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

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.

 Source: Thom Vaughn, EAD Solicitors LLP