Tri-Global (Australia) Pty Ltd v Colonial Mutual Life Assurance Society Ltd
[1992] FCA 303
•23 MARCH 1992
Re: TRI-GLOBAL (AUST) PTY LTD; L.M.K. FINANCIAL SERVICES; ASSOCIATED BUSINESS
MANAGEMENT PTY LTD; LLOYD REGINALD ROSS; KEVIN THOMAS BROWNE and MICHAEL JAMES
IRWIN
And COLONIAL MUTUAL LIFE ASSURANCE SOCIETY LIMITED
No. Q G39 of 1992
FED No. 303
Injunction - Contract - Trade Practices
(1992) 7 ANZ Insurance Cases 61-119
(1992) 14 ATPR 41-174
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.(1)
CATCHWORDS
Injunction - interlocutory injunction - seeking to preserve agency agreement - personal nature of relief sought requires high degree of satisfaction that relief appropriate - court not satisfied that a serious question to be tried - balance of convenience - effect of any order on third parties not parties to the action.
Contract - termination - determination of relationship of principal and agent - reasonable notice governed by terms of written agreement.
Trade Practices - whether principal a competitor of agent in the circumstances - substantial degree of power in a market - percentage of market share - taking advantage of market power - termination of agency agreement by principal pursuant to a contractual right.
Insurance (Agents and Brokers) Act 1984 (Cth). Trade Practices Act 1974 (Cth) ss 46 and 52.
Top Performance Motors Pty Limited v. Ira Berk (Queensland) Pty Limited (1975) 5 ALR 465; (1975) ATPR 40-004.
J. Ah. Toy Pty Ltd v. Thiess Pty Ltd (1980) 30 ALR 271; (1980) ATPR 40-155.
HEARING
BRISBANE
#DATE 23:3:1992
Counsel for the applicants: Mr R. R. Douglas QC and Mr G.J. Radcliff
Instructed by: Robinson and Robinson
Counsel for the respondent: Mr J.C. Sheahan
Instructed by: Mallesons Stephen Jaques
ORDER
THE COURT ORDERS THAT:
1. The application for interlocutory relief is refused.
2. The costs of the motion be the respondent's costs in the principal proceedings.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
On 19 March Tri-Global Australia Pty Ltd ('Tri-Global') and five others filed an application seeking a declaration that an agreement known as a 'Managing Agent Agreement' between Tri-Global and Colonial Mutual Life Assurance Society Limited ('CML') and agency agreements between L.M.K. Financial Services Pty Ltd and Associated Business Management Pty Ltd and CML are determinable only upon reasonable notice and not upon seven days notice; a declaration that the service by CML of notices dated 11 March 1992 upon each of the applicants was conduct contravening s. 46 and, alternatively, s. 52A of the Trade Practices Act 1974 as amended and, alternatively, is invalid on the ground that it is unconscionable; an injunction, including an interlocutory injunction, restraining the respondent from acting upon the said notices or from otherwise engaging in conduct against the applicants, or any of them, in contravention of ss. 46 or 52A of the Trade Practices Act; and restraining the respondent from altering the conduct of the relationship between the respondent and the applicants adversely to the applicants.
The application also claimed damages for contravention of s. 46 and, in the alternative, sought an injunction restraining CML from inducing or attempting to induce any agent or agents engaged by Tri-Global to terminate that engagement or to accept an engagement with CML. There was also a claim for damages for a breach of contract.
A notice of motion with supporting material had been filed the previous day. The notice of motion sought, inter alia:
"An injunction, including an interlocutory injunction, restraining the respondent from
(a) acting upon the said notices, or from otherwise engaging in conduct against the applicants or any of them in contravention of s. 46 or s. 52A of the Trade Practices Act;
(b) altering the conduct of the relationship between the respondent and the applicants adversely to the applicants."
And also an interlocutory injunction:
"...restraining the respondent from inducing or attempting induce any agent or agents engaged by the first applicant terminate that engagement or to accept an engagement with the respondent."
On Friday, 20 March, I declined to grant the interlocutory relief sought by the applicants and said I would give my reasons on 23 March. These are those reasons.
As finally formulated by Mr R.R. Douglas QC, senior counsel for all the applicants, the applicants sought an injunction restraining CML by itself, its servants or agents until the trial of the action or earlier order from:
"(a) acting upon notices of termination dated 11 March 1992 to the 1st, 2nd and 3rd applicants;
(b) altering the conduct of the relationship between the 1st, 2nd and 3rd applicants and the respondent from that which existed prior to 11 March 1992;
(c) restraining the respondent from engaging as its own agents those persons currently using the services provided as managing agent by the first applicant."
The difficulty in formulating the orders sought, particularly in relation to the nature of the retainer of the agents with Tri-Global, underlines the complexity of the relationships involved and the personal nature of the relief which the applicants claim.
Tri-Global and the other applicants were insurance agents appointed by CML. The directors of Tri-Global were, for many years, insurance agents for other companies, in particular National Mutual. Those persons commenced work as insurance agents for CML and by the beginning of 1990 Tri-Global became what is termed a 'managing agent' for CML.
Under that agency there were 65 agents of CML who had some connection with Tri-Global. The relationship between CML and the applicants and how it came into being is set out in much detail in the affidavit of Mr Lloyd Reginald Ross. I do not repeat what is there set out, but in summary the agents were recruited and trained by Tri-Global but the agents had "their own business as an insurance agent," were paid directly by CML and each had a signed agency agreement with CML. The agents sold insurance policies which were processed by Tri-Global and forwarded to CML. CML paid the agents pursuant to the terms of that particular agency agreement.
CML paid Tri-Global commission on any insurance business it wrote and, in addition, CML paid Tri-Global what was termed a production bonus or, colloquially, an overrider, which is calculated on the premium income generated by the agents who were associated with Tri-Global. The schematic representation of the nature of the relationship is in evidence before me and I will mark it exhibit 1.
Exhibited to the affidavit of Mr Robert Keith Phillips is the 'Agent's Agreement' between CML and Tri-Global, and it is necessary to refer in some detail to the provisions of that agreement.
I note at the outset, however, that the agreement is non-exclusive. Clause 2.3 provides:
"The relationship of the parties is that of independent contractor to principal, not employee to employer."
Clause 5 deals with the payment of commission. Clause 5.1 provides:
"The Society shall establish in the name of the Agent a Prospective Commissions and Advances Account, ('the Account') into which all prospective commissions, bonuses and allowances shall be credited."
Clause 5.3 provides:
"The Society may in its absolute discretion advance monies to the Agent against the prospective commissions credited the Account. Any such advances shall be debited to the Account and shall constitute a debt to the Society payable on demand. No such advance will be considered by the Society unless and until the Guarantee which shall be Schedule D to this Agreement is executed by the parties nominated by the Society."
Clause 5.6 provides:
"The Agent shall not have any proprietary or assignable interest in the amount standing to its credit in the Account. "
And 5.7 provides:
"At the end of eighteen (18) months after the termination of this Agreement there shall be a full accounting between thed Society and the Agent. Where the Account shows a credit balance the Society shall pay that amount to the Agent. Where the account shows a debit balance the Agent shall pay that amount to the Society."
Clause 6.1 deals with the practice called 'twisting'. The clause provides:
"The Agent, its employees and all persons acting on its behalf shall not engage in the practice of 'Twisting'. The Society believes such activity is not in the public interest and detracts from the service which the life insurance industry must give."
Termination is dealt with by clause 7. Clause 7.1 provides:
"Either the Society or the Agent may terminate this Agreement by giving to the other seven (7) days notice in writing without assigning any reason therefor."
Schedule C of the Agent's Agreement between CML and Tri-Global provides for the payment of an annual production bonus. While the phrase "production credit" is not defined in the agreement, it is common ground that Tri-Global was paid pursuant to the rate of bonus specified in schedule C in respect of the premium income earned by the 65 agents who were associated with Tri-Global and who received letters of termination dated 11 March.
There is no express recognition in the Agent's Agreement that the production bonus is to be paid in respect of those agents, but the parties have conducted themselves in a way which gives certainty to that particular entitlement. Concerning that agreement, Mr Phillips says that prior to 1 March 1992, CML generally exercised the absolute discretion given to it by clause 5.3 of the Agent's Agreement and advanced to an agent the whole of the prospective commission on the policy issued by it resulting from a proposal introduced by the agent, but that since 1 March 1992 it has been advancing 80 per cent of the prospective commission.
The prospective commission, he says, is calculated in accordance with schedules A and B to the Agent's Agreement. And he says that moneys were advanced to an agent against prospective commission fortnightly. He says that the annual production bonus, elsewhere called 'overriders', is calculated in accordance with schedule C to the Agent's Agreement.
As to termination, he says:
"On termination of an agents agreement, the respondent, generally, does not exercise the absolute discretion given to it by clause 5.3 of the agents agreement to advance monies to an agent against prospective commissions."
At the end of two years (increased from 18 months from 1 January 1991) after termination of an agent's agreement in accordance with clause 5.7 of the Agent's Agreement, there is a full accounting between the respondent and the agent. Where the account shows a credit balance, the respondent pays that amount to the agent, and where the account shows a debit balance, the agent must pay that amount to the respondent.
I query whether this variation suggested by Mr Phillips can be effective in the absence of agreement between the parties to alter the contractual period of 18 months to the period of two years to which Mr Phillips refers.
Mr Phillips swears that a production bonus calculated in accordance with schedule C to the Tri-Global Agent's Agreement is payable to Tri-Global by CML on 20 March in the sum of $46,365.96 and will be so paid.
He says:
"Any production bonuses payable to the firstnamed applicant by the respondent in the future will be so paid in accordance with the Triglobal agents agreement. "
As to the question of loans, Mr Phillips says that CML has not yet demanded repayment of any loans to any of the applicants. He says that when it does so, it will afford a reasonable time for repayment. Where the loans have not been reinvested with CML, CML will allow 60 days from the date of demand.
On 11 March 1992, CML sent a notice of termination to Tri-Global and to the agents associated with it. The letter to Tri-Global stated:
"Pursuant to Clause 7.1 of your Agreement with The Colonial Mutual Life Assurance Society Limited, the Society hereby terminates your Agreement with effect from the 18th March,
1992. In consequence of your termination and Section 10 of the Insurance (Agents and Brokers) Act, 1984, from the 18th March, 1992 you will no longer be entitled to arrange contracts of insurance on behalf of the Society. "
The Insurance (Agents and Brokers) Act 1984 requires that an assurance agent be authorised in writing. The other provisions of the Act impose obligations on agents and on insurers of a quite stringent kind and makes the relationship of principal and agent in the insurance context more onerous than the ordinary principal/agent relationship.
On 17 March there was a meeting of agents of CML who had formerly worked under the Tri-Global managing agency. The meeting was convened at the premises of CML at Southport on the Gold Coast, and the agents who had previously worked under the Tri-Global managing agency were addressed by Mr Peter Walsh, the CML senior sales manager for Queensland (managing agents) and Mr Hugh Dickson, the senior sales manager for Queensland (unit division) together with a Mr Jeff Webb who is said to be the Southport unit manager for CML.
In an affidavit sworn by Ms Helen Margaret O'Connor, events at that meeting are mentioned. Ms O'Connor says that the meeting was to be followed by separate interviews between the individual agents and Mr Webb. Mr Webb said that those interviews would take place over the next several days because CML "did not have a lot of time". According to the account of Ms O'Connor, at the outset of the meeting Mr Walsh explained to the attendees that what was the Tri-Global structure with agents would move from his control as the manager of agents working under a managing agency to his colleagues, who would be managing the agents as a unit on a regional basis centred on Southport.
Mr Walsh said that whilst a number of the services and facilities provided by Tri-Global to the individual agents would not be available to them through the Southport unit, they would be compensated by the entitlement to receive an overriding bonus which previously had been paid to Tri-Global. Mr Walsh explained that there would be a bit of "give and take" in the transition he had outlined.
According to Ms O'Connor, Mr Walsh further stated that whilst the overrider paid to Tri-Global had been computated on all premiums earned by all agents under the Tri-Global banner, under the proposed rearrangement the agents would have to individually qualify for an overriding bonus and that each agent would be given a new account number for their agency purposes, and that upon being given a new account number the clients of the individual agent previously serviced under Tri-Global would be transferred to the new account number to be serviced by the agent through the Southport unit.
Mr Webb explained that whether or not the CML agent involved had incorporated as an agency or was operating as an individual, they would be operating their own business and be responsible for their own administration, and said that those agents who chose to work from the CML premises at Southport would be provided with a work station with telephone and photocopying facilities at no cost to them.
So far as Tri-Global is concerned, Mr Ross in his affidavit deposes that the financial consequences to Tri-Global of the termination of the agreement would be catastrophic. In paragraph 94 of his lengthy affidavit, Mr Ross says that:
"The wholesale re-appointment of agents formerly working under the Tri-Global Managing Agency will inveitably result in the re-writing of policies of insurance with Colonial Mutual policy holders in the name of the individual agent in lieu of Tri-Global as the managing agent. Whilst Colonial Mutual purports to shun the conduct of 'twisting', the practice is inevitable once Colonial Mutual informs relevant agents of the termination of Tri-Global. In financial terms the re-writing of policies of insurance within two (2) years of the creation of policies would in normal circumstances result in Colonial Mutual debiting the Tri-Global account with all commission and overrider payments received in respect to the policy so 'twisted' to the substantial detriment of the policy holder so effected (sic). "
He says that:
"Pursuant to the provisions of the Insurance (Agents and Brokers) Act 1984, Tri-Global is prohibited from arranging Contracts of insurance on behalf of Colonial Mutual or any other insurer unless and until appointed by another insurer as an agent. The immediate termination of business by Tri-Gobal will prohibit it from meeting its usual periodic commitments particularly leases in respect to computers, motor vehicles and premises of approximately $16,000.00 per month, in addition to services such as telephone and electricity."
He says that the termination will result in:
"(T)he inability of Tri-Global to service its total monthly operating costs (including the aforesaid Leases) averaging the sum of $45,000.00 per month (exclusive of remuneration to the directors in any form)."
He says that the termination will cause:
"(t)he loss of staff trained in the insurance industry and difficult to replace."
And:
"(t)he loss of a team of agents forming the Tri-Global Agency base built up since May 1989 upon whom the future success of Tri-Global depends - the termination by Colonial Mutual of these agents (albeit with an invitation to re-join Colonial Mutual in their own right) will necessarily cause irreputable (sic) loss and damage due to the inability of Tri-Global in its own name to service, increase and endorse the insurance requirements of a customer base numbering in excess of 12,000 policy holders, exclusively with Colonial Mutual."
And finally he says that:
"The potential for Colonial Mutual to demand immediate repayment of all financial accommodation extended to Tri-Global and the insurance agencies of its directors including:
(a) The unvested portion of agency development loans drawn upon for the acquisition of family homes of the directors;
(b) The concessional housing loan mortgages advanced by Colonial Mutual at the time of acquisition of the directors family homes;
(c) The calling up of the balance of funds advanced for the fitout of the Tri-Global premises;
(d) The complete cessation of all cash flow to Tri-Global and the resultant inability of Tri-Global and its directors to service corporate and personal finanical obligations owed to Colonial Mutual and external lenders including the Commonwealth Bank, Toyota Finance, Westpac Banking Corporation, National Australia Bank, Custom Credit in respect to housing loans, personal and corporate overdrafts, motor vehicle leases, equipment leases, general insurances etc."
It has to be noted, however, that the Tri-Global agency was always liable to termination. This is accepted by counsel for the applicants. It is not the consequences of termination that have to be looked at, but the consequences of termination on seven days' notice if a longer period of notice should have been given. In that context, it seems to me, the stigma of termination seems not to be a very weighty consideration.
The relationship between CML and Tri-Global extends beyond what is encompassed by the Agent's Agreement. That much is clear. There are loans to Tri-Global in the sum of 1.4 million which have been reinvested with CML. The loans are interest free but the interest on the loans to CML is paid to Tri-Global. There are loans of approximately 1.6 million to the various directors which are interest free but secured by mortgage, mainly over their family homes.
In addition, CML paid approximately $320,000.00 for the fit-out of the premises leased by Tri-Global and that sum is to be written off over five years at no cost to Tri-Global. In addition, there are a number of other aspects of the relationship which are more particularly set out in paragraph 16 of Mr Ross's affidavit, and I refer in particular to the arrangements whereby the vesting of agency development loans after 10 years service or after business with a premium value of 10 times the amount of the loan had been written; long service leave benefit after four years with Colonial Mutual fixed in the sum of $34,000.00 based on annual premiums; "free" superannuation to the extent of 4 per cent of the annual premium business generated in any one year; concessional home loans; concessional car loans; the meeting by CML of the costs of Mr Ross's attendance with his wife at a Colonial Mutual overseas convention each year and the provision at no cost to Tri-Global of office premises and facilities in the CML head offices in New South Wales.
As earlier indicated, it is not disputed by the applicants that CML has the power to terminate its relationship with Tri-Global but the submission is that Tri-Global is entitled to reasonable notice and reasonable notice is longer than the seven days notice it was given. Mr Douglas QC said that reasonable notice could be a period up to two years.
On an application for interlocutory relief, it is necessary to consider whether there is a serious question to be tried, and if so, where the balance of convenience lies. These two requirements are not independent. The question of the adequacy of an award of damages or the availability or sufficiency of an undertaking as to damages on the part of an applicant is to be considered as part of the totality in determining where the balance of convenience lies.
The risk of irreparable injury to a party in the event of the Court exercising a discretion to grant or to refuse an interlocutory injunction is also a matter that has to be considered in determining where the balance of convenience lies. Here, the nature of the relief claimed, which I have earlier set out, is such that the Court would hesitate to order it unless there was a high degree of assurance that at the trial it would appear that the injunction in those terms was rightly granted.
The case for interlocutory relief was put forward on three bases: the first in contract; secondly, under s. 46 of the Trade Practices Act; and thirdly, on the basis of unconscionability with specific reference to s. 52A of the Trade Practices Act.
As to the claim in contract, the difficulty for the applicants is that whatever be the agreement between Tri-Global and CML, Tri-Global's entitlement to commission and the payment of production bonuses is governed by the Agent's Agreement, and clause 7.1 permits that entitlement to be terminated on seven days notice without a reason.
It is not possible to ignore the provisions of clause 7.1 and to infer from the entire width of the arrangements that some other provision as to termination applies in respect of those matters. The applicants' argument is that seven days termination is quite inappropriate to the extent and nature of the mutual dealings between Tri-Global and CML, but the fact is that the relationship Tri-Global between and CML so far as it relates to the payment of commission and the payment of production bonuses has been specifically agreed between them in writing and a term to the contrary cannot be inferred.
The entitlement to commission and to the production bonus in my opinion is governed by the terms of clause 7.1. It may be that there are other agreements between CML and Tri-Global, and, in particular, there may be other agreements concerning the various loans. If it be the case that a period other than seven days notice is required in respect of those matters, that has no present relevance. What has been determined is the relationship of principal and agent constituted by the agreement between Tri-Global and CML to which I have referred.
So far as s. 46 is concerned, s. 46(1) provides:
"A corporation that has a substantial degree of power in a market shall not take advantage of that power for the power of -
(a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;
(b) preventing the entry of a person into that or any other market; or
(c) deterring or preventing a person from engaging in competitive conduct in that or any other market."
It was submitted by Mr Sheahan, counsel for CML, that CML was not a competitor of Tri-Global. I do not accept that is so, and, in particular, from the events narrated in the affidavit of Ms O'Connor, I think it likely that it is the intention of CML to deal as a de facto managing agent itself in place of Tri-Global. Indeed it is hardly possible to think of any other intention in those circumstances.
It seems to me that CML can properly be regarded in a relevant sense as a competitor of Tri-Global. However, before s. 46 can apply a corporation has to have a substantial degree of power in a market. The nature of the market with which I am presently concerned appears from material exhibited to the affidavit of Mr Ross.
That material shows that, as at 30 June 1991 and based on total premium income, the Colonial Mutual group had 5.5 per cent of the market of life insurance. It was sixth largest in Australia as at June 1991, dropping down from fourth position in June 1990. According to that material the AMP was the largest life insurer, having 27.4 per cent of the market. National Mutual had 19.5 per cent, then followed the MLC group with 7.8 per cent; Commonwealth Life with 6.3 per cent; and the Prudential group with 6 per cent.
The top 20 life insurers accounted for 96.1 per cent of the market. In the context of that information I am unable to conclude that Colonial Mutual has a substantial degree of power in the market for the purposes of s. 46. Independently of that conclusion, it seems to me that there is not a serious question to be tried that its conduct contravenes s. 46.
In Top Performance Motors Pty Limited v. Ira Berk (Queensland) Pty Limited (1975) 5 ALR 465; (1975) ATPR 40-004 the Court concluded that terminating a distributor agreement pursuant to a contractual right did not constitute taking advantage of market power. In J. Ah. Toy Pty Ltd v. Thiess Pty Ltd (1980) 30 ALR 271; (1980) ATPR 40-155, a Toyota dealership in the Northern Territory was terminated and it was concluded that terminating that contractual arrangement according to its terms did not mean that the respondent was taking advantage of its market power. It was taking advantage of those terms
In the Top Performance case, Smithers J. said at 472:
"There is...a sense in which, as a result of the power that the respondent had by being able to control the market it did eliminate a competitor when it terminated the dealership agreement. Butthere are two elements involved in this. First, the termination of the applicant's dealership agreement. Secondly, the inability of the applicant to obtain supplies of Datsun cars by wholesale which will follow that termination.
So far as it is the termination of the dealership agreement which is attacked under s 46 it is to be observed that whether that agreement should be terminated or continued for any period depended not upon the respondent's control of tbe market but upon the terms of the agreement. It appears to me that in terminating the agreement on thirty days' notice according to its terms, the respondent was taking advantage of those terms
...
As to the applicant's ultimate inability to obtain supplies, it is clear that once its dealership agreement was terminated the applicant ceased to be a competitor in the market in any sense. At this stage his status in respect of Datsun cars was that of a mere member of the public. I did not understand it to be argued that the corporation having control of a market for goods would contravene sec. 46 of the Act merely by refusing to supply such goods by wholesale to a member of the public who wished to sell those goods by retail."
I do not think there is a serious question to be tried concerning s. 46.
The statutory basis of unconscionability, while it was relied on by the applicants, does not apply in the circumstances of this case. Section 52A(1) provides:
"A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances unconscionable."
However, s. 52A(5) provides:
"A reference in this section to goods or services is a reference to goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption."
The present proceedings are of a commercial character, and in my opinion, s. 52A has no application and provides no basis for relief to the applicants.
I do not think that the broader equitable basis of unconscionability can assist the applicants. Generally, unconscionability is considered in the formation of an agreement rather than in its termination.
In The Commercial Bank of Australia Ltd v. Amadio (1983) 151 CLR 447, Mason J., as he then was, said at 461:
"Relief on the ground of unconscionable conduct will be granted where unconscientious advantage is taken of an innocent party whose will is overborne so that it is not independent and voluntary, just as it will be granted when such advantage is taken of an innocent party who, though not deprived of an independent and voluntary will, is unable to make a worthwhile judgment as to what is in his best interest."
It is usually considered in circumstances where one party is placed at a serious disadvantage to another whether by reason of age, sex, infirmity of body or mind, drunkenness, illiteracy, lack of education, lack of assistance or explanation where assistance or explanation is necessary.
While the conduct of CML might be regarded as peremptory, and there is room for thinking that its conduct is in a sense predatory, I do not think the applicants can gain any comfort by resort to the doctrine of unconscionability.
The real difficulty in these proceedings is the position of the third parties, the 65 persons who were 'employed' by CML but had a commercial arrangement and connection with Tri-Global. The effect of the relief that is sought is to require arrangements affecting those persons to be put in place or resurrected. Those agents are not parties to these proceedings, and to grant the orders sought by the applicants would be to make orders which in a very real way affect their interests. It seems to me impossible in the absence of the agents being parties to these proceedings to make orders having the effect of undoing the contractual arrangements, or lack of them, that exist now between CML and those agents.
The primary reason for my refusing interlocutory relief is that, to grant it in the terms sought, is to impinge seriously on the rights of those third parties in circumstances where they have not been heard.
It seems to me in this case that even if there be an argument that the notice given was too short, the balance of convenience nonetheless is clearly against the grant of the interlocutory relief sought. In Bowstead on Agency at Article 61, the following appears:-
"SPECIFIC ENFORCEMENT OF AGENCY CONTRACT The continued performance of a contract of agency will not normally be enforced by an order for specific performance or other similar order.
Comment
Specific performance exceptional. A contract of agency is by its inherent nature a personal contract; the relationship between the parties is of a fiduciary character and depends upon mutual confidence. It has long been established that the courts will not normally enforce the continuation of such a contract, whether directly by an order for specific performance or indirectly by injunction. The normal remedy for breach of contract by the principal is therefore an action for damages. But because these specific remedies are equitable they are discretionary and it is therefore not possible to state that the principle has no exceptions."
The evidence in this case is such that the primary principle ought to be followed.
The contract of agency involved in this case not only has the normal fiduciary elements of a principal/agent relationship, but has the statutory obligations imposed by the Insurance (Brokers and Agents) Act of 1984. A fortiori, in the circumstance of an insurance agent, the principle that I have just referred to applies.
In my opinion, there is no serious question to be tried either under ss. 46 or 52A or on any general basis of unconscionability. In my view, the entitlement to commission and production bonuses is governed by the written Agent's Agreement, and termination of that entitlement is governed by the provisions of clause 7.1, and there can be no serious question to be tried as to that aspect of the matter. Whether in a broader business context there are other aspects of the relationship which call for a longer notice of termination, those questions do not fall to be considered in this litigation.
I am not satisfied that there is then a serious question to be tried, but, even if there were, the balance of convenience clearly in this case is against the grant of the interlocutory relief for the reasons that I have indicated. The effect on the third parties who are not parties to this litigation is clear and, in the circumstances here, I am not satisfied that damages would not be an adequate remedy in any event.
Those are the reasons for my refusal to grant interlocutory relief.
I think it is fair to say that the circumstances and time frame in which the litigation was conducted were such that there was very limited opportunity for CML to put material before the Court in respect of factual matters. The matter proceeded in a very short time frame on the basis that should I be minded to grant interlocutory relief, CML would seek the opportunity of putting further material before the Court at a later time in an attempt to persuade the Court to vacate those orders.
I propose to make the costs of the motion the respondent's costs in the principal proceedings.
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