Summary

Agreements under which the claimants were appointed as the defendants' agents for the purpose of procuring new customers for the defendants in the newly deregulated gas and electricity supply industries were governed by the Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053.

Facts

Trial of two preliminary issues to determine whether agency agreements made between the claimant agents and the defendants were subject to the Commercial Agents (Council Directive) Regulations 1993 SI 1993/3053. The defendants were two subsidiaries of Eastern Electricity plc ('Eastern'), and had been formed to exploit the newly deregulated gas and electricity supply industries. The claimants were appointed as agents for the defendants under written agency agreements for the purpose of pre-selling contracts to customers in anticipation of the free market that deregulation was to bring. Individual agents employed by the claimants were to attempt to persuade existing customers of British Gas and/or the current public electricity suppliers to transfer their custom to Eastern. Supply contracts were sold "on the door step", either as a result of cold calling or through recommendations. The Regulations gave effect to Council Directive 86/653/EEC. Their purpose was to provide protection to commercial agents in the event that their agency agreements were terminated by their principal without cause, by giving them a share of the goodwill that they had generated for their principal and from which the principal had derived or would derive benefit. However, and in conformity with Art.2.2 of the Directive, the Regulations did not apply to commercial agents whose activities were "secondary". The preliminary issues for determination were: (i) whether the claimants' activities were "secondary" under reg.2(4), so as to fall outside the scope of the Regulations; and (ii) whether the Regulations applied to the agreements in any event by reason of the terms of the agreements.

Held

(1) The concept of a commercial agent whose activities were secondary was not one that had any meaning in English law. On a true analysis, the contrast was simply between those agents who were covered by the Regulations and those who were not. (2) On the evidence the court was satisfied that the claimants had made a very substantial contribution to the new business that had been generated for Eastern, from which it derived a substantial measure of future goodwill. There was no doubt that the Regulations applied to the sale of products such as gas and electricity. The fact that the gas or electricity sold by Eastern was exactly the same as that sold by any other supplier in the industry was irrelevant for this purpose. (3) If it had been necessary to do so, the court would have concluded that the Regulations applied to the agency agreements by the terms of the agreements themselves.

Preliminary issues determined accordingly.