Why agents should think twice before telling their principal exactly what they think of him!

by Thom Vaughan
E.A.D. Solicitors L.L.P.

In the recent High Court case of
Stephen Gledhill –v- Bentley Designs
(UK) Ltd (2 June 2010) the Court was
asked to decide whether an apology
proffered by the agent (Mr Gledhill) to
the managing director of his principal
(Bentley) was adequate to maintain the
necessary personal relationship of trust
to enable the agency to continue.
Mr Gledhill had acted as agent for Bentley for around
17 years and had enjoyed substantial commission
income averaging around £85k in the final years. He
was a very effective agent and this was confirmed by
his principal during the hearing. In short he had
made himself and the principal substantial sums of
money over a number of years.
However, there was friction and the agent thought
the principal too demanding. One of the reasons for
this was that the principal instituted changes in the
final two years requiring the agent to change from
fax to a paperless email communication system. Mr
Gledhill was not comfortable with this and resisted
the changes until it was too late. The principal was
not impressed and levied “administration charges”
of £100 + VAT for continuing to deal with Mr
Gledhill’s faxes. This enraged him and created what
the judge referred to as a “two year pressure build
up”.
This in turn led Mr Gledhill to address his managing
director in abusive terms in a voicemail (which was
played to the court) and also in a telephone
conversation. It is worth setting out the key parts of
the offensive voicemail message, which the judge
referred to as “personal abuse of the worst kind and
gross insubordination”:

“… You are at your happiest when you are always
causing grief for people and just try to sort of upset
people, people that support you, and I just think
you are a horrible, despicable little man. I really do. I
just think you are absolutely gutless … You just seem
more intent on sort of … as opposed to getting the
business, the nitty gritty part, you seem more
intent on causing trouble to people. I think you are
an absolute shit, I really do. You are a despicable,
horrible little excuse for a human being …”
It is difficult to contest the Judge’s view of the
severity of the comments, which in the hearing he
referred to as “like something from Blackadder”. And
yet despite this almighty provocation the principal
chose to give Mr Gledhill an opportunity to
apologise and to make good the damage caused. In
particular Mr Gledhill was given an opportunity to
reflect on whether he in fact wished to apologise,
and then when he decided this was a good idea, an
opportunity to provide a written apology.
Unfortunately when that “apology” came the
principal, and so too the Judge, determined that it
was inadequate and allowed the principal to
terminate on the grounds of serious breach.
The Judge was decidedly unimpressed by the “letter
of apology”, which used the word regret followed by
a statement apparently justifying the attack, noting
that “’Regrets’ do not without more amount to
‘apologies.’” During the hearing the Judge referred to
the expression of regret as being similar to the tactic
used by Gordon Brown on the election trail where he
expressed regret for describing Rochdale voter
Gillian Duffy as a “bigoted woman”. It was clear that
the Judge found the “apology” offered to be
undercooked, insincere and insufficiently generous
to allow the two parties to go on working together.
The outcome was that Mr Gledhill’s claim failed and
his entitlement to a substantial compensation
payment that would otherwise be due on
termination disappeared.
In the course of the judgment consideration is given
to analogous employment law cases dealing with
similar events and in particular Charles Letts & Co
–v- Howard [1976] IRLR 248, which found that a
sufficiently fulsome and heartfelt apology may
mean that words spoken in heat and haste need not
be treated as repudiatory.
The message to be taken from this is that if an agent
finds himself pushed into a corner and snaps,
resulting in a torrent of abuse, he must quickly
reflect on whether he meant those words and if not
a genuine and heartfelt apology must be given at the
earliest opportunity.

Effectively what the court is seeking to analyse is
whether a worthwhile constructive business
relationship will be able to flourish after the event or
whether the conduct has caused irreparable
damage.

Agents must also give proper attention to the
requirements contained within Regulation 3 of the
Commercial Agents (Council Directive) Regulations
1993, namely the requirement to act dutifully and in
good faith and also comply with reasonable
instructions.
The Judge made no absolute determination as to
whether the change from fax to email was a
reasonable instruction; however, he does comment
that “Older established businessmen tend to be
slower to adapt to these changes and
understandably find it difficult to embrace them or
are fearful of them. Mr Gledhill falls into that
category and one must respect him for that.”
Whilst these comments are non-judgmental
evidence was given during the hearing that this
intransigence was holding up development of the
business and creating more burdensome
administrative processes. Further, if an agent and
principal are working on different systems this is
bound to cause frustration and may eventually
cause a rupture in the relationship. Therefore every
effort must be made by the agent to adopt modern
business practices where there is a clear operational
advantage.
This is a sad tale of an outstanding agent failing to
change with the times, lashing out at his principal
and not taking the opportunity to mend bridges
when given the chance. So before you choose to tell
your principal exactly what you think of him just
think of where it left Mr Gledhill. Biting your tongue
may be the best option, particularly where lucrative
compensation is at stake.

Thom Vaughan is a solicitor with
E.A.D Solicitors LLP and specialises
in commercial agency matters.

Head Office: Prospect House,
Columbus Quay, Liverpool L3 4DB
Tel: 0151 735 1000
www.eadsolicitors.co.uk

Disclaimer: This column does not contain legal advice and is for general
guidance only. Agentbase, E.A.D. Solicitors and the writer accept no
liability in connection with the general guidance given in this column.

 

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