Crane (t/a Indigital Satelite Services) v Sky In-Home Ltd & Anor

At the outset of the hearing of this appeal, we heard the application of Mr Crane to amend his appellants’ notice. Mr Duncan Macpherson, who appears for the Mr Crane (but who did not appear below), accepts that Mr Crane seeks to raise a new case. Mr Jasbir Dhillon, for the respondents (“SHS”), opposes the application principally on the basis that it raises issues not investigated at trial and that it would be thus unfair to SHS if the amendments were granted. The authorities show that permission should not lightly be given for a new case to be raised in this court. The question we have to decide is whether the factors in this case justify giving permission to amend in a manner that would enable Mr Crane to raise what is admittedly a new case.

Mr Crane traded as Indigital Satellite Services. Prior to February 2005 he was engaged in the business of installing and maintaining equipment used by consumers for the reception of Sky television. He entered into a contractual arrangement with SHS. This was terminated in February 2005. He then brought these proceedings to obtain financial relief under the Commercial Agents (Council Directive) Regulations 1993 (SI 1993 No. 3053) (“the Commercial Agency Regulations”). These regulations are designed to implement Council Directive 86/653/EEC (“the directive”) on the coordination of the laws of the member states relating to self-employed commercial agents. One of the objects of the directive was to enhance the position of intermediaries involved in the supply of goods (but not services) on behalf of a principal. In certain circumstances, on termination of the relationship, compensation is payable to the agent even though the termination did not involve a breach of contract. One of the issues sought to be raised by Mr Crane on this appeal is whether the relationship between Mr Crane and SHS, though not one of agent and principal, nonetheless fell within the mischief of the directive. At this stage of the appeal, we have not had detailed submissions on the mischief to which the directive is addressed. I thus note this submission without elaboration.

The trial took place before Briggs J. By his order of 13 February 2007, the judge dismissed the claim. That is the order now under appeal.

In order to receive Sky television, a customer must obtain a set top box and a minidish (satellite dish) to be placed on the outside of his premises. We are concerned with two sorts of equipment packages offered by Sky. The first is the Sky box package, which contains a standard set top box. The second is a Sky + box package. This includes a set top box with a personal video recorder, which contains a hard disc on which programming can be recorded. Broadly speaking, the Sky group had different arrangements of each sort of setup package. For the Sky box package, it alleged that the customer could approach either Sky or an authorised sky agent (“ASA”). Whenever an ASA identifies a customer, it is said that the ASA is obliged to sell as principal a Sky box package to SHS immediately before SHS delivered the same box to the customer. With the Sky + box package, Sky is only concerned with box packages supplied by BSkyB Ltd on contract to the customer. It is not concerned with Sky + box packages supplied to the customer by an ASA. By 2005, the majority of installations were of Sky + boxes rather than the basic set-top box. Mr Crane contends that it is these products that attract goodwill (and that point is relevant for instance to the question whether Mr Crane’s activities were secondary activities). Accordingly, although the judge found that he was an agent of Sky for the purposes of the sale of set top boxes, this did not greatly assist his case.

Mr Crane entered into an agreement dated 15 December 2003, called the "customer offer purchased an agency agreement" (“COPA”), with SHS. COPA was supplemented by a number of other related agreements but this judgment is not concerned with them.

The judge took the view that the case turned not so much on disputed questions of fact as on the application of the regulations to the contractual arrangements between the parties. The first issue was whether Mr Crane's agency extended to the sale of Sky + boxes. The judge noted that:

In other words, Mr Crane’s case on the Sky + box packages turned on whether COPA was varied by the parties in writing by the so-called “special offer” letters. He did not argue that the regulations would apply even if Mr Crane was not an agent for English law purposes if the situation was within the mischief to which the directive applied. The judge held on this issue that Mr Crane was at no time authorised to sell a Sky + box as agent of the SHS.

There was then a question about the validity of the regulations, with which I am not concerned. The judge then dealt with the question whether Mr Crane was a commercial agent within regulation 2(1). The judge held that Mr Crane was a commercial agent of SHS within the meaning of reg 2(1) in respect only of the sale of the standard set top box, and not Sky +. The next issue concerned the application or otherwise of the exclusion in the regulations of agents engaged in “secondary activities”. The judge held Mr Crane's activities were secondary, but it is unnecessary to summarise his reasoning. He then held that the termination of the agency was within regulation 18(a) (termination on agent’s default). Finally, he held that if Mr Crane had been entitled to financial relief it was for compensation rather than an indemnity. Again I am not concerned with the judge’s reasons on these issues.

In his original appellant’s notice, Mr Crane challenged the judge’s conclusions on secondary activities and on termination. However, Mr Crane’s skeleton argument made it clear that he intended to challenge the judge’s conclusions on a wider basis. No steps were taken to amend the appellant’s notice until his solicitors issued an application to amend the grounds of appeal on virtually the eve of the appeal. Most relevantly for the purpose of this application, Mr Crane attacks the judge’s decision as to whether he was a commercial agent for the purposes of the regulations with respect to Sky + boxes. The second ground as proposed to be amended includes the following passage:

The appellant was the agent of the respondent under the law of England and Wales for the promotion, sale, supply and installation of Sky television services in all respects save for the supply of Sky + equipment.

The appellant was a self-employed intermediary with continuing authority from the respondent to negotiate the supply of sky + equipment; further or alternatively

The respondent prevented the appellant in law firm further or alternatively in practice for dealing with the consumer freely in the supply of Sky + equipment alternatively it restricted such freedom to a considerable degree; further or alternatively

There would be no reason for the customer to believe that the appellant was acting in a different capacity when supplying sky + equipment to that customer when he would otherwise acted on behalf of the respondent and the promotion, sale and installation of Sky television services

Mr Macpherson emphasises that Mr Crane’s case relies on a more purposive interpretation of the regulations than that advanced to the court below and accepted by the judge. Mr Crane's case is that the concept of a commercial agent has an autonomous meaning in Community law and, if a particular situation is within the mischief addressed by the directive, it does not matter whether or not the intermediary in question is an agent for the purposes of English law. Thus Mr Crane’s supply of Sky + equipment could give rise to the application of the directive even though under it Mr Crane was not an agent for the supply of this equipment. Mr Crane does not challenge the judge’s ruling on this point.

Mr Macpherson seeks to meet the difficulty that Mr Crane’s new case might involve the investigation of further factual matters not investigated at the trial in two ways. First, he seeks to limit Mr Crane’s case to the contractual documentation which was before the court at the trial, the evidence given by witnesses called by SHS and the evidence given by Mr Crane and one of his witnesses, Mr Reynolds. It has already been pleaded by Mr Crane in a response to a request for further information made by SHS that one of the authorised distributors, called Eurosat, from which Mr Crane purchased his set top boxes was only allowed by SHS to sell Sky + boxes to ASAs but without limitation as to which. Transcripts of the evidence given at trial are available. Secondly, Mr Macpherson submits that if SHS considers that the new case involves the investigation of further factual matters, then it is up to it to identify those matters in its skeleton argument, which it has not on his submission done. Without that, he was “punching at shadows”.

Mr Macpherson relied on the speech of the majority of the Privy Council in Paramount Export Ltd (in Liquidation) v New Zealand Meat Board [2004] UKPC 45. Permission would be given to raise a new point on appeal about the interpretation of a contract where the underlying factual issues had in fact been fully investigated at trial. The relevant passage was as follows:

Other authorities provided no assistance as they were decided on their own facts or before the CPR.

Mr Macpherson was prepared to be flexible about paragraphs c and d of the proposed amended ground, which he offered to delete.

Mr Dhillon points out that Mr Crane had accepted clear limitations on this case as to whether he was a commercial agent for the purpose of the regulations. His new case is inconsistent with these limitations. On 6 November 2006, Mr Crane’s solicitors served a response to a request for further information about Mr Crane's alleged authority to sell Sky + box packages as an agent for SHS. The response was that it was wrong to characterise the position as capable of such analysis; “express or implied consent was given”. In addition, in the skeleton argument at the opening of the trial, Mr Crane stated that SHS’ point that he was not specifically authorised to sell Sky + boxes was absurd on the basis of the special offer letters. In the closing submissions served on his behalf, Mr Crane accepted that, while Sky + was expressly excluded from the COPA and that the COPA could only be varied in writing, nonetheless there was clearly an agreement to allow Sky + to be part of the COPA. That was the case that was put on behalf of Mr Crane to Mr Wright, the principal witness for SHS. Thus the case put at trial on the Sky + boxes was considerably narrower than the approach now taken. Moreover, counsel representing Mr Crane at the trial expressly agreed to limit Mr Crane's case about the restrictions imposed by SHS on distributors to Eurosat. This therefore did not substantiate paragraph c of the proposed new ground of appeal.

Mr Dhillon relies on Jones v MBNA (Court of Appeal, 30 June 2000, unreported), and the Tasmania (1890) 15 App. Cas 223, to which I refer below.

Mr Dhillon submits that the new case involves five steps, none of which were investigated below, namely that (1) Sky controlled Mr Crane’s purchasers; (2) Sky controlled his mark-up; (3) Sky adopted the contractual arrangements found by the judge in order to avoid the regulations; (4) customers believed that Mr Crane was acting as Sky’s agent in relation to the supply of Sky+ and (5) Sky restricted distributors, so that they sold equipment to ASAs only. The allegation that Sky adopted the contractual arrangements so as to avoid the regulations ought to have been put to Sky's witnesses. There had been inadequate disclosure to deal with the new issues. Mr Crane would have to amend his pleading.

CPR 52.8 provides that an appellant’s notice may not be amended without the permission of the court. When the court gives its permission, it must take into account the overriding objective in the CPR, which is to deal with cases justly. An application to amend a notice of appeal raises special considerations which do not apply to an application to amend a pleading prior to a trial. In the case of a pleading the court will (subject to any prejudice to the parties or to the administration of justice) readily give permission to amend so that the real dispute between the parties can be adjudicated upon. But on appeal the position is different. The simple fact is that there has already been a trial, and the significance of that is that the parties will have had an opportunity to put forward their cases, and incurred costs, and there will have been a decision. These points were powerfully put by May LJ in Jones v MBNA:

The court must examine each application on its own facts in the light of the guidance to be found in the authorities. On that, the starting point is a passage from the speech of Lord Hershell in The Tasmania:

Lord Hershell was there dealing with the situation where a party seeks to raise a new case by asserting that an accident happened in a different way from that which was suggested at trial. The passage stresses the importance of ensuring that the other party is not put at risk of prejudice. In his judgment in Jones v MBNA (a case under the CPR: see [27] of the judgment), Peter Gibson LJ helpfully elaborated the point, and expressed the view that it would be difficult to see how the court could ever, consistently with the overriding objective, allow a new point to be taken on appeal if further evidence might have been produced at trial on it or if the new point requires an evaluation by the appeal court of evidence which might be affected by seeing the witnesses:

There is further useful guidance in this passage for the purposes of the present case. Peter Gibson LJ adopted the approach that, before allowing a new case to be raised on appeal, he had to be satisfied that, if the new case had been raised at trial, the other party would not have altered the way it conducted the case. Likewise, in this case, in my judgment the court has to be satisfied that SHS will not be at risk of prejudice if the new point is allowed because it might have adduced other evidence at trial, or otherwise conduct the case differently. It should consider for itself, as best it can, what factual issues are likely to be raised by the new case. Moreover, in circumstances such as the present, where there has been no disclosure relative to the new way in which the appellant seeks to put his case and virtually no opportunity to consider the matter, I do not consider that the court can reasonably expect the party against whom the amendment is sought to be made to be specific about the evidence he would have adduced had the point been raised earlier. If there is any area of doubt, the benefit of it must be given to the party against whom the amendment is sought. It is the party who should have raised the point at trial who should bear any risk of prejudice.

The circumstances in which a party may seek to raise a new point on appeal are no doubt many and various, and the court will no doubt have to consider each case individually. However, the principle that permission to raise a new point should not be given lightly is likely to apply in every case, save where there is a point of law which does not involve any further evidence and which involves little variation in the case which the party has already had to meet (see Pittalis v Grant [1989] QB 605). (If the point succeeds, the losing party may be protected by a special order as to costs.) Sometimes a party will seek to raise a new point because of some other development in the law in other litigation, which he could not fairly have anticipated at the time of the trial. In some cases, the court may wish to take into account the importance of the point raised. Likewise, in the Paramount case cited by Mr Macpherson, one of the factors which influenced the Privy Council was the fact that it was in the public interest to allow a public body, which would otherwise end up liable to pay large sums, to raise on appeal a point of construction involving no new evidence.

Turning to the present case, in my judgment, it is clear that the new ground of appeal set out above will require further factual findings on areas not covered by the judgment the judge. The new case involves at the least drawing inferences from the whole of the trading relationship between the parties with respect to Sky + equipment. Moreover Mr Macpherson did not disagree with Mr Dhillon’s analysis about the five steps involved in Mr Crane’s case set out in [17] above. The whole of the trading relationship of the parties was not in issue at trial. Previously, Mr Crane’s case involved determining the true effect of the contractual documentation. The new way of putting the case involves examining whether Mr Crane was an intermediary for the sale of Sky + boxes on behalf of SHS by looking at the substance rather than the form of the parties’ arrangements. Although Mr Macpherson sought informally in his submissions to delete paragraphs c and d of his proposed amendment, those paragraphs certainly form an integral part of his application and may well fall within b even if omitted from c and d. There was no formal application to remove those paragraphs. Without doubt, they raise further factual matters. There is a risk of prejudice if the new point is decided by this court without SHS having the opportunity to obtain disclosure and call evidence. It would have that right if the court were to order a new trial but that is not an appropriate course where the appellant has had the opportunity to raise all these points at the trial which has already taken place.

Moreover, there has been no real explanation why the points that Mr Crane now seeks to take were not taken below.

I have borne in mind that the new ground of appeal would raise a number of important points on the interpretation of the regulations, for instance who is an agent for the purpose of the regulations read with the directive which they implement, and the effect of the arrangements being in part for the provision of services as well as goods and the meaning of secondary services. The points are also very important to Mr Crane. But it would not be right to allow even important points of law to be litigated if there is a risk of prejudice to SHS in allowing them to be raised at all.

Mr Macpherson submits that on Mr Crane’s side no fresh evidence will be required. But he cannot give that assurance on behalf of SHS. Otherwise, Mr Macpherson’s submission would come close to imposing a restriction on the evidence that they can call on a particular issue. In any event it would be inappropriate to draw inferences from documents unless all the evidence bearing on the issue that either party wanted to call was available to the court.

Mr Dhillon placed some reliance on the admitted fact that if Mr Crane loses this appeal he is likely not be able to pay the costs. In reaching my decision, I have not found it necessary to rely on this point. Provisionally, I do not consider it would be a bar to allowing a new point to be raised on appeal.

Mr Dhillon submits that there was a concession by Mr Crane that his case was limited to the way it was put at trial. Mr Dhillon’s point is that SHS were successful in getting Mr Crane to limit his case; he thus conceded any wider one. But in all the examples we have been given Mr Crane’s case was simply clarified. What was outside his case so clarified was thus abandoned. In my judgment, the word concession adds nothing here and should be reserved for the situation where a party has expressly conceded the position that for example the legal consequence of a particular transaction. There is no statement that Mr Crane was giving up some point that he considered he had. A concession in that sense would be a strong indication that permission to raise a new point should not be given since a party cannot blow hot and cold and be enabled to act in a manner inconsistent with his express acts.

For the reasons given above, I would reject the application to amend the appellant’s notice. Furthermore, although the appeal raises a number of issues about the application of the regulations those issues do not arise unless Mr Crane was a commercial agent in respect of the Sky + boxes for the purpose of the regulations. In the circumstances, if my Lords agree that this application must be dismissed, I would also dismiss the appeal in this matter.