PJ Pipe & Valve Co. Ltd. v Audco India Ltd.

An agent is entitled to commission where its work was the effective cause of the transaction. Other contributing causes do not prevent recovery. The same approach applies to the statutory test that a post-termination transaction must be mainly attributable to the agent’s efforts.

A commercial agent under the Commercial Agents (Council Directive) Regulations 1993 may have continuing authority to negotiate a sale even without authority to bargain over price or commercial terms. The Regulations require a purposive construction directed to protecting goodwill-generating agents.

Compensation under regulation 17 is fact-sensitive. The court is not bound by a fixed French-law tariff and must avoid double recovery.

PJ Pipe and Valve Co Ltd acted for Audco India Ltd in promoting and obtaining orders for industrial valves. The dispute concerned commission under agency agreements relating principally to the Bonny Island and Nanhai projects, and compensation following Audco’s repudiatory termination of a general exclusive agency agreement.

The central issues were whether the claimant had caused or facilitated particular orders, the scope of its Nanhai commission agreement, whether it was a commercial agent under the Regulations despite lacking authority to negotiate price and commercial terms, and how any regulation 17 compensation should be assessed.

1. Bonny Island phases 4 and 5. At common law an agent earns commission where it was the effective cause, or an effective cause, of the transaction. PJV’s work secured or facilitated the order. A reasonable commission was 4.5 per cent, reflecting the substantial work undertaken by PJV and the 3.5 per cent paid to the replacement agent, while recognising that 5 per cent was excessive for an order of this size.
2. Bonny Island phase 6. Although the order was placed after termination and followed some price negotiations, it was not competitively tendered and was substantially a roll-over from phases 4 and 5. PJV’s earlier work was the effective cause. PJV was therefore entitled to 4.5 per cent commission.
3. Nanhai. The agreed term linked commission to orders which PJV had facilitated, rather than solely to valves identified by MESC numbers in the Frame Agreement. “Facilitated” carried the same, or a closely similar, meaning as being the effective cause at common law and being mainly attributable to the agent’s efforts under the Regulations. PJV facilitated the stainless steel and alloy gate, globe and check valve orders, but not the separately tendered carbon steel and low-temperature carbon steel orders. Commission was therefore payable on US$9,302,108.18 at 3 per cent.
4. Commercial agency. Under regulation 2, “negotiate” should not be confined to bargaining over price or terms. PJV dealt with and conducted the relevant discussions, secured introductions and vendor approval, assisted with quotations, and developed goodwill. It was a commercial agent.
5. Compensation. Regulation 17 requires a principled and flexible assessment based on the circumstances of the case. French practice may provide background or a comparator, but it does not dictate the result. The court assessed the likely commission lost during the unexpired period, avoided double counting, and awarded compensation on a gross basis. The total award was US$118,518.60.