent’s claim of two years’ gross commission — Whether appropriate — Correct basis for assessment — Relevance of state of principal’s business — Commercial Agents (Council Directive) Regulations 1993, reg 17 — Council Directive 86/653/EEC, art 17
Lonsdale (trading as Lonsdale Agencies) v Howard & Hallam Ltd (Winemakers’ Federation of Australia Inc intervening) [2007] UKHL 32
HL(E): Lord Bingham of Cornhill, Lord Hoffmann, Lord Rodger of Earlsferry, Lord Carswell and Lord Neuberger of Abbotsbury: 4 July 2007
An award of £5,000 compensation rather than the two years’ commission sought by the agent pursuant to reg 17(6) of the Commercial Agents (Council Directive) Regulations 1993 had been adequate where the principal’s business had been in decline.
The House of Lords so held in dismissing an appeal by the claimant agent, Graham Lonsdale (trading as Lonsdale Agencies), from the Court of Appeal (Jacob, Moore-Bick and Hallett LJJ) [2006] 1 WLR 1281, who had dismissed his appeal from Judge Harris QC sitting at Oxford County Court.
LORD HOFFMANN said that the claimant was a commercial agent in the shoe trade. He had been appointed by the defendants in 1990 to sell their shoes, but their sales, and the claimant’s commission, had fallen year by year, and in 2003 the defendants had ceased trading and terminated the claimant’s agency by reasonable notice. He had claimed compensation, pursuant to reg 17(6) of the 1993 Regulations, based on two years’ gross commission. An agent was entitled to be compensated for being deprived of the benefit of the agency relationship. The value of that lay in the prospect of earning commissions. The court was required to decide what could reasonably have been obtained, at the date of termination, for the rights that the agent had been enjoying. If the market for the products in which he dealt had been rising or declining, that would have affected what a hypothetical purchaser would have been willing to give. Mr Moser had objected that that was likely to produce less than he would have been awarded by a French court, it being common practice for French courts to value agencies at twice the average annual gross commissions over the previous three years. Commercial agencies in France, however, operated in market conditions different from those prevailing in England. The judge had said that the claimant’s agency had been producing a modest and falling income in a steadily deteriorating environment and that there was no evidence that anyone would have paid anything for it. The judge had been right in his approach.
LORD BINGHAM, LORD RODGER, LORD CARSWELL and LORD NEUBERGER agreed.
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Appearances: Philip Moser (Morgan Cole, Oxford) for the claimant; Oliver Segal (Harvey Ingram LLP, Leicester) for the defendant; Fergus Randolph and Victoria Wakefield (APP Law, Norley, Cheshire) for the interveners.
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