Vick v Vogle-Gapes Ltd

The defendant company, Vogle-Gapes Ltd., to which I shall refer in this judgment as "the Company", was incorporated in October 1999 to take over the business carried on up to that point by a firm which traded under the style "Town and Country". The Company still uses that name as a business name. The business of the Company is in reality a development of a business originally established in 1962 by Mr. Barry Page. In this judgment I shall refer to that business, both in its original form, and once it came to be carried on by a firm, as "the Business". In the first instance the Business sold handbags and other leather goods to retailers and to the public. From 1975 the Business started to design its own products. It was successful in this field of endeavour until about 1988, when it began to feel the effects of competition from, amongst others, manufacturers based in the Far East, which had lower costs of production. The Business then diversified into areas such as shoes, belts and corporate clothing. However, that sector, too, proved vulnerable to competition from overseas manufacturers. In about 1992 Mr. Barry Page decided that production of the goods which he sold should be transferred to the Far East. At the same time there was a further change in the focus of the Business towards tool belts and gloves for the hardware industry and gloves and footwear for gardeners. It is in those sectors that the Company still carries on business.

The business established by Mr. Barry Page has, certainly in recent years, been a family business. Mr. Barry Page retired as the managing director of the Company in October 2005, but he has been succeeded by his son, Nick. Mr. Nick Page was, until he took over as managing director, the sales director. Another son of Mr. Barry Page, Mr. Jamie Page, has also been involved in the business of the Company on the information technology side.

In 1993 four people were employed in the business which Mr. Barry Page had founded. The decision was made to employ three salesmen, bringing the total number of employees to seven. There are now a total of 25 employees, including a sales force of ten.

The claimant, Mr. Tony Vick, was first associated with what became the Company when he was employed in September 1996 as a salesman. His status changed in 1999 when he gave up his employment and became a self-employed sales agent for the Business. Whilst employed as a salesman in the Business Mr. Vick made a good impression. He was considered to be effective and to have a good rapport with customers. In those circumstances Mr. Barry Page and Mr. Nick Page were amenable to the suggestion of Mr. Vick that the nature of the arrangement should alter and he should become self-employed. An agreement in writing dated 1 February 1999 was entered into between "Town and Country" and Mr. Vick. In this judgment I shall refer to that agreement as "the Agency Agreement" . It will be necessary to refer to some of the terms of the Agency Agreement in some detail later in this judgment. However, at this stage it is material to record that the Agency Agreement came to an end in April 2004 in circumstances about which there was a degree of dispute. The case for Mr. Vick in this action was that the Agency Agreement was repudiated by the Company, he accepted that repudiation and, as a result of that, he was entitled to be paid compensation. He also claimed other sums which were said to have fallen due, but not to have been paid, under the terms of the Agency Agreement. The case for the Company was that, far from it being the Company which repudiated the Agency Agreement, it was actually Mr. Vick. He was said to have done that by purporting to treat the Company, in a letter dated 2 April 2004 to Mr. Barry Page, perhaps as clarified in a telephone conversation with Mr. Page on 6 April 2004, as having repudiated the agreement. Alternatively, so it was contended, if Mr. Vick did not repudiate the Agency Agreement in that way, he had repudiated it by his conduct which showed, so it was asserted, that he did not intend to be bound by the terms of the Agency Agreement. That repudiation was said to have been accepted by the Company by a letter dated 15 April 2004 written by Mr. Barry Page to Mr. Vick.

As matters turned out, the precise allegations made in the Particulars of Claim on behalf of Mr. Vick and the precise answers given to those allegations on behalf of the Company in the Amended Defence and Counterclaim proved to be of significance in the trial. It is therefore material to set out the way in which the material parts of the case of both Mr. Vick and the Company were pleaded. I deal first with the pleaded case of Mr. Vick.

It is convenient to start the consideration of how Mr. Vick's case was pleaded by looking at his case as to how his agency came to an end. What was pleaded was:-

I shall come to Mr. Vick's Primary Case in more detail later, but for the present it is material to consider how the secondary case was put. The reference to alleged breaches of the agency agreement being set out in paragraphs 8 - 12 of the Particulars of Claim was an error. The paragraphs intended to be referred to were in fact 7 to 11. They were in the following terms:-

In the event, the allegations pleaded in paragraph 11 of the Particulars of Claim were not pursued. The customers in respect of sales to whom it was contended that Mr. Vick was entitled to commission which was not paid proved to be two, in the end, namely Otter Nurseries in respect of two sales in early 2004 and Charlie's Stores more generally. Although those non-payments of commission were relied upon as being repudiatory breaches of the Agency Agreement and there were more general allegations of late payment of commission, the real focus of the allegations which formed part of the Secondary Case that the Company had repudiated the Agency Agreement was the contention that it had done that by varying Mr. Vick's "Territory" and "Market". Those expressions were defined in the Agency Agreement and I shall come to the definitions later in this judgment. The various pleaded references to "Regulations" were to Commercial Agents (Council Directive) Regulations 1993, SI 1993 No. 3053, (to which I shall refer in this judgment as "the Commercial Agents Regulations") and again I shall come to them later in this judgment.

In the Amended Defence and Counterclaim the response to the allegations in paragraphs 19 and 20 of the Particulars of Claim was to be found, so far as is presently material, in paragraphs 20, 21 and 23:-

The alleged justification of the Company for varying the "Territory" and "Market" of Mr. Vick was dealt with in paragraph 9 of the Amended Defence and Counterclaim. After a general denial of the allegation of acting in breach of the Agency Agreement in relation to the variations, the following specific matters were pleaded as being relied upon:-

The only other plea in the Amended Defence and Counterclaim which it is appropriate to set out at this stage is that in paragraph 11, in response to the allegations in paragraph 9 of the Particulars of Claim:-

Mr. Vick was in fact the only sales agent ever engaged by the Company. All of its other sales staff at any point have always been employees.

When Mr. Vick worked for the Company as a salesman, that is to say, before the making of the Agency Agreement, the area which he covered was the South West of England and South Wales. After the making of the Agency Agreement he covered the same area and also the Channel Islands. For the purposes of the activities of Mr. Vick the South West of England initially comprised the counties of Cornwall, Devon, Somerset, Avon, Wiltshire and Dorset, while South Wales comprised the counties of Dyfed, Powys, West Glamorgan, Mid Glamorgan, South Glamorgan and Gwent.

The products distributed by the business carried on by the firm and then by the Company at the times material to this action reached the ultimate retail customer in one of two ways. Some stocks of products were held by wholesalers and orders could be placed by customers through wholesalers. However, the other route by which products could be supplied was in response to direct orders placed with the firm or the Company.

Many customers were dealt with at local level by salespersons soliciting orders. However, some large customers were dealt with at a central level. These included large supermarket chains such as Tesco Stores Ltd. There were also customers who were large on a regional, but not a national level. These customers were mostly dealt with by the salesperson with responsibility for the relevant region.

The role which Mr. Vick took on both as a salesman for the Business and, later, as a sales agent, involved him not only in seeking sales of the products of the Business, but also in an activity called "merchandising". "Merchandising" in the sense in which that term was used at the trial of this action comprises keeping neat and tidy display stands provided by the Business to its customers and, more particularly, keeping them filled with a stock of the relevant products. How this would happen, as I understand it, is that on a visit to a customer of the Business the salesman would check the relevant display stands and notify the customer what stock needed to be replaced. The customer would then be persuaded to order stock to replace what was missing from the display stands. The stock so ordered would be supplied from stock held by a wholesaler used by the Business. Within the Business orders for stock placed in this way were called "Transfer orders ex warehouse" abbreviated on occasions to "TOEW". The evidence was that Mr. Barry Page and Mr. Nick Page considered that TOEWs were an important aspect of the success of the business and a good way of achieving relatively easy sales.

In the Agency Agreement the Business was called "the Principal" and Mr. Vick was called "the Agent". The first clause of the Agency Agreement contained a number of definitions. Some of those definitions are important to the issues in this action, and so it is material to set them out:-

Appendix 1 to the Agency Agreement was in these terms:-

The only retail outlets not included within the Territory by Appendix 2 to the Agency Agreement were those of Great Mills. The products listed in Appendix 3 were gloves, garden tool holders, footwear, hardware tool holders and knee pads. I have already explained the geographical extent of the Territory.

In the context of the issues in this action the following were the material provisions of the Agency Agreement, in addition to the definitions in clause 1:-

It was common ground at the trial before me that it was important to the determination of the issues in the action to have regard not only to the terms of the Agency Agreement in the events which happened, but also to consider the impact upon the facts of the case of the Commercial Agents Regulations. For present purposes the material provisions of the Commercial Agents Regulations are these:-

Mr. Vick's case was that the Company determined the Agency Agreement without notice in circumstances in which it was not entitled to do so and was thus entitled to the compensation for which Regulation 17 (6) and (7) of the Commercial Agents Regulations provide. The case for the Company was that there was no such entitlement because either Mr. Vick himself terminated the Agency Agreement or because it was entitled to treat him as having repudiated the agreement and to bring the agreement to an end by acceptance of the repudiation. In the first event, so it was asserted, the right to compensation was excluded by Regulation 18 (b), none of the exceptions to that provision being applicable, so it was said. In the second event, the right to compensation was excluded by Regulations 16 and 18(a). It was countered on behalf of Mr. Vick that, if it was indeed he who had terminated the Agency Agreement, he had been entitled to do so by reason of the repudiatory breaches of it by the Company, and thus the exception in Regulation 18(b)(i) applied to preserve his right to compensation.

Before grappling with these alternative analyses it is appropriate to indicate my findings as to the facts of the case.

Mr. Vick gave evidence on his own behalf at the trial. Broadly speaking his account of matters during the period of the Agency Agreement was that he acted properly in the execution of his duties to the Company under the Agency Agreement, which was treated as continuing in force between him and the Company after the incorporation of the Company in October 1999 and its takeover of the Business. He was shown a number of documents which appeared to record criticisms or concerns in particular about his merchandising of display stands of customers of the Company, but he did not accept that any of the concerns or criticisms expressed were justified. It was also suggested to him that his sales performance certainly by 2003 left something to be desired, but he did not accept that either. He did not agree that in 2003 and 2004 his attitude to the Company was to the effect that he would carry out his obligations under the Agency Agreement in the manner he saw fit and that the Company would just have to put up with it. All of these matters were said, on behalf of the Company to be part of the background to the termination of the relationship between the parties and to justify, if it were necessary for the Company to justify, a termination by it of the Agency Agreement.

In addition to his own evidence, there was called on behalf of Mr. Vick as a witness Mr. Andrew Fox, who until June 2002 had been the Sales Manager of the Company. Further, there was put before me as uncontested a witness statement from Mr. Spencer Goodall, who was the immediate predecessor of Mr. Fox. Save in relation to one matter, concerning the increase in the amount of the commission paid to Mr. Vick from 8% to 9%, I did not find the evidence of Mr. Fox of any assistance in relation to the matters which I have to decide. The evidence of Mr. Goodall did not appear to bear in any helpful way upon any issue in dispute before me.

On behalf of the Company Mr. Barry Page, Mr. Nick Page, Mr. Richard Pyrah, Mrs. Amanda Finney and Mr. Paul Bissell were called to give evidence. Mr. Pyrah was appointed Sales Manager of the Company after the departure of Mr. Fox. Mrs. Finney was, and is, employed by the Company on what was called Sales Order Processing. Her evidence was really directed to one, rather minor, issue to which I shall come. Mr. Paul Bissell was the managing director of a customer of the Company who was called to give evidence as to his perception of the quality of the service provided by Mr. Vick to the Company.

Before indicating the evidence which I accept, it is appropriate to make reference to the contemporaneous documentation which was put before me and the evidence of the various witnesses in relation to such documentation.

Under the Agency Agreement, on its face, Mr. Vick was entitled to be paid commission in respect of sales to customers within the area for which he was responsible, whether or not he was involved in the particular sale. However, it was the case of the Company that a special arrangement varying the written terms of the Agency Agreement had been made in respect of a customer called Charlie's Stores ("Charlie's"). The evidence of Mr. Nick Page was that Charlie's, which seems to have been based in Newtown, Powys, was on the boundaries between the "Territory" of Mr. Vick and the areas covered by the sales person who dealt with the Midlands, Kate Parker, and the sales person who covered North Wales and the North West of England, Mike Powell. He said that he agreed with Mr. Vick that Charlie's would be covered by Mike Powell and that Mr. Vick would not deal with it. Subsequently, according to Mr. Nick Page, he understood that Mr. Fox had agreed with Mr. Vick that Kate Parker would handle Charlie's. It followed that Mr. Vick was not entitled to commission on sales to Charlie's and no commission was ever paid. Mr. Vick's evidence was that he knew that someone else was dealing with the business of Charlie's and that he himself was not. He obviously knew that he was not being paid commission on sales made by the Company to Charlie's. He never in terms complained about that before the commencement of this action. Indeed, he never made any express claim in respect of commission on sales of products to Charlie's until he made his witness statement dated 2 May 2006. He told me that he was not sure whether he was entitled to commission in respect of sales of products to Charlie's until he read the Agency Agreement, inferentially in the context of formulating his claims in this action. Because no claim in respect of commission on sales to Charlie's was ever formally pleaded, there was never any formal response to it on behalf of the Company. The issues in respect of Charlie's only became crystallised during the course of the evidence. The total alleged value of sales to Charlie's in relation to which Mr. Vick claimed commission was £ 3,487.34.

In relation to sales to customers within his "Territory" which were completed by a delivery from a wholesaler Mr. Vick obviously knew of the sale if he had himself been directly involved in obtaining it, for example a TOEW. However, there were sales which were effected by a retailer placing an order directly with a wholesaler, which the wholesaler met from a stock of the products of the Company which the wholesaler held. In those circumstances neither Mr. Vick nor the Company would be aware of the sale unless the relevant wholesaler informed the Company about it. I think that it was common ground that from October 2002 wholesalers used by the Company did provide information to the Company about such sales and appropriate commission was allowed. However, before that, according to Mr. Nick Page, the information just was not available. His evidence was that he discussed the situation with Mr. Vick sometime in about the summer of 1999 and it was agreed between them that in order to compensate Mr. Vick for loss of commission to which he was entitled on sales made by wholesalers the details of which were unknown, the Company would increase the rate of commission paid to him from the 8% for which the Agency Agreement provided to 9%, an increase in the rate of commission of 1/8, or 12.5%. Mr. Nick Page told me that it was understood that this arrangement would only continue until such time as appropriate information could be obtained from wholesalers to enable an accurate calculation of the commission due to be made. He said that he confirmed the arrangement made in a letter dated 6 August 1999 to Mr. Vick. In that letter he wrote:-

Mr. Vick was asked about this arrangement and this letter. He said in cross-examination that he did not recall the letter. He said that he was almost sure that his commission did not increase until after 1 March 2000 in the circumstances with which I deal in the next paragraph of this judgment.

Mr. Fox told me that he had a high opinion of Mr. Vick and his work on behalf of the Company. That, he told me, was what prompted him in effect to reward Mr. Vick for his efforts as from 1 March 2000 by increasing the rate of commission paid to him from the 8% for which the Agency Agreement provided, to 9%. He notified Mr. Vick of that decision in a letter dated 16 February 2000. The letter also dealt with another matter. That was that a company called Wyevale had a number of garden centres spread across the country which were dealt with, so far as ordering from the Company was concerned, at a national level. Nonetheless merchandising was still required to be done in the garden centres operated by Wyevale, and to reflect that it was agreed to pay a commission on the sales to Wyevale in Mr. Vick's area, but at a lesser rate than applied to customers dealt with directly by Mr. Vick. The text of the letter dated 16 February 2000 was this:-

Mr. Nick Page was asked in his turn about this letter. He said that the 9% commission arrangements were consistent with those already in place following his discussion with Mr. Vick the previous summer save for the new arrangements in respect of Wyevale.

Mr. Vick did not act as an agent only for the Company. In 1999 he acted for a company called Lincoln, which dealt in wrought iron products, a company called Plum Products, which dealt in wood products, and a company called Ward Plysu, which dealt in plastics. The agency for Ward Plysu came to an end in 2001, and those for Lincoln and Plum Products in 2002. In 2000 Mr. Vick obtained an agency for a company called AFK Marketing, which also dealt in wood products. That agency, as I understand it, is continuing. In 2001 Mr. Vick obtained an agency for a manufacturer of pumps, Gemini, but that only lasted until 2002. Between 2002 and 2004 he had an agency for a paint company, AKZO Nobel. In September 2002 Mr. Vick obtained an agency for a plastics company, Elho. That agency is continuing. Mr. Vick's other continuing agencies are for Burton McCall, a hardware company, and for DLF Trifolium, a garden seed company. The first of these agencies commenced in November 2002 and that for DLF Trifolium started in January 2004. It appears that Mr. Vick did not in fact comply with the letter of clause 3.3 of the Agency Agreement in relation to any of his other agencies. However, Mr. Pyrah told me in his evidence that he was aware of Mr. Vick's agencies for Burton McCall, AKZO Nobel and Elho and was not concerned about them.

It was common ground that the rate at which commission was paid by the Company to Mr. Vick after October 2002 was 9%.

Mr. Fox acknowledged that Mr. Vick was not very good at merchandising. That said, Mr. Fox thought that his deficiencies in that area were compensated for by his talents as a salesman. Nonetheless, the failures of Mr. Vick in the sphere of merchandising were the subject from time to time, at least from May 2001, of comment at management meetings held by the senior executives of the Company. These included, whilst he was employed by the Company, Mr. Fox, as well as Mr. Barry Page, Mr. Nick Page, and others. In March 2002 it was suggested at a management meeting that Mr. Fox should meet Mr. Vick to discuss with him the need to carry out merchandising. Mr. Fox did visit Mr. Vick. The upshot of the visit as reported at a management meeting in May 2002 was that Mr. Vick asserted that he had merchandising under control and would employ his son-in-law just to merchandise for the Company. In the event that did not happen. When he was asked about that in cross-examination Mr. Vick said that he could not afford to employ his son-in-law to work for him, having regard to how much that would have cost and how much money he was making from acting as a sales agent for the Company.

On 8 November 2002 Mr. Nick Page wrote a memorandum to Mr. Vick following a meeting with him at a trade show in Cheltenham. The expressed purpose of the memorandum was to confirm the discussion between them at their meeting. From the heading in the memorandum what was discussed was merchandising. The material part of the memorandum was in these terms:-

Mr. Vick was asked about that memorandum in cross-examination. He accepted that he may have been lax on one or two accounts, but said that he did the majority of the merchandising on the more important of the customers of the Company. The Company designated customers according to a scale starting at A and going down to D. The further down the alphabet one got the less important the customer was and so the less effort it was appropriate to put into merchandising. Mr. Vick said that he did merchandise the A and B customers. He also said that he preferred not to use the mechanism of TOEWs because he felt that whether he was paid commission on such orders depended upon the accuracy of the records of the supplying wholesaler and wholesalers in practice were dilatory in forwarding relevant records to the Company. Consequently he preferred to place direct orders with the Company on behalf of customers rather than go through wholesalers. I think that the problem with wholesalers not forwarding relevant records, until October 2002, was accepted on behalf of the Company.

In about February 2003 the Company decided to introduce a new tool for salespeople. It was a hand-held computer called an iPAQ. The idea was that details of all the products of the Company and of all customers in each sales area would be loaded onto the iPAQ. Each time a salesperson visited a customer and obtained an order that order would be entered into the iPAQ. A copy of the order could be printed out at once for the customer and the order itself could be forwarded through a mobile telephone link directly to the Company's computer. It was thought that this tool would save salespeople time and increase efficiency. It was also intended that a salesperson would enter into the iPAQ details of visits paid to customers on occasions upon which no order was obtained, just as a record of the visit having been made.

Mr. Vick is a gentleman of mature years. It seems to have been anticipated within the Company that he might not take readily to using the iPAQ. Consequently a decision was made that it should be introduced with the employed sales force of the Company first. Only once the system had been demonstrated to be working satisfactorily would Mr. Vick be asked to adopt it and be issued with an iPAQ.

Meanwhile the issue of merchandising activity, or the lack of it, on the part of Mr. Vick continued to exercise the Company. At the same time, according to the evidence of Mr. Nick Page, the perception within the Company was that from about April or May 2003 the volume of sales generated by Mr. Vick was declining. It is convenient to revisit this latter question later in this judgment. It was accepted by both sides at the trial that the volume of sales in the area for which Mr. Vick was responsible was accurately recorded, at least from October 2002, in the monthly commission statements produced by the Company. It will be necessary later in this judgment to analyse and to compare the figures shown in those statements from May 2003 onwards.

In June 2003 Mr. Vick attended a sales meeting. Afterwards he had a conversation with Mr. Barry Page. Mr. Page confirmed the substance of the conversation in a letter to Mr. Vick of 9 June 2003. The letter was to this effect:-

Mr. Vick did not respond to that letter in writing. He accepted in cross-examination that he did not speak to Mr. Barry Page about the content of the letter over the ensuing two months, or, as I understood it, at all. Mr. Vick's view, expressed to me during his cross-examination, was that, whatever the Company thought, he thought that he was doing a reasonable job.

It appears that there was a training day, or possibly two, on the iPAQ for sales people organised in August 2003. Mr. Vick was invited to attend, but did not do so. The Company's perception by this time was that Mr. Vick was difficult to communicate with and unresponsive.

Mr. Vick was issued with an iPAQ in the summer of 2003. He did not find it satisfactory. He was not able to use it to perform the functions for which it was intended, at least on a regular and reliable basis. The problem, he told me, was that various of the products of the Company were not in fact logged in the iPAQ. Many of his orders he continued to send through by telephone or by facsimile transmission. According to the evidence of Mrs. Finney, when Mr. Vick sent through an order manually it fell to her to log it on the Company's computer. In other words, a consequence for her as an individual of Mr. Vick not using the iPAQ to transmit an order was that she had more work to do. Her perception, she told me, was that Mr. Vick did not use the iPAQ properly, particularly because he did not understand that it was necessary to use the formal corporate title of each customer as logged in the iPAQ when placing an order. Mr. Vick told me in his evidence that he only ever received about one hour's training in how to use the iPAQ anyway. It is unnecessary for the purposes of this judgment to reach any conclusion as to the source of the difficulties which Mr. Vick had in using the iPAQ. Mr. Vick formed the view that the machine with which he had been issued initially was defective. So it was that in about October 2003 he was issued with a replacement iPAQ. That one did not seem to him to be any better.

Mrs. Finney gave evidence about a conversation which she had with Mr. Vick about his use or non-use of the iPAQ. She was indefinite as to when the conversation in question took place, but she was firm in her evidence that there had been such a conversation. At one point in her cross-examination Mrs. Finney suggested that the relevant conversation had been in February/March 2003, although I think that it was clear from her evidence that she fixed that date by reference to the date of issue of iPAQs. Mr. Vick denied the relevant part of the conversation. The conversation in question was referred to in a memorandum dated 17 October 2003 written by Mr. Nick Page to Mr. Richard Pyrah following a visit which Mr. Page had made to Mr. Vick's area over the previous couple of days. What Mr. Page wrote was:-

It was suggested by Mr. Oliver Segal, who appeared on behalf of Mr. Vick, that in referring to the conversation with Mrs. Finney about where the iPAQ might be stored Mr. Nick Page was resurrecting an incident already six months old, if it had ever happened at all, and was thus just trying to make trouble for Mr. Vick. That Mr. Page denied.

Mr. Pyrah did meet Mr. Vick at the Mills Show, as requested by Mr. Nick Page. Following it Mr. Pyrah wrote a letter to Mr. Vick to confirm what had been discussed. The letter was in these terms:-

Mr. Vick did not reply to the letter in writing. He told me that he did discuss its contents with Mr. Pyrah. He also said that in the discussion at the trade show which preceded the writing of the letter he had told Mr. Pyrah that he considered his merchandising to be very good.

Mr. Pyrah's account of the conversation which he had had with Mr. Vick following the writing of his letter of 27 October 2003 was that Mr. Vick had told him he could stuff the iPAQ and that he, Mr. Vick, was not bothered because it would cost the Company £ 100,000 to get rid of him. Mr. Vick's account of the conversation was that he had told Mr. Pyrah that the iPAQ was not working and he was fed up with it. He said that he told Mr. Pyrah that he, Mr. Vick, was doing a good job merchandising and that if they, the Company, were not happy, they would have to get rid of him and it would cost them £ 100,000.

It was then decided that the way forward from the perspective of the Company was to invite Mr. Vick to a meeting on 5 December 2003 to debate all outstanding issues. Mr. Nick Page wrote a letter dated 18 November 2003 to Mr. Vick about the meeting. He said:-

Mr. Vick did not respond to Mr. Page's letter of 18 November 2003. He did not produce any such programme as Mr. Page referred to in the letter. And he did not attend the meeting on 5 December 2003. He said that he was ill on the day in question, a Friday. He telephoned and left a message to that effect. He did not consult his doctor about his illness. He just rested at home over the weekend.

A management meeting took place on 15 December 2003 at which the situation concerning Mr. Vick was discussed. Following that meeting Mr. Pyrah sent a memorandum dated 19 December 2003 to Mr. Barry Page in which he wrote:-

The references to Leekes and Hurrans were to customers of the Company in the area covered by Mr. Vick whom the Company believed were not prepared to deal with it through Mr. Vick any more.

An analysis of the sales to outlets of various nationally managed accounts in the area for which Mr. Vick was responsible in the financial years 2002/3 and for the first two months of the year 2003/4 (the financial year of the Company began on 1 October) was prepared by Mr. Al Sheppard, the Company's National Accounts Manager, and sent to Mr. Barry Page under cover of a memorandum dated 22 December 2003. In each analysis there was a comparison with the previous year. The picture painted by the figures was very varied. One outlet had increased its purchases by 538%, from £ 277.81 to £ 1,772, between 2001/2 and 2002/3. That was the largest single percentage increase. However, as between 2001/2 and 2002/3 in each case there had been an increase in turnover. The average increase was 135%. The picture was different for the succeeding period. The largest decreases were of 100%, that is to say to no sales at all, from the previously modest levels of £ 242.40. In fifteen cases there had been a decline in sales as compared with the previous period, while in 11 cases there had been an increase. The average was of an increase of 2%.

Although the exercise was not carried out in advance of the meeting with Mr. Vick on 6 January 2004, to which I am about to come, it is convenient at this point to consider his turnover of sales in the period May 2003 to March 2004 as revealed by his commission statements and to compare the turnover each month with that of the same month in the preceding year and notice the percentage difference. The picture is as follows:-

Thus apart from November 2003, when there was a slight recovery, the trend was consistently downwards, as compared with the previous year, from September 2003.

Mr. Barry Page and Mr. Richard Pyrah met Mr. Vick at a place called Chateau Impney on 6 January 2004. The meeting appears to have been quite short. Mr. Barry Page in his cross-examination put it as lasting fifteen or twenty minutes. Mr. Page's evidence and that of Mr. Pyrah was that the principle of a reduction in the area covered by Mr. Vick was raised at this meeting. Mr. Vick in his cross-examination said that he did not recall that. The meeting was on any view not a happy one. Mr. Vick told me that he believed that he was doing a very good job for the Company. He said that he could not see where Mr. Page and Mr. Pyrah were coming from. The outcome was that a further meeting was arranged at a trade show in Salisbury for 21 January 2004. In a memorandum dated 7 January 2004 to Mr. Nick Page and others Mr. Barry Page reported on the meeting of the previous day in this way:-

According to Mr. Barry Page, the next meeting on 21 January 2004 was very short. Mr. Vick's account of it in cross-examination was that he told Mr. Page and Mr. Pyrah that he was not prepared to change the way he worked. Mr. Page, according to Mr. Vick, then said that there was no point in further discussion and he would do as he liked because the Company was his. Mr. Vick then said, he accepted, that if the Company wanted to get rid of him he would expect to be paid compensation of 2 years loss of earnings, which would have amounted to about £ 90,000. Mr. Barry Page and Mr. Pyrah in their evidence gave an account of the meeting similar to that given at the time by Mr. Page in a memorandum dated 22 January 2004 to Mr. Nick Page and others, which was:-

In the event what happened was that Mr. Barry Page wrote a letter dated 30 January 2004 to Mr. Vick. The letter was in these terms:-

The list attached to the letter contained 55 locations of customers in the counties which were intended to continue to form part of the area covered by Mr. Vick. The customers in the list included Leekes and Hurrans, the customers whom the Company considered were not prepared to deal with it through Mr. Vick.

Mr. Vick did not respond immediately to the letter of 30 January 2004. Mr. Barry Page wrote to him again on 17 February 2004, not having heard from him in the interim. What Mr. Page wrote was:-

Mr. Vick never in terms replied to that letter. He certainly did not make himself available for any meeting on any of the suggested dates. He told me in cross-examination that he arranged his visits to customers so far in advance that he was not able to attend a meeting at just a few days notice.

On 19 and 23 February 2004 the Company received orders from a customer called Otter Nurseries, a customer within the area for which Mr. Vick was responsible, for various goods which were agreed to be supplied at cost price, so that the customer could give them away to its own customers as a promotion. The total value of the two orders was some £ 7,000. The Company did not pay any commission to Mr. Vick in respect of those sales. Mr. Vick came to know of the sales, in which he had no direct involvement, and he made reference to them, and to his belief that he was entitled to commission in respect of them, in correspondence with the Company. The first such communication was a memorandum faxed to Mr. Pyrah on 22 February 2004. In that Mr. Vick wrote:-

Mr. Vick did reply to the letter of Mr. Barry Page of 30 January 2004 in a letter of 25 February 2004. Before writing his reply Mr. Vick had taken advice from the Professional Sales Association, a trade association of those involved in acting as commercial sales agents. That fact possibly explains why the letter which he wrote was headed "Without Prejudice" and contained a number of assertions as to his legal entitlements. I need not set out the parts of his letter which contained, in effect, legal submissions. The remainder of his letter was in these terms:-

Mr. Nick Page replied to Mr. Vick's fax to Mr. Pyrah of 22 February 2004 in a memorandum of 1 March 2004 as follows:-

Mr. Barry Page replied to the letter dated 25 February 2004 from Mr. Vick in a letter dated 5 March 2004. For present purposes the material parts of that letter were these:-

In his turn Mr. Vick replied to Mr. Barry Page's letter of 5 March 2004 in a letter dated 19 March 2004. In it Mr. Vick sought to argue points of law in a passage which I need not quote. The substantive part of the letter, so far as this part of this judgment is concerned, was this:-

At this time Mr. Vick spoke to Mr. Pyrah about the timing of his commission payments. Mr. Pyrah wrote to him a letter dated 22 March 2004 following a telephone conversation. Mr. Pyrah proposed a change in the system of payment, to which Mr. Vick did not, in the event, agree. The remainder of the letter was in the following terms:-

Mr. Vick's reaction to that letter was not conciliatory. He wrote a letter dated 28 March 2004 in which he said:-

The correspondence between Mr. Barry Page and Mr. Vick continued with a letter dated 29 March 2004 from Mr. Page in response to the letter dated 19 March 2004 from Mr. Vick. The letter was quite long, but it was important.

Mr. Vick told me in cross-examination that he had not received the letter dated 29 March 2004 when he wrote a letter dated 2 April 2004 to Mr. Barry Page to which I am about to come. Mr. Page told me in his evidence that he felt that in fact Mr. Vick had received it, but it suited him not to respond to it in the letter of 2 April 2004. The letter of 2 April 2004 is at the root of the principal issues in this action. The letter was in these terms:-

That letter was said on behalf of the Company to be a notice of termination of the Agency Agreement given by Mr. Vick. That was disputed by Mr. Vick. His case was that it was an indication of a claim to compensation in respect of the loss of his customers in the counties of Dorset and Wiltshire, plus the 55 other customers listed in the attachment to the letter Mr. Barry Page wrote to him on 30 January 2004. Alternatively, so it was contended on his behalf by Mr. Segal, if the letter on proper construction was a notice of termination given by Mr. Vick of the Agency Agreement, he was entitled to give that notice by reason of the repudiatory breaches of the Agency Agreement committed by the Company.

It was common ground between Mr. Vick and Mr. Barry Page that Mr. Page attempted to speak to Mr. Vick on the telephone twice on 5 April 2004. He was not able to do so, but left messages that he had called. On the next day they did in fact speak on the telephone. Mr. Vick's account of what happened was that Mr. Page said that he had received Mr. Vick's letter of 2 April 2004 and in the light of it there was no point in them meeting. Mr. Page's account was that he said to Mr. Vick that he wanted to meet him to discuss the letter of 2 April 2004, which he interpreted as a resignation on the part of Mr. Vick, but Mr. Vick said that it was too late and matters were in the hands of his solicitors.

On 7 April 2004 Mr. Barry Page wrote to Mr. Vick in response to his letter of 2 April 2004. What Mr. Page said was:-

The evidence of Mr. Vick was that he did not receive the letter dated 7 April 2004 until about 10 April. Mr. Page's evidence was that he sent it by facsimile transmission on 8 April.

Mr. Vick did not respond to Mr. Barry Page's letter of 7 April 2004 until 15 April 2004. He told me that he wished to seek the advice of the Professional Sales Association before he replied. His reply was to this effect:-

The last letter to which I need refer is the reply of Mr. Barry Page to Mr. Vick's letter of 15 April 2004. It too was dated 15 April 2004. Mr. Page wrote as follows:-

I regret to have to say that I was unimpressed by Mr. Vick as a witness. I formed the view that he was a truculent individual who was accustomed not merely to standing up for what he conceived to be his rights, but to doing so in forceful, nay crude, terms, if he thought it appropriate to make a point. I am completely satisfied that he did indeed tell Mrs. Finney that she should stow his iPAQ exactly where she told me that he had. She struck me as a straightforward lady of reasonable firmness and courage who might not have been offended by the language in question used by a friend in a humorous context, but who was surprised and shocked to find a man she did not know well, and considerably her senior in years, talking to her like that. I accept her evidence without hesitation. I find, so far as it may be material, that that conversation took place when Mr. Nick Page recorded it as having taken place, that is to say in the week ending 17 October 2003. A little later it was Mr. Pyrah's turn, when Mr. Vick told him that he could stuff the iPAQ and that it would cost the Company £ 100,000 to get rid of Mr. Vick. I was impressed by Mr. Pyrah as a witness and accept his evidence also without reservation. It appears, and I find, that Mr. Vick convinced himself that, as a self-employed agent, he was in a strong position to decide how he would perform his functions under the Agency Agreement and to resist any pressure from the Company to do anything which did not suit him. Thus he was not interested in making any effort to work with the iPAQ, and did not feel that he had to make any. I am sure that he was keen to emphasise to the representatives of the Company that it would cost it a large sum of money to get rid of him. That that was his response to Mr. Pyrah's letter of 27 October 2003 I am quite certain. It was a response which he gave to Mr. Barry Page and Mr. Pyrah at their meeting on 21 January 2004, as I find, combined on this occasion with what Lord Denning once described as an emphatic version of "You be off"(see R. v. Barnsley Metropolitan Borough Council ex p. Hook [1976] 3 All ER 452 at 454J - 455A) . So far as the meeting on 21 January 2004 was concerned, Mr. Vick hardly disputed that he had stated his opinion of how much it would cost the Company to get rid of him.

I was very impressed by Mr. Nick Page as a witness. He struck me as a thoroughly honourable and honest man. I have no doubt that in his evidence to me he was accurate, reliable and fair. There was a sustained attempt on behalf of Mr. Vick to depict Mr. Nick Page as a Machiavellian character, deviously plotting the downfall of Mr. Vick over a long period because he disliked him and disliked the idea of having a self-employed agent working for the Company. I think that it is clear from the terms of Mr. Nick Page's letters to Mr. Vick, and his memoranda about him, that he had no animus against Mr. Vick and was anxious to deal with him in a straightforward fashion, at the same time as promoting the interests of the Company. I accept his evidence that he agreed with Mr. Vick that Mr. Vick would not cover Charlie's, although it was strictly on the "Territory" of Mr. Vick, and that he would not be paid commission in respect of sales to Charlie's. I also accept the evidence of Mr. Nick Page as to the agreement made with Mr. Vick as to the increase in his rate of commission to 9% and the circumstances in which that agreement was made. I prefer that evidence to the evidence of Mr. Fox to the effect that the increase to a rate of 9% was a reward for good service. I formed the impression that Mr. Fox did not have a reliable recollection of events which took place now, after all, some seven years ago. Mr. Vick was not an employee and Mr. Fox accepted that he himself had had no authority to agree to an increase in the percentage rate of his commission. Such an increase required the consent of Mr. Nick Page. I was satisfied that his recollection of what he agreed to and why was accurate. Mr. Vick's evidence on the point was not a vigorous challenge to the recollection of Mr. Nick Page and, interestingly, did not in terms support the evidence of Mr. Fox as to what prompted the increase in rate. Although such may not have been expressed in terms at the time, I find that it was obvious to the parties, and represented their actual, but unexpressed intention, that the arrangement for the increase in the rate of commission to 9% should only endure as long as the problem which it was intended to address, namely lack of information from wholesalers as to sales handled by them from customers of Mr. Vick, continued.

I was also very impressed by Mr. Barry Page. He seemed to me to be a businessman of a rather old-fashioned sort, who was keen to have regard to the interests of the employees of the Company and those of Mr. Vick, as well as to the efficient and effective running of the Company. In my view Mr. Barry Page put up with a lot more from Mr. Vick than a younger, less emollient man would have done. I accept without reservation the evidence of Mr. Barry Page.

It was plain, as it seems to me, that Mr. Vick became increasingly difficult and unresponsive to the approaches of the Company over, in particular, merchandising, using the iPAQ and responding to competitor activity in his "Territory". I find that Mr. Pyrah, Mr. Nick Page and Mr. Barry Page all sought to deal constructively with Mr. Vick in relation to these issues, but met with no worthwhile response. There was no useful reply to Mr. Pyrah's letter of 27 October 2003. There was no response at all to Mr. Nick Page's letter of 18 November 2003. Mr. Vick did not attend the meeting arranged for 5 December 2003. He made no helpful suggestions at, or following, the meeting on 6 January 2004, notwithstanding that, as I find, the issue in principle of a reduction in his "Territory" and in his "Market" was then raised with him. His attitude at the meeting on 21 January 2004 was confrontational. One can well understand how it was that the senior management of the Company came to the conclusions that something had to be done, that Mr. Vick was not interested in being involved in a helpful way in considering what should be done, and that the reduction of the "Territory" and the "Market" along the lines of what was eventually set out in the letter dated 30 January 2004 was what was necessary. However, it was submitted by Mr. Segal on behalf of Mr. Vick that it was not open to the Company as a matter of law in the circumstances of the case to reduce the "Territory" and the "Market" of Mr. Vick under the Agency Agreement, and to that issue I shall shortly turn.

Before coming to deal with the issue of the ability, or not, of the Company to reduce Mr. Vick's "Territory" or his "Market", I should record my findings about what happened after Mr. Vick sent his letter dated 2 April 2004 to Mr. Barry Page. In particular it is necessary to make findings about what was said between Mr. Vick and Mr. Barry Page during their telephone conversation on 6 April 2004. On this question I accept the evidence of Mr. Barry Page that, whilst he offered to go down to Mr. Vick's area to meet him for a discussion, Mr. Vick said that it was too late and the matter was in the hands of his solicitors. That version of events Mr. Page recorded in his letter to Mr. Vick of 7 April 2004. Mr. Vick did not respond until 15 April 2004, by which time, he told me, he had taken further advice from the Professional Sales Association. While in his letter of 15 April 2004 Mr. Vick did dispute the account of the conversation between him and Mr. Barry Page on 6 April 2004 set out in Mr. Page's letter of 7 April 2004, it seems to me to be clear that the major purpose of the letter of 15 April 2004 was to seek to resile from the position which Mr. Vick had adopted in his letter of 2 April 2004 that the Agency Agreement was at an end, which position he had repeated on the telephone on 6 April 2004. It looks as if, perhaps with the aid of advice, by the time he came to write his letter of 15 April 2004 Mr. Vick had come to realise that he might have overplayed his hand in his letter of 2 April 2004 and in his conversation with Mr. Page on 6 April 2004. At all events, I am satisfied that the letter of 15 April 2004 was self-serving and intended to soften the position which Mr. Vick had adopted. It was not an accurate account of what Mr. Vick either intended in writing his letter of 2 April 2004 or of what he considered to be the effect of his conversation with Mr. Page on 6 April 2004.

Because of the way in which Mr. Vick's case that, if by the letter of 2 April 2004 he did bring the Agency Agreement to an end, he was entitled to do so, was pleaded, the issue whether the Company was entitled to take the step which it did by the letter of 30 January 2004 assumed great importance. In his written opening submissions Mr. Segal set out Mr. Vick's case in a passage which he repeated in his written closing submissions. That passage, with emphasis added in the version reproduced in the closing submissions, was to this effect:-

The general nature of the argument of Mr. Segal was that in construing any of the provisions of the Agency Agreement, and in particular clause 7, it was necessary to have regard to the obligation of the Company in clause 4.1.2 of the Agency Agreement to act towards Mr. Vick dutifully and in good faith. In other words, any power of the Company to do some act which could have repercussions upon Mr. Vick was only to be exercised dutifully and in good faith. I do not think that Mr. Jason Coppel, who appeared on behalf of the Company, dissented from that proposition. I am not sure that, without the agreement of the parties on the point, I should have reached the same conclusion, that is to say, that all express terms of the Agency Agreement which permitted the Company to do something were to be read as subject to the obligation in clause 4.1.2, but for the reasons which I shall explain, my doubt on the point did not prove to be material in the circumstances of the present case.

Mr. Segal submitted that the obligation to act towards Mr. Vick dutifully and in good faith was at least as wide as the obligation implied on the part of both an employer and an employee in a contract of employment to act towards the other with mutual trust and confidence. The content of that obligation was considered by the House of Lords in Malik v. Bank of Credit and Commerce International SA [1997] ICR 606. The formulation approved by the House of Lords was that the relevant party (in that case the employer):-

I accept those submissions of Mr. Segal. However, it is material to notice that, in the formulation approved by the House of Lords, a number of elements fall to be considered on the way to reaching a conclusion as to whether the obligation has, on particular facts, been breached. The first is that whatever has been done which is said to have amounted to a breach of the obligation must have been done without reasonable and proper cause. If what was done was done reasonably and for good cause, it is not a breach. Second, what was done which was said to have been a breach must have been calculated and likely either to destroy or to seriously damage the relationship of trust and confidence. It appears that what is required is deliberate, rather than inadvertent conduct, but that the conduct in question need not be targeted at the other party to the contract, as opposed to someone else. As Lord Steyn said in Malik v. Bank of Credit and Commerce International SA at paragraph 60:-

Mr. Segal submitted that an aspect of the obligation to act dutifully and in good faith towards Mr. Vick involved the need for any decisions made by the Company concerning him to be both genuine and rational. I accept that also. In his written closing submissions he set out his contentions to the effect that the decision of the Company to vary Mr. Vick's "Territory" and his "Market" in the manner set out in Mr. Barry Page's letter of 30 January 2004 was not rational, was not made with reasonable and proper cause, and was calculated and likely seriously to damage the relationship of trust and confidence between the Company and Mr. Vick as follows:-

Those submissions of Mr. Segal concentrated upon the performance of Mr. Vick as perceived by him and the effect upon him of the variations indicated by Mr. Barry Page's letter of 30 January 2004. However, in my judgment they were misdirected. I am completely satisfied that the variations to Mr. Vick's "Territory" and "Market" were not made by way of punishing him for some misdemeanour. Had they been imposed as a punishment, no doubt it would have been appropriate to consider as the first relevant matter the impact of the changes upon his income. However, he had no assured right to any level of income, no matter what the circumstances in the marketplace, so in fact, in my judgment, the impact upon Mr. Vick's earnings of the alterations to his "Territory" and "Market" was but one of the considerations to be taken into account, and not one which was obviously more important than other relevant considerations.

The first question which logically arises under clause 7.1 of the Agency Agreement is whether the threshold condition, that in the reasonable discretion of the Company Mr. Vick was failing to maximise sales opportunities within the "Territory" , was satisfied in the circumstances of the present case. Mr. Segal barely suggested that it was not - at paragraph 10 of his written closing submissions he seemed implicitly to accept that that condition was satisfied. I am certainly satisfied that the Company had good reason for holding the opinion, and did hold the opinion, that Mr. Vick was, as at 30 January 2004 failing to maximise sales opportunities in the "Territory". The issue of the failure of Mr. Vick effectively to merchandise customers of the Company was by that time a long-running sore, and one which he had said that he would address by employing his wife or his son-in-law to do merchandising. In fact he had done nothing. He had failed, at least, possibly refused, to adopt the new technology of the iPAQ which was viewed within the Company as an aid to obtaining sales because of the instant access to the Company's computer which it provided, a factor which it was thought would impress customers. He had failed to respond to the letter which Mr. Pyrah wrote him dated 27 October 2003 or to the letter of 18 November 2003 which Mr. Nick Page wrote him, in each of which he was invited to set out his proposals for dealing with the matter of merchandising, the use of the iPAQ, and how to respond to competitor success on his patch. He then failed to attend the meeting arranged for 5 December 2003. At the meetings with him on 6 and 21 January 2004 he made no constructive suggestions about merchandising, iPAQ use or responding to competitor activity. He declined to engage in discussion of a possible reduction in his "Territory" or his "Market". It seems to me that the only possible conclusion was that Mr. Vick was failing to maximise sales opportunities.

The next question, relevant to both clause 7.1 and clause 7.2 of the Agency Agreement in the light of the obligation of the Company in clause 4.1.2, was whether operating the powers conferred on it by clause 7.1 and clause 7.2 was calculated or likely to destroy or seriously damage the relationship of trust and confidence between the parties. I am entirely convinced that the intended purpose of the variations made in Mr. Vick's "Territory" and "Market" was not to destroy or seriously to damage the relationship between the Company and Mr. Vick. Did the variations objectively have that effect? That is difficult to say. Potentially one would imagine that they could have. However, on my findings Mr. Vick was not sufficiently interested in the possibility of variations being made to be prepared to discuss either the principle or the detail when the matter was raised with him on 6 January 2004. Again, his immediate reaction to the letter dated 30 January 2004 was not to complain that what was proposed was outrageous. So far as writing to the Company was concerned, he had no immediate reaction at all. He delayed in replying to the letter of 30 January 2004 until his letter of 25 February 2004. The reason for the long delay in reacting to the letter of 30 January 2004 was not really explained beyond Mr. Vick saying that he wanted to take advice from the Professional Sales Association. And when the response did come, it was not, "You can't do this.", but rather, "You will have to pay compensation". In other words, it appeared that Mr. Vick was entirely content to have his "Territory" and his "Market" reduced, as long as he was paid an amount of money which he considered appropriate. Provided that happened, it seems, he was quite content to continue working for the Company. It was not until 2 April 2004 that, on his pleaded case, he decided that the variations to his "Territory" and his "Market" amounted to repudiatory breaches of the Agency Agreement. However, strangely, there was no express reference in that letter to the making of the variations being a matter of complaint. At the trial Mr. Vick attempted to contend that the allegation that the Company had failed, "1. To act dutifully and in good faith to your agent, contra to Regulation 4." was intended to refer to the variations effected by the letter of 30 January 2004. I do not accept that. In my judgment that was a late attempt to seek to explain away why it was that what was the most significant of the matters alleged to be a repudiatory breach in the Particulars of Claim was not even mentioned in the letter of 2 April 2004. Another matter which is material to an objective consideration of the effect of the changes effected in Mr. Vick's "Territory" and in his "Market", as it seems to me, is that even after a reduction in his "Territory" and in his "Market", by clause 5.1.2 of the Agency Agreement Mr. Vick remained entitled to commission on sales to customers whom Mr. Vick had acquired as customers of the Company, and by clause 5.1.3 he remained entitled to commission on sales to customers in the "Territory". I see no justification for reading clause 5.1.2, as Mr. Coppel contended I should, as referring only to customers introduced by Mr. Vick whilst acting as agent for the Company, and thus as not including customers he had introduced whilst an employee. While, no doubt, the word "Territory" in clause 5.1.3 should be read, after a variation, as referring to the "Territory" as varied, the customers listed in the annexure to the letter of 30 January 2004 for whom Mr. Vick was no longer to be responsible remained in the "Territory" as varied. It thus appears that in fact the variations of his "Territory" and "Market" may, under the Agency Agreement, have had little effect upon Mr. Vick's income from commissions, save insofar as he might have sold more to the customers he was losing than his replacement or replacements did. Had there been argument about it, I think that I should have been inclined to find that Mr. Vick did not in fact treat the variations made to his "Territory" and his "Market" by the letter of 30 January 2004 as being any sort of breach, never mind a repudiatory breach, of the Agency Agreement. However, it was not argued on behalf of the Company that, if there were a repudiatory breach of the Agency Agreement as a result of the variations in Mr. Vick's "Territory" or his "Market", he had waived that breach or had affirmed the Agency Agreement after it, and I say no more about those matters.

On the assumption that the variations to the "Territory" and the "Market" of Mr. Vick were potentially such as went to destroy or seriously to damage the relationship of trust and confidence between Mr. Vick and the Company, the question would remain whether those variations were made with reasonable and proper cause. I am completely satisfied that they were. It is no part of the function of the Court to second guess the commercial decisions of those carrying on a business. Thus it is not for me to consider what else might have been done by the Company to address the problems which it was having with Mr. Vick, or what I would have done if in the position of the senior management of the Company. The issue is really whether what the Company did do was what, in another context, might be called within the range of reasonable responses. On my findings Mr. Vick's sales in his "Territory" were on a downward spiral from about September 2003. That was a matter which needed to be addressed and which Mr. Vick had been invited to address, but he had declined to do so. Linked with it was the long-standing issue of merchandising and Mr. Vick's failures in that area. Again he had been invited to address that issue and had failed to do so. His attitude to criticism and to suggestions that he was not performing his duties to the Company in accordance with the wishes of the Company was hostile. Essentially he considered that his level of performance was satisfactory and that the Company would just have to put up with it, or pay him a large amount of compensation to get rid of him. His lack of co-operation at a fairly basic level with the Company was manifested in his approach to the use of the iPAQ. Plainly, in my judgment, something had to be done to try and persuade Mr. Vick to confront the important issues which had arisen concerning his approach to acting as agent for the Company and his declining level of success in attracting orders. Effectively the Company had only three options. It could do nothing and just let Mr. Vick set his own agenda as to what he was prepared to do. That, I think, was obviously not a realistic option because it produced no solution from the Company's point of view to the problems. It could terminate the Agency Agreement. That would mean that the Company was no longer at the mercy of Mr. Vick in relation to what he was prepared to do, and how, in the "Territory", but it would create other problems, specifically an urgent need to replace a representative who had been active in the relevant area, which was not a small geographical area, for some 8 years. The third option was to do what it in fact did, that is to say, to reduce the size of the "Territory" and to reduce the size of the "Market". That option had a number of attractions from the point of view of the Company. It enabled it to retain the services of Mr. Vick, who was an experienced representative who had in the past shown a commitment to the Company and had achieved considerable success in the past in obtaining orders. It meant that the Company did not need to find an immediate replacement for Mr. Vick, but could allocate the parts of the "Territory" and the "Market" taken away from him to other members of the existing sales force. For the reasons I have explained, although I do not think that this factor was considered or recognised by the senior management of the Company at the time, the effect of the changes on the earnings of Mr. Vick may have been modest. But the most obvious benefit of the new arrangements was that Mr. Vick would not have so many customers to cover as before, and thus would have more time, in theory at least, to devote to the customers whom he was left to service. How great this benefit would be is difficult to assess in detail, because Mr. Vick acted as an agent for other companies and would continue to visit customers of those companies. The evidence was that some of those customers of other companies for whom Mr. Vick acted were located in Dorset and in Wiltshire, but the matter of what additional time would have been available to Mr. Vick to visit his remaining "Town & Country" customers was not really investigated in evidence. Against these factors, the only consideration which Mr. Segal really urged upon me as making the changes in the "Territory" and the "Market" alterations made without reasonable and proper cause was the effect which it was contended that those changes would have had on the income of Mr. Vick. Even if the effects upon the income of Mr. Vick were going to be as drastic as Mr. Segal contended, and as it seemed from the evidence of Mr. Barry Page he assumed, the issue was really one of how the balance should be struck. On the one hand, on the assumption Mr. Barry Page was making, Mr. Vick was going to suffer a considerable reduction in his income. On the other, he had consistently declined to face up to important issues and it was his recalcitrance which had brought about the situation as it was as at 30 January 2004. That recalcitrance included not even being prepared to discuss the proposed reductions in his "Territory" and in his "Market". Had he been prepared at least to discuss that matter he could have been informed what was then in the mind of the Company and had an opportunity to make any points he wished in relation to that. I am sure that, had he been prepared to engage in dialogue, even at that late stage, Mr. Barry Page would have been receptive. However, that was not how matters turned out. The Company was left with having to make a decision without any worthwhile input from Mr. Vick. For the reasons which I have given I do not see how the Company can be criticised for acting as it did in the circumstances.

I have reached the conclusion which I have expressed in the preceding paragraph on the basis that it is necessary to have regard to the provisions of clause 4.1.2 of the Agency Agreement in considering what use it was open to the Company to make of its powers in clause 7.1 and clause 7.2. I have already indicated my doubts as to the correctness of that approach. Those doubts become stronger if the issue is not simply whether some action taken in reliance upon the powers conferred by clause 7.1 and clause 7.2 was a breach of contract, but whether it was a repudiatory breach of contract. In general, in English law a repudiatory breach of contract is one which indicates an intention on the part of the contract breaker to abandon or refuse performance of the contract. Thus seeking to rely upon an express term of a contract, even mistakenly and wrongly, is not likely to indicate an intention to abandon or refuse performance of it. That was the effect of the holding of the majority of the House of Lords in Woodar Investment Development Ltd. v. Wimpey Construction UK Ltd. [1980] 1 All ER 571. The nature of the problem and the proper approach of the Court was explained by Lord Wilberforce in his speech at page 574B - E:-

The decision in Woodar Investment Development Ltd v. Wimpey Construction UK Ltd. was not cited to me by Counsel and no argument was addressed to me as to the applicability of any principle to be derived from it to any issue in the present case. I have therefore reached my decision that on the facts the Company was not in breach of the Agency Agreement by seeking to vary the "Territory" and the "Market" of Mr. Vick on the assumption that the parties were correct in their agreement that the provisions of clause 7.1 and clause 7.2 of the Agency Agreement were to be construed in the light of the provisions of clause 4.1.2 and on the assumption that any unjustified use of the powers in clause 7.1 or clause 7.2 would have amounted to a repudiatory breach of the Agency Agreement on the part of the Company. I mention the decision of the House of Lords simply in order to explain why I have doubts that the approach of the parties was correct.

At one point in his opening submissions Mr. Segal seemed to be submitting that the provisions of clause 7.1 and clause 7.2 of the Agency Agreement were unlawful in the light of the provisions of Regulation 19 of the Commercial Agents Regulations. There remained shades of that submission in his closing submissions. The nature of the argument was this. Regulation 19 prevents the parties to an agreement to which the Commercial Agents Regulations apply from derogating from the provisions of Regulations 17 and 18. But for the provisions of clause 7.1 and clause 7.2 of the Agency Agreement the only way in which a reduction in Mr. Vick's "Territory" or his "Market" could have been achieved was by a termination of the Agency Agreement and the substitution of some other agreement. On the termination of the Agency Agreement the compensation for which Regulation 17(6) and (7) provide would have been payable. Because clause 7.1 and clause 7.2 of the Agency Agreement enable something to be done which otherwise could not be done without terminating the Agency Agreement, without paying the compensation for which Regulation 17 (6) and (7) provide, they derogate from Regulation 17, which is prohibited by Regulation 19. The matter having been raised, Mr. Coppel answered it in his closing submissions.

The submission of Mr. Segal was, in my judgment, misconceived. Subject to the provisions of the Commercial Agents Regulations, and to any other relevant legislative inhibition upon the freedom of the Company and Mr. Vick to contract, it was entirely up to them to decide what provisions they wished to have in their contract. They were the masters of their own contractual fate. It is in the nature of any contract to confer rights or to impose obligations which would not exist but for the making of the contract. It is not, as it seems to me, a derogation from a right to compensation upon the termination of a contract for the parties to agree to some provision in their contract which does not involve termination, but which, if they had not agreed it, could only have come about by the making of some further agreement. In fact the analysis that a variation to a contract can only come about by the discharge of the original agreement and the making of a new agreement is itself false. A novation does conceptually involve the discharge by agreement of the original agreement and the substitution therefor of a new agreement, usually not between the same parties, or, at least, not all of the same parties. An ordinary contract can, however, be varied by agreement between the parties to it without discharge of the original agreement. Thus, if the Agency Agreement, when made, had not included clause 7.1 and clause 7.2, those provisions could have been added by agreement between Mr. Vick and the Company without discharging the Agency Agreement and substituting for it some other agreement. Moreover, the Company and Mr. Vick could, by simple agreement between them, have agreed a variation to the "Territory" or the "Market" as defined in the Agency Agreement. What the Company could not have done, but for the inclusion of clause 7.1 and clause 7.2 in the Agency Agreement, was unilaterally to modify either the "Territory" or the "Market". But that does not mean, as it seems to me, that by agreeing to those provisions in the first place, as part of the consideration for the making of the Agency Agreement, the parties thereby derogated from the provisions of Regulation 17 of the Commercial Agents Regulations, which, in the light of what they in fact agreed in clause 7.1 and clause 7.2, were irrelevant to the operation of those clauses.

The other matters pleaded in the Particulars of Claim as amounting to repudiatory breaches of the Agency Agreement which entitled Mr. Vick by his letter of 2 April 2004 to treat the Agency Agreement as at an end were the non-payment of commissions to which he contended that he was entitled and the late payment of commissions. As I have recorded, it was admitted in the Amended Defence and Counterclaim that, on occasions, for reasons outside the control of the Company, specifically the late provision of information by wholesalers, payments of commission were made late. The extent of the delays in payment was not much investigated in evidence. Mr. Vick asserted, but without any detail of when particular payments should have been made and when they were in fact made, that payments were habitually made late. When asked about it, the witnesses for the Company accepted only that there could have been delays of a few days from time to time. On the totality of the evidence I am not satisfied that the problem of late payment was perceived by the parties as at all significant. Mr. Vick did not even complain of late payment, rather than non-payment, of commission in his letter dated 2 April 2004.

So far as was known to Mr. Vick at the time he wrote his letter dated 2 April 2004, the only transactions in relation to which he considered that he was entitled to commission in respect of which commission had not been paid were the two sales to Otter Nurseries for promotional purposes earlier in 2004. The commission to which Mr. Vick considered that he was entitled in respect of those sales was 9% of £ 7000, that is to say, £ 630. In fact, on my findings as to the agreement concerning the increase in commission to 9%, the proper rate of commission, if commission were payable, was the rate agreed in the Agency Agreement, 8%, and thus the sum involved was £ 560. On my findings in relation to what was agreed concerning Charlie's, that sum of £ 560 was the only amount of commission arguably due to Mr. Vick when he wrote his letter dated 2 April 2004 which he had not been paid.

It is necessary to make findings as to whether Mr. Vick was indeed entitled to commission on the two sales to Otter Nurseries. I have indicated the position of the Company in relation to that alleged entitlement. However, no witness on behalf of the Company said in evidence that it had been specifically agreed with Mr. Vick that he would not be entitled to commission on sales of goods at a promotional price. Rather it just seems to have been thought that, as the Company was not making a profit on the sales, and Mr. Vick had had nothing to do with obtaining them, it was not appropriate for commission on the sales to be paid to him. When Mr. Vick was cross-examined about the matter of the Otter Nurseries sales he did not seem to think that the matter was necessarily straightforward. He said that there had never been any other sales at cost to customers in the "Territory". He told me that he thought that Mr. Nick Page should have arranged things with Mr. Vick before the sales were agreed and that, if Mr. Page had done so, he, Mr. Vick might have agreed to accept a reduced level of commission.

In my judgment the two relevant sales to Otter Nurseries did, under the express terms of clause 5.1.3 of the Agency Agreement, entitle Mr. Vick to commission. They were sales to customers within the "Territory". Thus he was, and is, entitled, in my judgment to commission on those sales in the sum of £ 560.

The next question is whether the failure or refusal on the part of the Company to pay that commission of £ 560 amounted to a repudiation of the Agency Agreement.

In the ordinary way a mere failure or refusal to pay money under a contract does not amount to a repudiatory breach of the contract. It is not, without more, an indication of an intention to abandon or refuse performance of the contract. However, at least in relation to a contract of employment, a deliberate refusal to pay money due to an employee may amount to a repudiatory breach of the contract. The leading authority in this area is the decision of the Court of Appeal in Cantor Fitzgerald International v. Callaghan [1999] 2 All ER 411. In that case the leading judgment, with which Nourse and Tuckey LJJ agreed, was that of Judge LJ. The statement of principle in the case was contained in this passage from the judgment of Judge LJ at page 420F - H of the report:-

Under a contract of employment the entire consideration moving from the employer to the employee takes the form of money or money's worth. If there is a deliberate refusal to supply any part of that consideration, it may not be particularly difficult to reach the conclusion that the employer has shown an intention to abandon or refuse performance of the contract. However, it is apparent from the passage which I have quoted from the judgment of Judge LJ that a non-payment which is not deliberate may well not lead to the same conclusion. It is, I think, clear, that in order to reach a conclusion on the facts of any particular case whether a non-payment of a sum due under a contract of employment amounted to a repudiatory breach of the contract on the part of the employer it is necessary to consider all of the circumstances, and in particular, whether there was a dispute about how much was due, how much of what was due was not paid, and the reasons for the non-payment.

Mr. Segal submitted that I should apply the principles expounded by Judge LJ in relation to a contract of employment by analogy to the circumstances of the present case. Mr. Coppel objected that Mr. Vick was not an employee of the Company and had deliberately structured his relations with the Company so that he should not be.

In my judgment it would be remarkable if the common law principles applicable to contracts of employment were different from the principles applicable to any other type of contract. It is an area in which there has been a significant amount of statutory intervention, and as a result of that a distinct body of law has arisen concerning contracts of employment, but that rather emphasises the fact that, but for that statutory intervention, the principles are the same. What, I think, is special about a contract of employment in relation to non-payment of money due to an employee possibly amounting to a repudiation of the contract, is the factual circumstance that the most important part of the contractual performance expected of the employer is payment of the agreed remuneration. Thus I find that the principles enunciated by Judge LJ in Cantor Fitzgerald International v. Callaghan are, in principle, applicable to other types of contract, such as the Agency Agreement.

However, applying those principles to the circumstances of the present case it is plain, in my judgment that neither late payment of commission, so far as it occurred, and non-payment of the commission of £ 560 due, as I find, in respect of the Otter Nurseries sales, amounted to a manifestation on the part of the Company of the abandonment of the Agency Agreement or of its refusal to perform it. I recognise that a refusal to perform does not have to be total, but can be of an important part of the obligations assumed under the contract. Nonetheless, it is clear that the Company did not abandon the Agency Agreement or refuse to perform a significant part of its obligations. On the evidence which I accept, the extent of late payment of commissions due was slight and was the result of the delays on the part of the Company's wholesalers in providing information to enable commission entitlement to be calculated. So far as the Otter Nurseries commission was concerned, Mr. Vick claimed it and the Company did not pay it. However, the circumstances were out of the ordinary and the Company had a rational, if, as I find, incorrect, reason for the stance which it adopted. Mr. Vick in his cross-examination seemed to accept that the situation was not clear-cut. But for the poor state of relations between the parties by the time the claim to commission in respect of the sales to Otter Nurseries was made, the probability is that a solution acceptable to both parties would have been thrashed out in discussion. However that may be, what is decisive, as it seems to me, against the analysis that by refusing to pay a relatively modest sum, in the context of his other commission earnings, to Mr. Vick the Company had shown that it had abandoned, or was refusing to perform, the Agency Agreement is that in all other relevant respects the Company continued to perform the Agency Agreement after the time the issue about Otter Nurseries arose until the Agency Agreement came to an end in the circumstances to which I am about to turn.

For the purposes of the trial before me Mr. Segal formulated a list of issues. Of those the first was did Mr. Vick terminate his agency by his letter of 2 April 2004 and/or what he said to Mr. Barry Page on 6 April 2004. At various points in his submissions Mr. Coppel described the letter of 2 April 2004 as a letter of resignation, but that description concealed, rather than illuminated, as it seems to me, what the real issues were. The real issues were whether, by that letter, Mr. Vick purported to accept some repudiation on the part of the Company of the Agency Agreement, and whether he made it plain that he was himself refusing to perform the Agency Agreement further. His case was that he did not do either of those things, and that the letter was simply an intimation on his part of a desire to make a claim for compensation in respect of the reduction in his "Territory" and his "Market" effected by Mr. Barry Page's letter of 30 January 2004. The Company's case was that upon proper construction of the letter Mr. Vick was indicating that he regarded the Agency Agreement as at an end.

In support of his submission that the letter was not a purported acceptance of a repudiation on the part of the Company, Mr. Segal contended that the letter was ambiguous and was treated as such by the Company in seeking clarification of it, first by Mr. Barry Page in his conversation with Mr. Vick on 6 April 2004 and then by the terms of his letter of 7 April 2004. Mr. Segal made reference to a decision of the Court of Appeal, Sovereign House Security Services Ltd. v. Savage [1989] IRLR 115, from which he sought to draw an analogy. However, that was a case of an equivocal verbal exchange in the heat of the moment, and it did not seem to me that any assistance was to be derived from it for the purposes of the present case.

Mr. Coppel submitted that the terms of the letter were clear and that the letter could only be read as Mr. Vick resigning from his agency in response to what he claimed were breaches of the Agency Agreement on the part of the Company.

In my judgment it is plain that by the letter dated 2 April 2004 Mr. Vick was purporting to accept the alleged repudiatory breaches of the Agency Agreement set out in the letter as bringing the agreement to an end. Five alleged breaches were set out in the letter, albeit all described in very general terms and without any particulars of what was being complained of. The effect of those alleged breaches was said to be, "You have made this agency untenable and unworkable. You are, therefore, depriving me of earning a living and fundamentally breaching my contract." That is the language of assertion of repudiatory breaches. As to what was to follow from the assertion that there had been such breaches, it was that Mr. Vick was going to take action against the Company "for the loss of the whole of the agency". The whole of the agency could only have been lost if the Agency Agreement were at an end. Any doubt that that was the position Mr. Vick was taking was removed by the threat that his solicitors had been instructed to proceed with legal action "If I have not heard from you with the offer of full payment by 15th April 2004". Full payment for loss of the whole of the agency again could only have been due if the Agency Agreement had come to an end.

I have already indicated my finding that the Company had not in fact committed any repudiatory breaches of the Agency Agreement before Mr. Vick wrote his letter dated 2 April 2004. By the letter he was stating that he was not going to offer further performance himself of the Agency Agreement - his position was that "this agency [is] untenable and unworkable". In the circumstances he was himself refusing further performance of the agreement and thereby repudiating it.

In the list of issues which Mr. Segal prepared it was assumed, by paragraph 7, that if I found, as I have, that Mr. Vick purported by his letter of 2 April 2004 to accept repudiatory breaches of the Agency Agreement on the part of the Company, and, if I found, as I have, that there were no repudiatory breaches on the part of the Company, the Company was successful in its defence of Mr. Vick's claim for compensation for termination of the Agency Agreement. In fact, as it seems to me, that analysis leaves out a necessary step before the stated conclusion could be reached. The indication on the part of Mr. Vick that he declined further performance of the Agency Agreement did not, of and by itself, bring the Agency Agreement to an end. It gave the Company an option. It could either accept the repudiation and treat the Agency Agreement as at an end, or it could affirm the agreement and seek to hold Mr. Vick to it. In fact, as it seems to me, the Company had little option but to accept the repudiation on the part of Mr. Vick, and did so. On my findings Mr. Vick, during his telephone conversation with Mr. Barry Page on 6 April 2004, indicated clearly that he considered that relations between him and the Company were at an end. The effect of Mr. Barry Page's letter dated 7 April 2004 to Mr. Vick was, as it seems to me, to accept that situation, unless Mr. Vick spoke to him or e-mailed him immediately on receipt of the letter. That Mr. Vick did not do, and the Agency Agreement, in my judgment, then came to an end. Mr. Segal in his closing submissions contended that the analysis which I have just set out was not contended for on behalf of the Company. So far as Mr. Coppel's closing submissions was concerned, that was correct, no doubt in the light of the position indicated in paragraph 7 of the list of issues. However, it was exactly the analysis contended for in paragraph 15 of the Amended Defence and Counterclaim.

It was common ground that, if I found that Mr. Vick repudiated the Agency Agreement and thereby brought the agreement to an end, he was entitled neither to damages at common law nor to compensation under the Commercial Agents Regulations. So far as the latter was concerned, in Bell Electric Ltd v. Aweco Appliance Systems GmbH & Co. KG [2002] EWHC 872 (QB) Mr. Justice Elias had to consider the effect of Regulation 18 of the Commercial Agents Regulations in a situation in which a commercial agent terminated his agreement with his principal in circumstances in which he was not entitled to treat the principal as having repudiated the agreement at common law. That, of course, is this case, on my findings. The learned Judge's consideration of the issue was:-

I respectfully agree with the analysis of Mr. Justice Elias and consider that the agreement of the parties on the point as to no compensation being payable in the situation with which I am concerned is sound.

In the light of my findings it is not strictly necessary to deal with the Company's alternative case that, if the Agency Agreement was brought to an end by it by the writing by Mr. Barry Page of his letter of 15 April 2004, not having accepted any antecedent repudiation on the part of Mr. Vick, it was entitled to terminate by reason of the repudiatory breaches of the Agency Agreement alleged in paragraph 23 of the Amended Defence and Counterclaim. However, as the matters relevant to this alternative case were fully argued, it is convenient to indicate my findings in respect of it.

Mr. Segal made a number of points in relation to the alternative case of the Company. The first was that, in effect, it was not open to the Company at all, because none of the reasons set out in paragraph 23 of the Amended Defence and Counterclaim was mentioned in the letter of 15 April 2004 and they were all known to the Company as at 15 April 2004. He submitted that a party was only at liberty to seek to justify terminating a contract by reference to reasons not stated at the time of the termination if the facts as to those reasons were not known to the party terminating at the time of the termination. He contended, without taking me to it, that that submission was supported by the decision in the well-known case of Boston Deep Sea Fishing and Ice Co. v. Ansell (1888) 39 Ch. D. 339. I reject that submission. As it seems to me, the correct principle is that stated in Chitty on Contracts 29th edition, paragraph 24-014:-

My attention was drawn to that passage by Mr. Coppel.

A more substantial objection on the part of Mr. Segal was that the Company could not rely, as justifying termination of the Agency Agreement, upon breaches of the agreement which occurred prior to some affirmation of the agreement on the part of the Company. That submission I accept as sound in law. I do not think that Mr. Coppel contested it.

In the circumstances of the present case, Mr. Segal submitted that the Company had certainly affirmed the Agency Agreement when it sought to use its powers under clause 7.1 and clause 7.2 on 30 January 2004 and thus could not rely upon any breaches of the agreement on the part of Mr. Vick which occurred prior to that date. Moreover, Mr. Segal submitted that the Company was continuing to affirm the contract right up to 2 April 2004.

I do not think that it was in dispute that the Company could not rely upon any breach of the Agency Agreement of which it had knowledge, if, after it possessed the requisite knowledge, it affirmed the agreement. At all events I accept that such is the correct position in law. The last letter written on behalf of the Company to Mr. Vick before he wrote his letter of 2 April 2004 was Mr. Barry Page's letter of 29 March 2004. It was plain, as it seems to me, from the terms of that letter that the Company was in it still treating the Agency Agreement as being in place and seeking to persuade Mr. Vick to perform his obligations under it. By so doing, in my judgment the Company was affirming the Agency Agreement.

All bar one of the matters pleaded in paragraph 23 of the Amended Defence and Counterclaim were well-known to the Company long before 29 March 2004. The issue of Mr. Vick's inadequacies in respect of merchandising had been canvassed over many months. The fall-off in his TOEWs was also well-known. The customers who no longer wished to be dealt with by Mr. Vick had been identified before the letter of 30 January 2004 was written, as had his disinclination to use the iPAQ with which he had been issued. Mr. Vick's obstructive attitude had been manifested since at least October 2003. The only area in which, on the evidence, there was any lack of knowledge, as at 29 March 2004, on the part of the Company of matters relevant to the alleged repudiatory breaches of the Agency Agreement pleaded in paragraph 23 of the Amended Defence and Counterclaim was as to the agencies which Mr. Vick held for other companies. Even in relation to that, it was just one agency, that for DLF Trifolium, of which Mr. Pyrah was unaware. Failure to disclose that agency does not seem to me to have been a repudiatory breach of the Agency Agreement. It was not an agency for a competitor of the Company. Moreover, Mr. Vick had not formally disclosed any of his other agencies, but the Company had made no complaint when it found out about them. The failure to disclose does not seem to me to indicate an abandonment of the Agency Agreement on the part of Mr. Vick or a refusal on his part to perform important obligations under it.

In the result, had it been material, I should have found that the Company's alternative case, that it was justified in terminating the Agency Agreement on account of breaches of that agreement on the part of Mr. Vick, failed.

In the circumstances it is not necessary for me to address the question of the assessment of compensation for loss of Mr. Vick's agency. However, I was told that this case is the first case in which the issue of how such compensation should be assessed has arisen since the decision of the Court of Appeal in Lonsdale v. Howard & Hallam Ltd. [2006] ICR 584. Moreover, no expert evidence in relation to the assessment was put before me. I was just invited by Mr. Segal to do my best in the light of the guidance of the Court of Appeal in Lonsdale v. Howard & Hallam Ltd As I have come to the conclusion that, had it been appropriate for me to assess compensation in this case, I should have assessed it at the nominal sum of £ 2, I think that it is convenient, for the assistance of litigants in other cases, to explain why.

If and insofar as it was appropriate to assess damages at common law for wrongful termination of the Agency Agreement, the exercise would essentially involve assessing the income which, but for the termination of the agreement the agency was likely to produce per month, per annum, or as the case might be, deducting the expenses of producing that income, and multiplying the relevant net income by the period considered as that over which the agency would have continued but for the premature termination. In principle that exercise could be approached on a loss of income basis or on a capitalised basis. The latter would, in essence, be an assessment of the value of the goodwill of the agency business. In any event, in the present case, the calculation would have been complicated by the fact that Mr. Vick acted as agent for a number of principals and continued to act for those others. It may be that, as a result of losing the agency for the Company, he would have been able to take on a further agency or agencies, or have been able to devote more time to his existing other agencies and thereby generate more income from them. If any of these was a possibility, it would probably have had to have been taken into account in the assessment of damages. However, what is certain is that the Court would not have been able to undertake the assessment of damages without evidence of some sort, and, in the circumstances of this case, expert evidence as to future income potential, likely future expenses, the likely duration of the agency and so forth. None of that evidence was led.

To an English lawyer, the language of Regulation 17(7) of the Commercial Agents Regulations is curious. It deems damage to have occurred for the purposes of Commercial Agents Regulations in one of two alternative scenarios, namely circumstances which:-

As Regulation 17(7) deems damage to have occurred in the circumstances there set out "For the purpose of these regulations ", it would seem that it is this deemed damage to which the entitlement to compensation in Regulation 17(6) relates. The compensatable damage is thus either loss of the commission which proper performance of the agency contract would have procured or unamortized costs incurred on the advice of the principal. However, the first sort of compensatable damage appears from Regulation 17(7) only to be payable if and to the extent that the principal will be provided with "substantial benefits linked to the activities of the commercial agent", so that if there are no such substantial benefits, there is no compensatable damage, while if there are substantial benefits, no matter how large or small, full compensation for loss of commission is payable. The second type of compensatable damage seems, in effect, to be that which would have been appropriate if the principal had warranted to the commercial agent that he would amortize the costs which he was advised to incur. All of this seems very alien and not to possess any obvious logical foundation.

In Lonsdale v. Howard & Hallam Ltd. the Court of Appeal had to grapple with the correct approach to the assessment of compensation under Regulation 17 of the Commercial Agents Regulations. The leading judgment was that of Moore-Bick LJ. The other members of the Court of Appeal, Jacob and Hallett LJJ, agreed with the judgment of Moore-Bick LJ. For present purposes the material parts of the judgment of Moore-Bick LJ were these:-

What emerges from the judgement of Moore-Bick LJ in Lonsdale v. Howard & Hallam Ltd., in my judgment, is that in assessing compensation for the purposes of Regulation 17(6) and (7) of the Commercial Agents Regulations the primary focus of attention should be the value of the goodwill of the agency at the date of termination. However, in some circumstances it may also be appropriate to have regard to unamortised expenses incurred on the advice of the principal. It is unclear whether Moore-Bick LJ envisaged that a claim in respect of unamortised expenses should be in addition to a claim based on loss of goodwill, or, as Regulation 17(7) seemed to contemplate, an alternative claim, presumably in a case in which the unamortised expenses were greater than the value of the goodwill. However, that was not an issue in the present case. The valuation of the loss of goodwill would seem to be essentially the same exercise as the assessment of damages for wrongful repudiation of an agency agreement, without the need to consider the question of the steps which the former agent had taken, or could reasonably have been expected to take, to mitigate his loss.

It is plain, as it seems to me, that Moore-Bick LJ contemplated that in the ordinary case there should be proper evidence, probably expert evidence, of the value of the lost goodwill of the agent. As the learned Lord Justice pointed out, a judge could not be expected to be familiar with the valuation of commercial goodwill. I would add a further cautionary note. Judges with experience of how commercial goodwill can be valued should not seek to apply that experience in a case of this kind. The reasons are that, unless, as is unlikely, a judge has professional qualifications as a valuer, there is a real risk that his understanding or recollection of principles which he has encountered in previous cases are erroneous, and in any event it is unjust for a judge to seek to apply principles without sharing those principles and the proposed application of them with the parties. Yet in the course of sharing the judge's knowledge of the relevant principles and his proposed application of them with the parties he may appear to adopt a more participatory role in the process than is appropriate for the judge of the matters in issue in the case. The basic rule has to be, in the ordinary case, that the assessment of compensation for loss of the goodwill of an agency depends upon expert evidence. I do not understand Moore-Bick LJ to have been suggesting anything different. The only situation in which the learned Lord Justice seemed to envisage that an assessment might be made other than with the benefit of expert evidence was if the amount at stake on any view was so small that the cost of obtaining expert evidence would be disproportionate and the parties agreed that the judge should make the best assessment he could without the benefit of such evidence. That was the situation in the case before him, which the trial judge found was worth only £ 5000. It is unlikely to be the situation in any case in which there is a claim worth pursuing. It was not the situation in the case before me.

What was being claimed in this case was a substantial sum, put at as much as £ 90,000 or £ 100,000. A claim of that amount merits expert evidence to justify it. Without expert evidence I do not know how, in any sort of detail, to approach the assessment of the value of the goodwill of Mr. Vick's agency for the Company. The past earnings of Mr. Vick from his agency could be proved as matters of fact. However, I would imagine that in the valuation of the goodwill of the agency anticipated future trends in earnings are more important than past earnings unless, as was not the case in respect of Mr. Vick's agency, the earnings were historically flat and likely to remain so. As the concept underlying the goodwill of a business is what someone is prepared to pay for the opportunity to carry it on, I assume that the price someone would be prepared to pay would take into account the costs of earning the income which the business is anticipated to produce. Where there is a single agency, obviously all costs incurred in the business are referable to that agency and what historically they have been can be established as a matter of evidence. However, Mr. Vick had a number of agencies, and I imagine that the costs which he incurred would need to be apportioned between them in some way. How that allocation should be made was not investigated in evidence. How a purchaser of the agency would take account of the costs associated with it, I do not know. It seems probable that a purchaser of the goodwill of Mr. Vick's agency would make some assumption about for how long the anticipated earnings from the agency would continue. What assumption I do not know, nor do I know how that issue might be approached. I imagine that the assumption is likely to depend upon how secure the income from the agency was perceived to be. It seems likely that, in valuing the goodwill of Mr. Vick's agency, a purchaser would apply some discount to the result of multiplying an annual figure of anticipated net profits by a number of years considered to be appropriate to assess the net present value of future profits. Whether that would be so, and, if so, what the discount would be, I do not know. I reject absolutely the suggestion of Mr. Segal on behalf of Mr. Vick that a litigant is entitled in any circumstances to put a Court in a position of having to make what is euphemistically described as "the best estimate it can" - in other words, to guess. In all cases, as it seems to me, it is for a litigant to prove his case, on damages as much as on any other aspect, and, if he does not, he simply fails. Thus, had it been necessary to address the issue of compensation for loss of Mr. Vick's agency in this case, I should have found that he had failed to prove any substantial loss and was simply entitled to nominal damages for wrongful repudiation of the Agency Agreement.

There was a pleaded claim on behalf of Mr. Vick for compensation from the Company for terminating the Agency Agreement without notice. How the claim was put was that the Company could lawfully have determined the Agency Agreement by giving three months notice and, as it had not given that notice, Mr. Vick was entitled to be compensated for the earnings which he would have made in the notice period, in addition to the claim for compensation for loss of the agency altogether. This claim strikes me as misconceived. The error underlying it seems to originate in the fact that in a case in which an agency agreement was terminated by notice, but the provisions of Regulation 18 of the Commercial Agents Regulations did not apply, the agent would still be entitled to the compensation for which Regulation 17(6) provided. That analysis, which is correct, seems to have been misapplied to result in the conclusion that if no notice were given, and there was a claim for compensation under Regulation 17(6), there was in addition a claim for loss of earnings in the notice period which should have been allowed. The true position, as it seems to me, in a case in which an agency agreement has been wrongfully terminated without notice, is that the valuation of the amount of the goodwill payable as compensation under Regulation 17(6) includes, so far as appropriate (and it may well be that it is not appropriate to adjust the calculation in any way), the period which would otherwise have been covered by a notice.

There was a pleaded claim for commission on behalf of Mr. Vick under Regulation 8 of the Commercial Agents Regulations. No evidence was led in relation to the claim. In the list of issues to which I have referred, as modified by the end of the trial, the only matters which I was asked to determine were Mr. Vick's claims in respect of commission on the sales to Otter Nurseries which I have mentioned and the sales to Charlie's. I have indicated my findings on those claims. Mr. Coppel in his closing submissions asked me to determine what would be a reasonable period after the Agency Agreement was terminated for the purposes of Regulation 8(a). He submitted that the period in question should be found to be that which the parties had agreed in clause 5.2.1 of the Agency Agreement, namely one month after the termination of the Agency Agreement. He submitted that there was no provision of the Commercial Agents Regulations which inhibited the making of an agreement between the parties about what should be a reasonable period. I accept those submissions. I therefore find that the appropriate period is that of one month from the termination of the Agency Agreement, on my findings a period expiring on 8 May 2004.

Shortly before the commencement of the trial two counterclaims were added to the Defence by the Amended Defence and Counterclaim which the parties agreed might be served and for which I gave formal permission at the outset of the trial. One of the counterclaims was not in dispute. It was for a sum of £ 2,431.40 in respect of commissions overpaid to Mr. Vick in relation to Wyevale. As I have already explained, it had been agreed that he should be paid a commission of 5% on sales to Wyevale, but for two periods he was paid in error at 9%. The other counterclaim was in respect of overpayments of commission generally between October 2002 and March 2004. As from October 2002 accurate returns of sales by wholesalers to customers in the "Territory" were available to the Company and the commission paid to Mr. Vick was based on those returns. That much was not in dispute. Nor was it in dispute, as I understood it, that, notwithstanding the availability of the accurate returns, Mr. Vick continued to be paid commission on all sales at 9%. I think that it was also agreed that the difference between 9% and 8% on the relevant commissions was £ 7,146.42. The issue between the parties was whether Mr. Vick had been paid at 9% from October 2002 by mistake, as was the case for the Company, based on the agreement between Mr. Nick Page and Mr. Vick which I have found proved, or whether Mr. Vick was entitled, as he contended, to be paid at a rate of 9% in any event. In the light of what was agreed and my findings on what was in dispute, the counterclaims both succeed in full in the aggregate total of £ 9,577.82.

In the Amended Defence and Counterclaim there was added a plea that if the Company was found liable to Mr. Vick for any amount it would seek to set off against its liability the amounts found due to it in respect of its counterclaims. In the light of my findings the sum to be set-off against the sum of £ 9,577.82 which I have found to be the amount due to the Company in respect of its counterclaims is £ 560. The net balance due in favour of the Company is £ 9,017.82

The claims of Mr. Vick all fail and are dismissed. There will be judgment for the Company in the sum of £ 9,017.82, together with interest, as to which I will hear Counsel.