Unite the Union v Liverpool Victoria Banking Services Ltd & Ors

The Claimant (“Unite”) is a trade union formed in April 2007 through the merger of two other trade unions, the Transport and General Workers Union (“T&G”) and Amicus. Upon the merger all property and rights of T&G and Amicus vested in Unite.

The Defendants (“LV”) are legal entities within the Liverpool Victoria group and carry on business selling insurance and other financial products.

LV had arrangements with T&G and Amicus (known as “affinity” schemes) whereby the unions provided LV with access to their members in order that LV could market their services to them. In return LV discounted the price of the products to union members and agreed to pay a commission to the unions upon its sales of products. A dispute has arisen between LV and Unite as to how the commission should be calculated. Unite stopped providing LV with membership data and LV terminated the arrangement. In these proceedings three broad issues arise for decision:

Recital (A) to this agreement provided that LV wished to provide certain insurance and financial products and services to members of T&G and their dependants. Clause 1 defined T&G Members as members and employees of T&G and their dependants. Clause 2 provided that the start date was 1 January 2005. Clause 3 defined the Services to be provided by LV as, inter alia, “advising those T&G Members who reasonably request such advice in respect of insurance and financial related products and services and marketing such products and services to T&G Members from time to time as set out at Schedule 1”. Clause 4 listed the duties of T&G which included the obligation to provide LV “with access to T&G Members through the T&G distribution and organisational networks for the sole purpose of enabling LV to perform and promote the Services.” In addition T&G was to provide LV “with direct access to T&G membership data for the purposes of promoting and performing the Services to T&G Members.” Clause 6.1 provided that LV shall provide T&G “with such management information for each Quarter in respect of its T&G customers and its performance of the Services as to include that set out in Schedule 2” and clause 6.2 allowed T&G to “audit LV’s performance under this Agreement”. Clause 8 provided that LV shall have “exclusive rights to advertise the Services within T&G using T&G held membership data”. Clause 10 provided that the agreement would last for an initial period of 5 years.

Clause 9.1, headed Commission and Fees, provided as follows:

“In consideration for the obligations and undertakings of T&G in this Agreement LV will pay to T&G a share of the Annual Premium, Loan New Business, and Net Retained Initial Commission earned by [LV] in respect of the Services during the period of this Agreement as set out in Schedule 1……”

Annual Premium, Loan New Business, and Net Retained Initial Commission were defined in clause 1. “Annual Premium” was the sum paid by a T&G Member in respect of a relevant product as set out in Schedule 1, “Loan New Business” were the total sums advanced to T&G Members in each 12 month period less any amount used to settle existing loans and Net Retained Initial Commission was the commission or fees earned and retained by LV in respect of the provision of financial advice or mortgage advice. Schedule 1 identified the products to be marketed and sold (eg motor and home insurance) and stated the percentage of such sums to be paid as commission, between 1% and 10%.

This agreement was in very similar terms. Its start date, pursuant to clause 2, was 1 July 2006. Clause 10.1, entitled “Commission and Fees” provided:

“In consideration for the obligations and undertakings of Amicus in the Agreement [LV] will pay to Amicus a share of the Annual Premium, Annual Premium Content and Net Retained Initial Commission in respect of the Services during the period of this Agreement in accordance with Schedule 1.”

It is to be noted that the clause does not contain the phrase “earned by LV” which appears in the equivalent clause in the T&G agreement, clause 9. Neither party said this affected the true construction of the agreement. There were one or two other minor differences from the T&G agreement but neither party suggested that they led to the Amicus agreement being construed differently from the T&G agreement.

The aim or object of the affinity agreements was to enable the members of the union to obtain insurance and other services at discounted rates from a company whose services were endorsed by the union. This was common ground between the parties even though, remarkably, the agreements did not mention any discounted rates. That aim or objective was to be achieved by the union providing LV with access to its membership in order that LV might market its insurance and other services to the membership. In return the union was entitled to a share of the annual premium (and other revenue) earned by LV.

In 2007, after the conclusion of the agreements with T&G and Amicus in 2005 and 2006, LV decided to seek a greater share of the retail insurance market. Mr. Hickford, an account manager within LV, said that around 2007 LV “shifted the balance of its focus from affinity schemes as its core business to more of a focus on sales to the general public, although affinity schemes remained an important part of its business.” Ms. Riches, a marketing manager within LV, said that to achieve this shift of focus “a number of key management personnel were recruited” from other retail insurance competitors “with the mandate of growing the LV Group’s general insurance business and becoming a top 5 player in the market.” LV appears to have been successful in that regard. Mr. Beard, LV’s retail business director, gave evidence that LV now had an 11% share of the retail car insurance market which makes LV the third largest private motor insurer.

LV’s success in promoting its insurance products to the general public has given rise to the present dispute. For amongst the members of the public who purchased LV’s insurance products were Unite members who did so without using the telephone line or website identified in LV’s marketing materials sent to the members of Unite (“the dedicated channels”). At a meeting on 14 October 2009 LV gave a presentation to Unite which referred to some 51,026 “other policies”, which policies, it was suggested at the meeting, referred to policies sold to Unite members which had not been included in the Unite “book” of business. Mr. Hickford, the day after the meeting, requested an explanation of the figures from the personnel within LV who had made the presentation. He said in evidence that he thought the figures were too high. He stated in his contemporaneous email that “the union is now asking me to explain further, because they are surmising that maybe they have some further Commission due…….” It does not appear that he ever received an explanation of the figures. He was still seeking an explanation in February 2010. As it happens Unite did not, at this stage, make any claim for any further commission.

In 2011 LV and Unite met to discuss the continuation of the affinity agreement after the initial 5 year period had expired. On 30 June 2011 Mr. Beckett, Unite’s new Director of Legal, Membership and Affiliated Services, expressed Unite’s wish to receive commission for sales to Unite members regardless of the channel through which the members approached LV. Although there is no contemporaneous record of Mr. Beckett having been informed of the October 2009 meeting it seems likely that Mr. Beckett must have been informed of it and what had been stated as to the volume of business contracted with members of Unite by means other than the Unite affinity scheme. A briefing note suggests he was.

In the evening of 30 June 2011, presumably after that meeting, Mr. Hickford asked Mr. Brooks, a senior business development manager with LV who focussed solely on affinity agreements, to try and verify exactly how many LV policies were held by Unite members. He thought that the figure of 51,026 mentioned in 2009 was wrong. Mr. Brooks asked Ms. Riches for assistance later in the evening of 30 June 2011 and she, in the morning of the next day, provided Mr Brooks with certain figures. Mr. Brooks reported to Mr. Hickford that day stating that the data provided by Ms. Riches showed that the “50k” figure mentioned in 2009 had increased. The data showed that, as at 8 June 2011, 72,548 Unite members held a motor insurance policy underwritten by LV which had been purchased through channels other than the dedicated channels. Of those, 57,553 had been purchased through channels open to the general public with the balance having been purchased through other union schemes. Far fewer policies, namely 29,829 policies, had been issued to Unite members under the Unite scheme. The figures surprised Mr. Brooks but he said that he had no reason to challenge the figures. These figures do not appear to have been passed on to Unite. Nor does Unite appear to have requested such figures. Counsel for LV told me that it was not known whether these figures were correct. However, the volume of sales to the Unite members through channels open to the general public compared with the volume of sales to Unite members through the dedicated channels explains why the issue between the parties is now of importance to them.

Unite claims that it is entitled to commission on all sales to members of Schedule 1 products. LV claims that it is only obliged to pay commission on sales of such products when the member responds to LV through the dedicated website or telephone line identified in the marketing literature sent by LV to the members of Unite.

The clause which defines LV’s obligation to pay commission in the T&G agreement describes the obligation as being to “pay …a share of the Annual Premium [and other income of LV] earned in respect of the Services …….” I have added the emphasis because the words emphasised describe the Annual Premium in respect of which commission is to be paid. It is those words which, in the context of the agreement as whole, must be construed in order to decide which of the competing contentions is correct. Although, as I have stated, the wording of clause 10 of the Amicus agreement is slightly different neither party suggests that it should be construed differently.

The court’s task when construing an agreement is to determine the meaning which the agreement would have conveyed to a reasonable person having all the background knowledge which was reasonably available to the parties at the time when the agreement was concluded.

The T&G and Amicus agreements were concluded in 2005 and 2006.

History of the arrangement between T&G and LV: When the agreement between T&G and LV was made in June 2005 there already existed an arrangement between the parties which arose as follows.

Membership Services Direct Limited (“MSD”) was an affinity marketing company, that is, it facilitated deals between unions and insurers and other service providers such as banks or financial advisers. MSD did not underwrite insurance and so received a commission from the insurer or other service provider which it shared with the union. One such union was the T&G. The products promoted by MSD (the FamilyCare scheme which included car and home insurance) were branded with the T&G logo. Commission was payable to T&G when a customer purchased a T&G product. That could only be done via the T&G sales channel facilitated by MSD. It had no sales channel to the general public. There was no written agreement between MSD and T&G.

LV purchased MSD in 2002. LV had its own insurance products which it sold to the general public. LV became the underwriter of the FamilyCare scheme.

In December 2004 Heads of Agreement were signed. T&G agreed to allow LV to use the T&G name and logo and to market insurance and financial services under the T&G FamilyCare branding. In return LV was to pay T&G “agreed commission on premiums received and agreed percentage of new loan advances made pursuant to the Contract.” Thus the sums paid by LV to T&G were a commission on the premiums received (because LV was the underwriter of the T&G scheme) rather than on the commission received by MSD from the underwriter. It was the evidence of Mr. Hickford, the account manager of LV who in 2005 was the group liaison manager for the affinity relations team, that commission was only paid on sales made under the T&G scheme.

History of the arrangement between Amicus and LV: When the agreement between Amicus and LV was made in July 2006 there already existed an arrangement between the parties which arose as follows.

In 1996 LV had purchased Frizzell Financial Services (“Frizzell”). It appears that Frizzell, like MSD, did not underwrite policies but facilitated agreements between underwriters and union members. In 1997 Frizzell entered into an agreement with the Amalgamated Engineering and Electrical Union (“AEEU”), which agreement was later novated so that, as from January 2001, the agreement was between LV and AEEU. The novation agreement provided that commission would be paid at the rate of 1.7% on new business or renewal business premiums, that is, “premiums collected from AEEU members who have identified themselves as members.” Amicus was formed in 2004 when the AEEU merged with the Manufacturing Science and Finance Union (“MSF”). The agreement between LV and AEEU continued following the formation of Amicus in 2004. According to Mr. Hickford a member of Amicus was able to identify himself as a member by using the specified scheme phone number and email addresses set out in the marketing for the Amicus scheme.

The background material known to both parties in 2005 and 2006: I have concluded that when T&G and Amicus agreed in 2005 and 2006 to “pay …a share of the Annual Premium [and other income of LV] earned in respect of the Services …….” the background knowledge reasonably available to both parties was likely to have been that LV was an underwriter of financial products which it marketed to the general public. That is suggested by Mr. Hickford’s evidence; and Mr. Brown, Unite’s marketing manager who worked for Amicus from 2001, confirmed in his evidence that as at 2005 and 2006 he knew that LV provided insurance services to the general public. In addition both parties appreciated that when LV marketed its products to the members of T&G and Amicus the members were invited to purchase the products at discounted prices using designated telephone numbers or website channels identified in the marketing materials sent to them. This appears to have been Mr. Brown’s understanding in 2005 and 2006. He expected that members would use the dedicated channels because at that time LV did not “aggressively market” to the general public.

However, I accept Mr. Brown’s evidence that until October 2009 he thought that the union were entitled to commission where a union member bought a policy from LV whether or not they had used the designated channels. He was surprised to learn in October 2009 that a large number of union members had bought policies from LV and did not feature in the quarterly management information sent by LV to the union. It is true that no claim for further payments of commission was made by Unite and that no mention of the point was made in any internal memorandum. Nevertheless, my view of Mr. Brown as a witness was that he appeared to be truthful (he answered questions seemingly without guile and accepted points against his evidence) and, more importantly, his evidence in this regard was to some extent supported by Mr. Hickford’s contemporaneous email in October 2009 reporting that that “the union is now asking me to explain further, because they are surmising that maybe they have some further Commission due…….”

There was much evidence about how LV allocated its marketing costs to the various methods by which it sold policies from, in particular, 2007; marketing to the general public, marketing to union members, and marketing to brokers. However, there was no evidence that such information was shared with T&G or Amicus in 2005 and 2006 and it was not suggested by counsel for LV that such information formed part of the background available to both parties.

Clause 9 of the T&G agreement and clause 10 of the Amicus agreement do not oblige LV to pay a share of the Annual Premium earned by LV without qualification. On the contrary LV is obliged to pay a share of the Annual Premium earned by LV “in respect of the Services”. The question raised by the dispute between the parties is what those words mean.

The Services in the T&G agreement are defined by Clause 3 as, inter alia, “advising those T&G Members who reasonably request such advice in respect of insurance and financial related products and services and marketing such products and services to T&G Members from time to time as set out at Schedule 1”. Thus the Services contemplate LV advising union members who request advice in respect of insurance and finance related products and services and marketing such products and services to them.

There was, however, an issue between the parties as to the scope of the Services. Andrew Green QC, counsel for LV, submitted that the advice and marketing contemplated by that definition must be that advice and marketing which the agreements as a whole contemplated, namely, the advice and marketing to union members which LV was enabled to perform by reason of the affinity agreements. Mr. Colin Wynter QC, counsel for Unite, submitted that any sale of a Schedule 1 product to a union member was within the Services, whether or not the marketing which led to that sale was to the general public or to the membership of the union.

The width of “the Services” must depend upon the definition of the Services in clause 3.1, read in the light of the agreement as a whole. When one has regard to the agreement as a whole it is clear, in my judgment, that the advice and marketing which forms part of the definition of “the Services” was intended to be that advice and marketing to union members which LV was enabled to perform by reason of having been provided with access to the union membership by the union pursuant to its obligations under the agreement. For example, clause 3.2 contemplated that T&G was to be regularly consulted with regard to documentation and publicity material. It cannot have been intended that T&G would be consulted about marketing material to the general public. Clause 3.4 entitled LV to use the T&G name and logo for the marketing and promotion to T&G members. Such marketing must have been that directed at T&G members rather than to the general public. Clause 4.1 obliged the union to provide LV with access to T&G members “according to the criteria agreed within the Annual Marketing Plan and otherwise from time to time [agreed] between T&G and LV.” This again suggests that the marketing contemplated by the agreement must be that which is directed at the union members rather than at the general public because T&G would hardly be involved in agreeing criteria for marketing to the general public. Finally, clause 4.5.1 provided that “all marketing, advertising or promotional material relating to the Services which [LV] wishes to include in any communication to be sent by T&G or to otherwise publish or distribute under clause 4.5 shall be submitted by [LV] to T&G for prior approval…” T&G would hardly be expected to approve marketing material directed at the general public.

Mr. Wynter submitted that “the Services” involved selling insurance products to union members, advising union members in relation to those products and marketing the products to union members. He relied not so much upon the definition of “the Services” in clause 3.1, which does not specifically mention the selling of products, but upon the recital to the agreement, which specifically mentions the provision of insurance products to union members. Whilst the definition of “the Services” in clause 3 does not specifically mention the selling of products it is implicit in the definition as a whole that selling must be contemplated. That is because the definition also includes a claims handling and settlement service which necessarily assumes a prior sale; see clause 3.1.2. In addition, the definition includes the placing of Relevant Business (defined as the provision of the services set out in clauses 3.1.1, 3.1.2 and 3.1.4) in the insurance market. That must also necessarily assume the selling of a policy; see clause 3.1.3. I therefore accept counsel’s submission, not by reference to the preamble, but by reference to the definition of “the Services”.

However, although “the Services” include the selling of Schedule 1 products I do not consider that any selling of Schedule 1 products to union members is within the definition of the Services. For the reasons I have already given the selling in question must be that which follows upon the advice and marketing to union members. I do not consider that the selling can be divorced from the marketing which leads to the selling.

Having determined the scope of “the Services” one can approach the true construction of clause 9 of the T&G agreement and in particular of the phrase “a share of the Annual Premium….earned by [LV] in respect of the Services…..” The words “earned in respect of the Services” qualify or describe the annual premium, a share of which is to be paid to the union as a commission. The natural meaning of the words “in respect of the Services” is that they import some connection between the earning of the Annual Premium and the Services. They suggest that the Services must in some way lead to the earning of the premium. Thus the most obvious connection indicated by the words is a causal connection between the Services and the Annual Premium. Such a connection will be established if the provision of the Services by LV is an effective cause of the Annual Premium being earned. That is, in my judgment, the meaning which a reasonable person would expect the words “in respect of the Services” to bear.

Counsel for LV agreed with this approach to the construction of clause 9 (see paragraph 21 of his Skeleton Argument) but went further and said that the clause contemplated one particular form of causal connection, namely, a sale to union members of Schedule 1 products bought through the designated channels in the marketing literature sent to members. Counsel for Unite did not accept that the words “in respect of the Services” imported a causal connection between the earning of the premium and the Services (though he accepted that where a union member purchased a Schedule 1 product as a result of LV’s exclusive access to union members commercial common sense dictated that LV should account to the union for commission, see paragraph 21(4) of his Closing Submissions). Thus the parties were united in opposing, though for different reasons, what appeared to me to be the natural construction of the words “in respect of the Services”. I shall consider each party’s submission as to the meaning of the agreement.

Mr. Wynter submitted on behalf of Unite that where there had been a sale of a Schedule 1 product to a union member the premium will necessarily have been earned “in respect of the Services” since “the Services” include the selling of a Schedule 1 product to a union member. It will be apparent from my conclusion as to the meaning of “the Services” that I am unable to accept this submission. It is true that “the Services” necessarily include the selling of a Schedule 1 product to a union member but, to be within the definition of “the Services”, such sale has to have been pursuant to the marketing of union members envisaged by the agreement, namely, such marketing as was made possible by reason of LV’s access to the union members through the agreement. Mr. Wynter further submitted that where there had been a sale of a Schedule 1 product to a union member LV will necessarily have advised the union member and therefore the advice and sale which enabled LV to earn the premium were “in respect of the Services”. But again, in my judgment, such advice and sale must, in order to be within “the Services”, have been pursuant to the marketing to union members envisaged by the agreement, namely, such marketing as was made possible by reason of LV’s access to the union members through the agreement. Mr. Wynter submitted that this approach to the meaning of services was restrictive and unwarranted. I disagree. It seems to me to be the natural construction of the definition of the Services in clause 3 in the context of the agreement as a whole. Finally, Mr. Wynter relied upon clause 8.1 of the Amicus agreement pursuant to which Amicus agreed not to permit any other supplier of services which “are the same as the Services” to advertise them in any Amicus publication. He said that this clause would be meaningless if the Services included only sales made as a result of LV’s marketing to union members. I do not accept this submission. Clause 8.1 (like clause 8.1 of the T&G agreement) is a provision which gives LV exclusive access to union members. The union undertakes not to enable any “other supplier of services that are the same as the Services” (or, in the T&G agreement, any “other supplier of services similar to the Services”) to advertise them in union literature. The natural construction of this clause, the meaning which it would be reasonably understood to bear, is that no other supplier of insurance products will be afforded the opportunity to advertise them in union literature. The clause is not meaningless if “the Services” only include sales made as a result of LV’s marketing of union members. It provides LV with the exclusive right to market union members.

I am therefore unable to accept Mr. Wynter’s suggested construction of the agreements. His construction, which, in effect, entitles the union to commission even where there is no causal connection between the earning of the commission and the performance of the Services, is inconsistent with the aim or object of the agreements.

Mr. Green, on behalf of LV, submitted that since “the Services” embrace the sale of Schedule 1 products consequent upon the marketing envisaged by the agreement and since the marketing sent to union members advises union members to contact LV by means of a designated telephone number or website address the phrase “Annual Premium …………..earned by [LV] in respect of the Services” can only refer to sales to union members via those designated channels.

Whilst this construction is consistent with the aim or object of the agreements there are, it seems to me, several difficulties with this construction.

First, the phrase “in respect of the Services” is general and does not specifically refer to premium earned when a union member contacts LV through a designated telephone number or website address.

Second, it is possible to envisage premium being earned when a union member, who is persuaded by the marketing sent to him, nevertheless contacts LV using a telephone line available to the general public (because, for example, he has mislaid the marketing information sent to him) and then purchases a Schedule 1 product. If that union member states that he is a union member LV accepts that his business would be added to the Unite “book”, that he would get the discount and that Unite would get the commission. Mr. Green said that this was a concession on behalf of LV; strictly speaking, the premium had not been earned “in respect of the Services”. I do not accept that this can realistically be described as a concession. Commission is payable to Unite in such a case because the premium has in truth been earned by LV by reason of the marketing to union members envisaged by the agreement (notwithstanding that the union member had mislaid the marketing material and so had to use a public telephone number) and so was earned by LV “in respect of the Services”. The example exposes the difficulty with Mr. Green’s submission.

Third, Mr. Green’s submission assumes that all of the marketing envisaged by the agreement mentioned the designated telephone number or website address. No doubt much of the marketing material did. But the marketing of LV to union members was not restricted to providing the designated telephone number or website address. It included marketing techniques designed to make LV’s “brand” attractive to union members. In addition to direct mailing to union members there were adverts in union magazines, inserts into union communications such as welcome packs to new members and marketing at conferences. There was “dual branding” using both the LV and Unite logos. This association of the union with LV, and its apparent endorsement of LV, led to what was described in evidence as the “halo” effect. Tara Riches, LV’s marketing manager, accepted that dual branding helped build trust in the product. The union’s endorsement of LV might therefore cause a member to decide to buy insurance from LV, even though he has never read or noted the designated telephone number or website address. The premium which LV earned from such a sale was earned, it seems to me, because of the marketing in which LV was permitted to engage by Unite pursuant to the terms of the agreement. Such premium was therefore, in my judgment, earned by LV “in respect of the Services”.

For these reasons I am unable to accept either of the two constructions urged upon me by the parties. In my judgment commission is payable when there is a causal connection between the Services and the earning of premium. That is the meaning of the phrase “in respect of the Services” which is consistent with the aim or objective of the agreements. I do not consider that there is any ambiguity in the construction of that phrase in the context of the agreements as a whole which would justify examining which of two possible constructions is more consistent with business common sense. The meaning which, in my judgment, the phrase reasonably bears certainly does not flout “business common sense”. On the contrary, linking the payment of commission to premium which is earned as a result of the marketing made possible by the agreements is consistent with business common sense.

Both parties said that this construction of the agreements was impractical and therefore could not have been intended by the parties. Mr. Wynter said that because LV held all the information concerning the sale of insurance products it could not have been intended that the union should have the burden of establishing a causal connection between the Services and the earning of premium. Mr. Green said that because LV was obliged to provide quarterly information as to the number of products sold and the amount of commission earned it cannot have been intended that LV should do anything other than record the number of sales and resulting commission to union members who had used the designated sales channels. The membership information provided by the union was not sufficiently accurate or up to date for that purpose, did not include dependants (who were within the definition of members) and (in the case of Amicus) did not include “excluded members” (those who had expressed a wish not to be marketed to by LV). For these reasons both counsel submitted that the construction of the commission clause which required a causal connection between the Services and the earning of the annual premium was unworkable and therefore could not have been intended by the parties.

When the T&G and Amicus agreements were made with LV in 2005 and 2006 it is more likely than not that there were relatively few sales to union members other than through the designated channels. Neither MSD nor Frizzell were underwriters and so did not market products to the general public. LV, which bought those companies, did market to the general public, but it was not until 2007 that LV shifted the balance of its focus from affinity schemes to sales to the general public. That shift in emphasis proved to be successful with the result that by June 2011 72,548 Unite members held a motor insurance policy underwritten by LV which had been purchased through channels other than the “Unite scheme”, and of those 57,553 had been purchased through channels open to the general public with the balance having been purchased through other affiliate schemes. Far fewer policies, namely 29,829 policies, had been issued to Unite members under the Unite scheme. Thus the difficulties now relied upon by counsel have a prominence which they probably did not have in 2005 and 2006 when the agreements were made. In 2005 and 2006 it is probable that neither party saw any difficulty in the provision that commission was payable on “the annual premium …..earned by [LV] in respect of the Services” because the focus of LV’s marketing was on affinity schemes and not on sales to the general public. That phrase has, in my judgment, a clear meaning. It requires a causal connection between the Services and the earning of the annual premium. Such difficulties as there might be in deciding whether the causal connection has been established cannot, in my judgment, imbue the phrase with a meaning it cannot reasonably bear. The fact that the success of LV’s marketing to the general public since 2007 has now made it financially important to identify the share of LV’s annual premium which has been earned as a result of the Services and the share which has been earned as a result of the marketing of LV’s products to the general public cannot alter the clear meaning that the phrase “in respect of the Services” had in 2005 and 2006.

For these reasons I am not dissuaded from construing the commission clause in the manner I have suggested by reason of suggested practical difficulties in its application which have come to the fore because of a change in LV’s marketing focus after 2005 and 2006 when the agreements were entered into. In any event the suggested difficulties have not prevented Unite from submitting that, by reason of the halo effect, where a member purchases a Schedule 1 product the “overwhelming likelihood” is that this was as a result of LV’s direct and exclusive access to the union membership. Nor have the suggested difficulties prevented LV from submitting that any union member who has been influenced by the halo effect is likely to have mentioned that he was a member and as a result would have been put on the Unite scheme. It seems to me that the parties, with the assistance of the marketing expertise available to them, are probably able to assess the likely percentage of the sales to union members who did not use the designated channels which resulted, in part, from the marketing envisaged by the affinity agreements.

Unite seeks a declaration that it is entitled to commission “on any financial product of a type set out in Schedule 1 to the T&G [or Amicus] Agreement sold to any T&G [or Amicus] member and/or any Unite member during the term of the agreement.” Such declaration makes no mention of the agreed requirement that the premium on which commission is payable must be earned “in respect of the Services”. It declares that Unite is entitled to commission on premium earned regardless of whether or not it had been earned “in respect of the Services”.

For the reasons I have given Unite is not entitled to the declaration which it seeks.

LV’s case that Unite is estopped from contending that the agreements should be construed in the manner for which it contends is now academic. However, I have already accepted Mr. Brown’s evidence that until October 2009 he thought that the union was entitled to commission where a union member bought a policy from LV whether or not they had used the designated channels. This finding is inconsistent with LV’s case that all parties had a mutual understanding that LV was not obliged to pay commission otherwise than on sales made through the designated channels.

LV relied upon the provision of commission statements and marketing information to the unions which dealt solely with sales through the designated channels. However, there was nothing in such documents to show that there were other sales to union members on which commission was not being paid.

LV also relied heavily upon the fact that after October 2009 no claim to commission was advanced on other sales until negotiations between the parties had broken down and that until then the point was only made for the future (in the context of the negotiations to continue the affinity agreement) and not for the past. Reliance was also placed on Unite’s wish to encourage members to purchase through the designated channels.

It is true that it was only late in the day that the present claim was first advanced by Unite. It is also true that Unite, in the person of Mr. Brown, enquired as to how members with a “non-Unite” policy might be persuaded to take up a Unite policy so that Unite could obtain the commission. Unite’s conduct in failing to make a claim after October 2009 and in making enquiries that suggested that Unite had no such claim in mind may have led LV to think that, notwithstanding what had been said at the October 2009 meeting, Unite did not consider that such a claim could be made. However, such conduct was someway short of a statement as to Unite’s understanding of the agreements (albeit to be inferred from its conduct) upon which Unite expected LV to rely (for the importance of which see Pearson v Lehman Brothers [2010] EWHC 2914, at para.344 per Briggs J. and [2011] EWCA Civ 1544, at para.107 per Lloyd LJ.) In any event, even if there were any such common assumption as has been alleged, there was no evidence of any reliance by LV upon it. Mr. Beard, LV’s retail business director, when asked what if anything LV would have done differently had there not been that shared assumption was unable to identify anything LV would have done differently. Thus it would not have been unconscionable or unjust for Unite to assert the true legal position.

There is no dispute that Unite ceased to provide membership information after June 2011. LV says this was a breach of the agreements. Unite claims to have been entitled to do so, upon the assumption that LV’s construction of the agreements is correct, on the grounds that LV, in breach of an obligation to use that data for “the sole purpose” of enabling LV to perform and promote the Services, used the information to sell products to union members irrespective of whether the members used the designated channels or not. This argument fails because the assumption upon which it is based is not correct. In any event the suggestion that LV acted in breach by reason of the circumstance that certain union members who were the subject of marketing pursuant to the agreements purchased products without using the designated channels was mistaken. When the information was used to market union members it was being used “for the sole purpose” of performing and promoting the Services. Unite’s decision to stop providing membership information was therefore a breach and LV was entitled to terminate the agreements as alleged.

However, LV’s claim to a refund of the advance payment of £1.65m. paid to T&G less commission earned (pursuant to clause 9.7) is dependent upon commission equal to the advance payment not having been earned. The amount of commission earned by Unite remains to be determined or agreed and unless and until it is determined or agreed the court cannot order any sum to be repaid.

In respect of the Amicus agreement there was, instead of the Advance Payment, a guarantee that the amount of commission earned during the five years of the agreement would be not less than £950,000 (see clause 10.3). It is common ground that to the extent that any further commission is due to Unite that amount may be set-off against LV’s liability pursuant to the guarantee.

I shall ask the parties to agree an order giving effect to this judgment.