SMC Electronics Limited v. Akhter Computers Limited & Others
Court of Appeal (Civil Division) Lord Justice Henry Lord Justice Latham and Sir Murray Stuart-Smith
Lord Justice Henry: Introduction
1 The Claimant, SMC Electronics Ltd, ("SMC"), and the Defendants (all part of the Akhter Group of companies ("Akhter")), both sell power supply units ("PSUs"). PSUs are printed circuit boards with capacitors and other components soldered on to them.
2 This is Akhter's appeal from the decision of HHJ Green dated 31st March 1999, sitting in the Central London County Court, allowing SMC's claim and declaring that SMC was entitled to 50% of the profits that Akhter had made on sales of certain PSUs to Pitney Bowes Plc ("Pitney Bowes"). This entitlement is said to arise under a commission agreement made on 26th July 1993, under which Akhter promised to share their profits with SMC, in consideration for the introduction to a major new customer for PSUs, Pitney Bowes. This is a case about the authority of the third party to these proceedings, David Bennett, to enter that commission agreement on behalf of Akhter, his employers, who now seek to avoid having to pay any commission by challenging his authority to make the contract. …show more content…
The judge found support in the facts that David Bennett was allowed to the use the grandiloquent title "Director PSU Sales" and was allowed to describe himself as simply "director". He further relied on the facts that David Bennett took an important part in making the annual budget estimate for Skynet and that Pat Swabey, an employee of Skynet, said that if anyone asked her who Skynet was she would have said "David Bennett". The judge added, with some hesitation, that the use of Skynet notepaper, which infringed s. 351 of the Companies Act 1985, led SMC to believe that there was no-one more senior than David Bennett at …show more content…
Lord Justice Latham:
32 I agree that the appeal on the first issue fails, but succeeds on the second. Like Henry LJ and Sir Murray Stuart Smith I consider that Mr Bennett had, by reason of the terms of his employment contract, express actual authority to enter into the commission agreement. It was intended to, and did, secure a sale for his employers. As far as the scope of the commission agreement was concerned, I again agree with Henry LJ and Sir Murray Stuart Smith that the meaning contended for by Mr Norris both accords with the natural meaning of the words used, and with commercial sense.
Sir Murray Stuart-Smith:
33 Two issues arise on this appeal. The first is whether Mr Bennett had actual or ostensible authority to enter into the commission agreement of 26th July 1993. The second is what was the scope of that agreement, in particular to what extent it extended to further projects. The judge's order is that the claimants are entitled to an account of profits not only on the B900 project but also on "... any other projects in which P Dewey of Pitney Bowes plc has ordered goods from them". The judge answered the first issue in favour of the claimants holding that Mr Bennett had implied actual authority. He also answered the second issue in their favour giving a wide interpretation to the contract. I agree that the appeal on the first issue fails, but succeeds on the second. I only add a few words of my own to the
Court of Appeal (Civil Division) Lord Justice Henry Lord Justice Latham and Sir Murray Stuart-Smith
Lord Justice Henry: Introduction
1 The Claimant, SMC Electronics Ltd, ("SMC"), and the Defendants (all part of the Akhter Group of companies ("Akhter")), both sell power supply units ("PSUs"). PSUs are printed circuit boards with capacitors and other components soldered on to them.
2 This is Akhter's appeal from the decision of HHJ Green dated 31st March 1999, sitting in the Central London County Court, allowing SMC's claim and declaring that SMC was entitled to 50% of the profits that Akhter had made on sales of certain PSUs to Pitney Bowes Plc ("Pitney Bowes"). This entitlement is said to arise under a commission agreement made on 26th July 1993, under which Akhter promised to share their profits with SMC, in consideration for the introduction to a major new customer for PSUs, Pitney Bowes. This is a case about the authority of the third party to these proceedings, David Bennett, to enter that commission agreement on behalf of Akhter, his employers, who now seek to avoid having to pay any commission by challenging his authority to make the contract. …show more content…
The judge found support in the facts that David Bennett was allowed to the use the grandiloquent title "Director PSU Sales" and was allowed to describe himself as simply "director". He further relied on the facts that David Bennett took an important part in making the annual budget estimate for Skynet and that Pat Swabey, an employee of Skynet, said that if anyone asked her who Skynet was she would have said "David Bennett". The judge added, with some hesitation, that the use of Skynet notepaper, which infringed s. 351 of the Companies Act 1985, led SMC to believe that there was no-one more senior than David Bennett at …show more content…
Lord Justice Latham:
32 I agree that the appeal on the first issue fails, but succeeds on the second. Like Henry LJ and Sir Murray Stuart Smith I consider that Mr Bennett had, by reason of the terms of his employment contract, express actual authority to enter into the commission agreement. It was intended to, and did, secure a sale for his employers. As far as the scope of the commission agreement was concerned, I again agree with Henry LJ and Sir Murray Stuart Smith that the meaning contended for by Mr Norris both accords with the natural meaning of the words used, and with commercial sense.
Sir Murray Stuart-Smith:
33 Two issues arise on this appeal. The first is whether Mr Bennett had actual or ostensible authority to enter into the commission agreement of 26th July 1993. The second is what was the scope of that agreement, in particular to what extent it extended to further projects. The judge's order is that the claimants are entitled to an account of profits not only on the B900 project but also on "... any other projects in which P Dewey of Pitney Bowes plc has ordered goods from them". The judge answered the first issue in favour of the claimants holding that Mr Bennett had implied actual authority. He also answered the second issue in their favour giving a wide interpretation to the contract. I agree that the appeal on the first issue fails, but succeeds on the second. I only add a few words of my own to the