Cooper & Ors v Pure Fishing (UK) Ltd

For the purposes of Commercial Agents (Council Directive) Regulations 1993, an agency contract that expires by effluxion of time is a termination for regulation 17, but it is not a contract which the principal has terminated under regulation 18(a). The regulation 18(a) exception requires two conditions: the principal must have acted unilaterally to bring the contract to an end, and must have done so because of an objectively justifying default by the agent. Non-renewal of an expired contract is not termination by the principal. Exceptions to the general compensation right are construed according to their terms.

Three commercial agents had represented the defendant and its predecessors under fixed-term agency contracts. The contracts expired on 30 June 1999. The defendant declined to renew them after alleging that the agents were in material breach, including refusal to market newly introduced products.

The High Court held that expiry by effluxion of time constituted termination for regulation 17, but that non-renewal was not termination by the principal for regulation 18(a). It also held, alternatively, that immediate termination would not have been justified. The defendant appealed on the construction of regulation 18(a), contending that non-renewal for an agent’s default should engage the exception.

1. Appeal dismissed. The claims for compensation under regulation 17 were not excluded by regulation 18(a).
2. Regulation 18(a) must be read as a whole. It requires the principal to do something unilaterally which brings the agency contract to an end, and to do so because of default attributable to the agent which would justify immediate termination under regulation 16. Both conditions must be satisfied.
3. Expiry on the agreed date requires no act by either party and is not dependent on default. A decision not to enter into a further contract is therefore non-renewal, not termination of the existing contract by the principal.
4. The compensation right in regulation 17 is general, while regulation 18 creates exceptions. Those exceptions must be construed according to their terms. The court rejected the submission that fairness or the general purpose of protecting commercial agents justified rewriting regulation 18(a).
5. The comparison between regulation 17 and regulation 18 does not assist the appellant. The word termination takes its meaning from context. Regulation 17(8), regulation 18(b), and regulation 16(b) do not support the broader construction. The reference in regulation 18(a) is to regulation 16(a), since force majeure or frustration brings a contract to an end through the event, not through termination by the principal.
6. The court considered that a later discovery of fraud might support an argument that the agent suffered no damage, but this point did not alter the construction of regulation 18(a). It was unnecessary to decide whether immediate termination would otherwise have been justified.
7. The appeal was dismissed with costs summarily assessed at £29,000 inclusive of VAT. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division): [2004] EWCA Civ 375 dismissed the appeal, upheld the High Court’s construction of regulation 18(a), and ordered costs of £29,000 inclusive of VAT. Permission to appeal to the House of Lords was refused.
• High Court of Justice, Queen’s Bench Division, Manchester District Registry: His Honour Judge Kershaw QC, sitting as a deputy High Court judge, held that expiry by effluxion of time was termination for regulation 17 but that non-renewal was not termination by the principal under regulation 18(a).