Anderson and Albrecht
We continue to act for the former UK sales agents of Crocs.
Our clients represented Crocs from the early stages of the development of the Crocs brand in the UK (2004/2005) and built up the UK customer base to one which generated annual turnover in the UK in 2008 in excess of £25m. Crocs terminated our clients’ agency contract in July 2008, on the basis of alleged repudiatory breach. This was disputed by our client, who brought claims against Crocs under the Commercial Agents (Council Directive) Regulations 1993 for (1) unpaid commission, (2) payment in lieu of notice of termination and (3) compensation as a result of termination.
Our clients were successful on a number of liability issues following a trial in December 2011, His Honour Judge Jack concluding that our clients had breached their obligations to Crocs but that the breach was not sufficiently serious to amount to a repudiatory. This meant that Crocs was liable to pay compensation to our clients (potentially a multi million pound figure).
Crocs appealed that judgment to the Court of Appeal, arguing that it was automatically entitled to terminate the agency contract on a number of grounds (including breach of condition, breach of statutory duty or breach of fiduciary duty). The hearing took place in July 2012 and judgment was given by the Court of Appeal in October 2012 in favour of our clients, essentially on the same grounds as at first instance.
Crocs sought permission from the Supreme Court to appeal the Court of Appeal’s decision. The Supreme Court refused that application in April 2013. With issues of liability still to be determined, the parties have engaged in settlement discussions (including a mediation which took place in October 2013). Those discussions have not proved fruitful to date and the Court proceedings will therefore continue in relation to quantum.
The quantum issues involve a number of novel points which will need to be decided by the Court. These include (1) assessment of our clients’ claims for unpaid commission in circumstances where accepted orders were not completed due to the fault of Crocs (our clients remain entitled to be paid commission on such orders) and (2) the valuation of the compensation claim (where the agency was of relatively short duration but was tremendously successful). These issues are of particular interest in commercial agency cases and would form part of a growing body of case law under the Regulations.