On
Wednesday, 8 June 2016, Jamie Riley appeared in the Supreme Court as lead
advocate for the Respondents in what is set to be a landmark case concerning
two key issues:
Background
The
Respondents were the Liquidators of D&D Wines International Ltd., a major
broker and distributor for the sale of wine which went into administration and
then liquidation. The Appellant, Angove
Pty Ltd. was one of Australia’s largest wine producers which sold wines to
supermarket chains and other bulk purchasers in the UK and Ireland. The UK and Ireland sales were arranged
through D&D pursuant to the terms of an Agency and Distribution Agreement
(“the ADA”). Under the terms of the ADA,
Angove was liable to pay commission to D&D on sales arranged by D&D in
accordance with the following scheme:
D&D
arranged a number of sales to UK based customers but subsequently entered
administration prior to receiving payment from the customers and before having
paid Angove’s invoices. Angove gave
notice terminating the ADA and purporting to bring an end to D&D’s
authority to conclude further sales and collect outstanding sums owed by the
customers including the sums owed in respect of the sales already concluded. According to the ADA, upon termination each
party was obliged to pay to the other all sums “owing” and termination was
expressed to have no effect on “accrued rights”. Angove argued that the termination of
authority brought an end to D&D’s right to collect in the monies with the
result that they should be paid to Angove.
The Liquidators contended that D&D had an accrued right to
commission which survived termination.
That accrued right included the right to collect in the monies owed in
respect of concluded sales pursuant to the contractual scheme for payment under
the ADA. On that basis the monies were
payable to D&D and fell within its assets for distribution to the general
body of creditors. The sums paid by the customers were placed in an escrow
account pending determination of the issue as to whom the monies were payable.
The decisions at first
instance and in the Court of Appeal
At
first instance the Judge held that monies paid to D&D during the term of
its authority under the ADA were not held on trust for Angove but that, once
the ADA was terminated, D&D’s authority to collect the monies was brought
to an end and they became payable to Angove; see [2013] EWHC 215 (Ch). On appeal the Judge’s decision was
reversed. The Court of Appeal held that,
notwithstanding termination of the ADA, D&D had an accrued right to receive
its commission in accordance with the contractual scheme. It was therefore implicit in the scheme that
D&D had a continuing authority to collect the sums from customers since
that was how the parties had agreed the commission and the sums owing on
termination should be paid. On that
basis the Court of Appeal held that the general rule that a principal may
revoke its agent’s authority even if the revocation amounted to a breach of
contract (‘the general rule”) should yield to the bargain expressly agreed by
the parties. The Court of Appeal also
rejected Angove’s residual argument relying on the decisions of Neste
Oy and Re Japan Leasing (Europe) plc.
That argument proceeded on the basis that, if D&D retained authority
to collect in the monies, it would be unconscionable for D&D and its
creditors to retain the benefit of those sums when D&D was insolvent and so
unable to discharge Angove’s invoices.
In rejecting that argument and doubting Re Japan Leasing, the Court of Appeal held that there was no
element of unconscionability: the receipt and retention of the sums by D&D
was merely the product of the contractual arrangements agreed by the parties;
see [2014] EWCA Civ 215.
The issues before the
Supreme Court
Before
the Supreme Court the issues were as follows:
The awaited outcome
The
Supreme Court’s judgment is awaited but it is set to be a landmark case on two
fronts:
