We are proud to announce that we have won a large and complex multi-million claim before the London Court of international Arbitration (LCIA), where we succeeded in having all of the claims against our client dismissed with costs.
Breach of Contract
The claim against our client was for damages of several million US dollars for breach of contract. There were alleged breaches of both the express and allegedly implied terms of two written contracts by which our client had appointed the Claimant its agent for specific tasks and to provide it with its services. The Claimant also sought damages for misrepresentation, negligence and fraud.
During disclosure, the Claimant disclosed that he had secretly agreed with a customer of our clients to sell our client products to our client’s customer on advantageous terms from our client to that customer. In return the Claimant was to get paid secret commission on those sales by the customer (see Imageview Management Ltd v. Jack [2009] 2 AER 666 (CA)). The secret agreement came out as part of the disclosure process and was followed up by us through the detailed questions we raised in the Redfern Schedule.
Implied Terms in Contracts – the fivefold test
The Arbitrator had to construe the Contracts carefully to ascertain the scope of our clients’ fiduciary duties and although he reached his conclusions by construing the express terms, he could have achieved the same result through construction of the implied terms. Whilst he examined several authorities during the trial he laid out the fivefold test for implication of terms into contracts as set out in BP Refinery (Westernport ) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20 (must reasonable and equitable; must be necessary to give business efficacy to the contract so that no term would be implied if the contract is effective without it; it must be so obvious that “it goes without saying”; it must be capable of clear expression and it must not contradict any express term of the contract).
The Arbitrator also examined the principles of agency law carefully and the duties owed by an agent to its principal, including a duty of loyalty. He found that the Claimant owed our client a duty of loyalty. He referred to Bristol and West Building Society V Mothew ( 1998) Ch 1 at page 18 that;
“ the ….the principal is entitled to the single-minded loyalty of his fiduciary. …..A fiduciary must act in good faith; he must not make a profit out of his trust; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal”.
Conflict of interest
He also examined whether the Claimant had a conflict of interest or whether there was “a real possibility of a conflict of interest”. He also examined whether the conflict had been disclosed. He found it had not. Ultimately, he found that the Claimant had breached his duty towards our client and that breach acted as a bar to any form of relief claimed following the decision in Imageview.
After a thorough and detailed examination of all aspects of the Claimant’s case for breach of contract and misrepresentation it was dismissed on all aspects following the decision in Imageview Management Ltd v. Jack [2009] 2 AER 666 (CA) with costs being awarded to our client.
Comment: this was a hotly contested matter with both parties having entrenched positions. The case highlights that even though a claimant may believe he has a case, prior to bringing such claim, a careful analysis must be carried out to ascertain any conduct on the part of the claimant which could act as a bar to any relief.
Contact Nath Solicitors
For more information or if you would like to discuss your contract, please contact us at Nath Solicitors on 0203 983 8278 or info@nathsolicitors.co.uk. If your matter is urgent and you need to or have been issued with proceedings, please contact Shubha Nath directly to discuss either on the main Nath Solicitors number or mobile on 07545 813 894.
