Crane v Sky In-Home Service Ltd & Anor

An agent’s entitlement under the Commercial Agents (Council Directive) Regulations 1993 depends on the substance of the agency and the statutory secondary-activities test. The court must identify the relevant principal, goods and contractual arrangement, and assess whether sales of those goods are likely to generate further sales or goodwill. The Schedule’s indications are non-exclusive pointers, not matters to be counted mechanically.

A principal may rely on regulation 18(a) where, at termination, it had a right to terminate immediately for a repudiatory breach, even though it gave notice under the contract rather than terminating summarily. The principal must nevertheless show that it terminated because of the qualifying default.

Mr Crane claimed compensation or indemnity from Sky In-Home Service Ltd following termination of an agreement under which he sold Box Packages. The issues were whether the agreement extended to Sky+ boxes, whether Mr Crane was a commercial agent, whether his activities were secondary under the Regulations, whether termination resulted from a qualifying default, and whether any entitlement would be compensation or indemnity.

The Secretary of State intervened because Mr Crane challenged the vires of the secondary-activities provisions and Schedule under section 2(2) of the European Communities Act 1972.

1. Agency scope. The written agreement excluded Sky+ boxes and required authority to act for SHS to be in writing. The Special Offer letters concerned customer subscription incentives and enhanced commission. They did not authorise Mr Crane to negotiate Sky+ box sales as SHS’s agent. Those sales were made by him as principal.
2. Commercial agency. The contractual mechanism, under which SHS became seller to the customer and Mr Crane negotiated the sale on SHS’s behalf, was not mere form. Mr Crane was therefore a commercial agent within regulation 2(1) in respect of Box Packages.
3. Vires. Regulations 2(3) and (4) and the Schedule were authorised by section 2(2) of the European Communities Act 1972. Article 2(2) of the Directive conferred a right to derogate. Creating domestic rules defining secondary activities was necessary to enable the United Kingdom to exercise that right. The provisions were authorised under section 2(2)(a), or alternatively under section 2(2)(b). They were not ultra vires.
4. Secondary activities. Paragraph 1 of the Schedule generally places the burden on the claimant to show that the arrangement’s primary purpose falls within paragraph 2. Paragraph 2 requires attention to the principal’s commercial interests, the particular goods, individually negotiated transactions, and the likelihood that sales will generate further transactions or goodwill. The indications in paragraphs 3 and 4 are non-exclusive and must be weighed rather than counted.
5. Box Packages were principally the means of accessing Sky’s subscription service. They did not themselves generate the relevant attractive force leading to repeat sales. Mr Crane therefore failed paragraph 2(b)(ii), and his activities were secondary. His claim consequently failed on that ground.
6. Termination. Regulation 18(a) refers to an enactment or rule of law permitting immediate termination independently of the contractual termination clause. The relevant English rule was repudiatory breach. SHS’s 14-day notice did not prevent reliance on regulation 18(a), provided SHS had an immediate right to terminate and terminated because of the default. Mr Crane’s continuing and serious passing off breached his duty of fidelity under regulation 3(1). SHS terminated because of that continuing conduct.
7. Had Mr Crane been entitled to relief, regulation 17(2) would have entitled him to compensation rather than indemnity. The claim was dismissed.

First-instance judgment. The judgment states that it was the second of two judgments arising from the simultaneous trial of related claims. No appeal or lower-court decision is stated.