W Nagel (a firm) v Pluczenik Diamond Company NV

A commercial agent’s status under the Commercial Agents (Council Directive) Regulations 1993 is assessed at the date relevant to the remedy claimed, ordinarily termination. The question concerns the scope of the contractual authority and retainer, not the frequency with which authority was exercised. The commodity-market exclusion is directed to the commercial nature, manner and place of the sale. It is not confined to exchanges with futures trading or publicly quoted prices. Where the agency is indivisible and its predominant activity concerns commodity sales, the Regulations do not apply merely because some ancillary transactions involve specific goods. Common-law damages for breach of an agency agreement are assessed by the compensatory principle, not by the hypothetical-sale valuation used for Regulation 17 compensation.

The claimant had acted as the defendant’s diamond broker for many decades. The defendant terminated the relationship in August 2013 after the principal De Beers Sight moved from London to Botswana.

The claimant sought unpaid commission, post-termination commission, notice compensation and termination compensation under the Commercial Agents (Council Directive) Regulations 1993, alternatively contractual damages. It also claimed expenses and declarations concerning alleged breaches of duty.

The central issues were whether the claimant was a commercial agent, whether the Sights were commodity-market transactions excluded by Regulation 2(2)(b), whether termination breached a commission variation agreement, and how any common-law loss should be quantified.

1. Regulations. The claim under the Commercial Agents (Council Directive) Regulations 1993 failed. The claimant’s authority was assessed at termination because the remedies claimed were termination or post-termination remedies. Its retainer was continuing and included the traditional functions of a DTC broker, including lobbying, advocacy, allocation assistance and CPQ work. It therefore had continuing authority to negotiate, even though it could not conclude purchases or independently agree prices. The relevant question was the contractual scope of the authority, not the extent or frequency of its exercise.
2. The Sights were sales on the rough-diamond commodity market and constituted a commodity exchange for Regulation 2(2)(b). “Commodities” had to be understood in its commercial sense. The court considered the nature of the goods, the wholesale and organised nature of the market, the generic categorisation and fixed pricing of most boxes, and the trading arrangements. Inspection, limited participation or the absence of futures trading did not prevent the transactions being commodity sales.
3. The agency could not be divided between boxes and special or exceptional stones. The predominant activity concerned commodity sales, and the activity relating to special stones was secondary. Regulations 2(2)(b) and 2(3) therefore excluded the agency as a whole.
4. The commission variation agreement required the defendant to retain the claimant as broker for so long as it held a De Beers Sight. Termination was consequently a breach. Common-law damages were governed by the compensatory principle and were not calculated by treating the agency as a notional sale under Regulation 17. The appropriate multiplier for the net annual earnings after tax was five.
5. The court’s alternative conclusion was that, absent the commission variation agreement, reasonable notice would have been three months or, if longer, two further Sights. The post-termination commission claim also failed because the claimant’s efforts were not the main cause of the defendant’s later purchases.
6. The claimant was entitled to the unpaid commission on the November 2012 sale, reimbursement of expenses and declarations of non-liability regarding the Belgian allegations. Judgment was entered for the claimant.

First-instance judgment in the High Court (Commercial Court). No appellate history is stated in the judgment.