Warren & Anor v Burns

Contractual waiver requires an unequivocal representation, by words or conduct, that a party will not enforce a contractual right in future. Silence, inaction and partial performance are ordinarily equivocal. A contractual payment term is not automatically of the essence. Termination for late payment depends on the contract, the term, the nature and degree of breach, and its consequences. A party may terminate for repudiatory breach only where the breach is sufficiently serious. An offer of a replacement contract does not itself terminate the existing contract. Lost profits require reliable evidence of probable profitability and may be extinguished by set-off against unpaid liabilities.

The claim arose from agreements under which Ricky Burns appointed Alex Morrison and Frank Warren as managers and W. Promotions Limited as his promoter. The claimants sought unpaid management commission and substantial damages for alleged breaches of the promotional agreement. Mr Burns disputed the commission claim, sought payment of the unpaid balance of the purse for his fight against Kevin Mitchell, and argued that he had validly terminated the promotional agreement because of late and overdue payments.

The issues included waiver, the construction of the management and promotional agreements, the alleged increase in the Mitchell purse, the alleged personal guarantee, termination for repudiatory breach, and the claim for lost profits.

1. The court held that the management agreements entitled Mr Warren and Mr Morrison together to a 25 per cent commission, rather than separate commissions of 12.5 per cent. Mr Warren had performed some managerial work, and the commission was therefore payable subject to the final accounting.

2. The waiver arguments failed. The deduction of 15 per cent, the absence of an earlier demand, and Mr Warren’s statements about postponing collection did not amount to unequivocal representations that the remaining commission would not be claimed. Silence and inaction were equivocal in the circumstances, consistently with Liberty Insurance Pte Ltd & Anor v Argo Systems FZE [2011] EWCA Civ 1572 and Allied Marine Transport Ltd v Vale do Rio Doce Navegaccao SA (The Leonidas D) [1985] 1 WLR 925.

3. Mr Burns was not entitled to the proposed £40,000 increase in the Mitchell purse. No binding agreement had been established and, in any event, the conditional new promotional agreement had not been concluded. The alleged personal guarantee also failed because there was no concluded contract of guarantee.

4. The purported termination of the promotional agreement was ineffective. The letter was not signed by Mr Burns and, in any event, the late payments did not constitute repudiatory breaches. Time for payment was not of the essence, and no notice had been served making time essential. The assessment required the multi-factorial approach described in Dalkia Utilities Services plc v Celltech International Ltd [2006] 1 Lloyd’s Rep 599 and Valilas v Januzaj [2014] EWCA Civ 436.

5. Although termination was not effective on 6 March 2013, Mr Burns would shortly afterwards have been entitled to terminate because FWP was insolvent and unable to pay overdue and future purses. The claim for lost profits failed for want of reliable evidence. The court found that FWP had suffered no loss, and any modest profit would in any event have been absorbed by set-off against the unpaid Mitchell purse.

6. FWP owed Mr Burns the unpaid balance of the Mitchell purse, understood to be £102,000 plus interest, for which he would prove in the liquidation. Mr Burns owed unpaid management commission to Mr Warren and Mr Morrison jointly. No sum was payable by Mr Burns to FWP or Mr Warren under the promotional agreement.

Not stated in the judgment.