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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Times Travel (UK) Ltd Nottingham Travel (UK) Ltd v Pakistan International Airlines Corporation [2017] EWHC 1367 (Ch) (14 June 2017)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2017/1367.html
Cite as: [2017] EWHC 1367 (Ch)
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CHANCERY DIVISION
7 Rolls Buildings Fetter Lane London, EC4A 1NL |
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B e f o r e :
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| TIMES TRAVEL (UK) LIMITED NOTTINGHAM TRAVEL (UK) LIMITED |
Claimants |
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| - and - |
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| PAKISTAN INTERNATIONAL AIRLINES CORPORATION |
Defendant |
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Lee Schama (instructed by Farani Taylor) for the Defendant
Hearing dates: 2, 3, 6, 7, 8 and 10 February 2017
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Crown Copyright ©
- The Claimants ("TT" and "NT", together "the Claimants") are unconnected small family-owned and run travel agents carrying on business in respectively Birmingham and Nottingham, mainly selling airline tickets to the Pakistani community in their respective geographical areas of operation. They are both agents who are and were at all material times International Air Transport Association ("IATA") approved Passenger Sales Agents. As such, they were required to enter into IATA standard-form Passenger Sales Agency Agreements with each of the airlines whose tickets they were authorised to sell. One of those airlines was the Defendant ("PIAC"). The Claimants were appointed to act as agents for PIAC in 2008 and 2009.
- PIAC is the national flag carrier airline of Pakistan. It is the sole operator of direct flights between the UK and Pakistan. Other airlines operate with stopovers. As such, I think that it is common ground (and if it is not common ground, I find as a fact) that PIAC is an important trading partner for any travel agent selling airline tickets to the Pakistani community in the UK.
- There have been earlier proceedings brought by other travel agents against PIAC making similar complaints to those made in the current proceedings. The claimants in such actions were members of, and were supported by, the Association of Pakistan Travel Agents ("APTA"), a trade association representing the interests of a substantial number of travel agents in the UK who, like the Claimants, were authorised to sell air passenger transportation on the services of PIAC. APTA members' customers were largely of Pakistani origin. The first such action was commenced by the travel agent owned by the Chairman and General Secretary of APTA on 25 February 2011. A further 30 agents commenced proceedings against PIAC on 25 October 2012.
- Each of the Claimants allege that it was pressured by PIAC not to participate as claimants in those proceedings and instead to enter into new agreements with PIAC. Each of them signed a new agreement ("the New Agreement") in 2012, the form of agreement being common to each of them. Under the New Agreement, each of them gave up all accrued claims for commission under previous contractual arrangements ("the Original Agreements") in force between 2008 and 2012.
- Each of the Claimants alleges that it entered into the New Agreement as the result of improper pressure and/or misrepresentation. Further or alternatively, each of them asserts a collateral contract under which, in consideration of their agreement not to participate in the earlier proceedings and signing the New Agreement, they would receive certain commission payments, which in the event were never paid. Whether it is now open to them to raise this last argument is a matter to which I will come in due course.
- The commissions on ticket sales which the Claimants seek are set out in Mr Shepherd's skeleton argument as follows:
- As well as the claim based on economic duress TT and NT seek in the alternative declarations that clause 6.2 of the New Agreement by which they were to give up all accrued claims for commission is unfair and unenforceable under the Unfair Contract Terms Act 1977 ("UCTA"). In any event, they seek an account of the commission due to them over the period 2008-2012.
- Mr Schama, in his skeleton argument, has set out a table of terms relevant to this action which I gratefully incorporate with some modifications:
- I have referred above to the Original Agreements. There is no single document which records the arrangements in place prior to the New Agreement. The key agreement as between IATA agents and airlines is the PSAA Resolution 824 (the "PSAA"). Material provisions are these:
- As Mr Shepherd explains, and I accept, under the accounting system that all IATA agents were required to operate under paragraph 2.1(a)(ii) of the PSAA, an agent was obliged to pay all the fare applicable into the BSP which collates all sales and ticketing done through the booking system and produces a report on a weekly basis. The BSP is designed to facilitate and simplify the selling, reporting and remitting procedures of IATA Accredited Passenger Sales Agents and to ensure that there is a definitive accounting between the agent and the carrier. IATA collected ticket revenue by direct debit through the BSP system. I note that the Claimants' claims in are all based on figures derived from the BSP: any suggestion on the part of PIAC that different figures apply is rejected by the Claimants.
- There was, when I came to write this judgment, some confusion, in my mind at least, about identification of the relevant Sales Agency Rules. Following provision of further information from the parties, my confusion has been resolved. The position appears from the following paragraphs.
- Regulations 814 and 818g have featured in argument. Parts of Regulation 814 are referred to and set out in the judgment of the Court of Appeal in Association of British Travel Agents Ltd v British Airways plc [2000] 2 All ER 204 ("ABTA") and parts of Regulation 818g are set out in the judgment of Master Leslie in Global Service Travel Agency v PIAC (13 December 2012) ("GSTA"). I have since the hearing been provided with Resolution 814 and with the 2012 edition of Resolution 818g. It was common ground in ABTA that the rules in force at the relevant time were to be found in Resolution 814 (although it is not clear why that was so). However, by the time relevant in the present case, Resolution 818g had been passed. It is apparent from the forward to the 2015 edition of the Handbook that Resolution 818g was adopted at the end of June 2007 and therefore governs the contractual arrangements between the Claimants and PIAC. Further, from the page headed "SALIENT ASPECTS OF NEW OR AMENDED RESOLUTIONS" it is apparent that there have been no changes to Rule 9, which is the important rule for present purposes. I therefore proceed on the basis that Regulation 818g, and not Regulation 814, contains the provisions relevant to the present case and that the material terms (namely, section 9) are to be found in the 2012 edition of Resolution 818g.
- The two sets of provisions do, however, share characteristics, and what was said in ABTA may be of assistance in interpreting Regulation 818g. There are, however, material differences. Section 9 of Regulation 814 provided as follows:
- It is accordingly well arguable that a Member was obliged under the Rules to provide as part of its remuneration of Agents some level of commission.
- Regulation 9 of Regulation 818g is structured differently. It provided as follows:
- It can be seen that the definitions of "fares applicable" are in materially identical terms in Regulations 814 and 818g. But in contrast with Regulation 814, Regulation 818g clearly envisages the possibility of remuneration which is not commission; and it does not require that commission should be payable at all. Although paragraph 9 of the PSAA apparently requires remuneration to be provided to the Agent, it does not require that remuneration must include commission.
- Resolution 824a (which I understand was adopted some time in 2011) provides that, for the purposes of the Passenger Agency Conference Resolutions, the term "commission" shall be deemed to include any form of remuneration. These Resolutions are the ones listed at the top of the Table of Contents near the front of the Handbook. They include Resolutions 818g and 824, but they also include many other resolutions. However, by 2011, section 9 of Resolution 818g had already replaced section 9 of Resolution 814. The former referred to "commission or other remuneration" so that Resolution 824a really adds nothing to the interpretation of section 9, although it may be relevant in the interpretation of other Rules or other Regulations.
- Originally, the Claimants were each entitled to two elements of remuneration which are relevant to the present dispute namely the 9% Basic Commission and the ORC. Disputes have arisen in relation to both of those elements.
- Agents were obliged to provide PIAC with a bank guarantee as security since there could be a period after an agent has sold a ticket to a passenger (which PIAC was obliged to honour) but before PIAC had received payment. TT and NT each provided such guarantees, the amount of which was that requested by PIAC. PIAC provided, until the changes in 2012, an agreed number of tickets per fortnight – 300 in the case of TT and 200 in the case of NT. It was possible for them to request more on an ad hoc basis.
- PIAC contends that it was entitled under the terms of the PSAA to stop paying the 9% Basic Commission. It alleges that it did so by giving notice to agents on or about 23 September 2010 that it was moving to "net fares" ie Net Sale Remuneration. The Claimants contend that it was not permissible to reduce commission, under the PSAA, to zero which was the effect of the change to Net Sale Remuneration. Further, they contend that Net Sale Remuneration was not remuneration at all by PIAC but rather depended on an agent charging its own customers.
- A similar claim arises in relation to ORC although the dates in respect of which such commission is payable may differ.
- PIAC had been paying, as a matter of practice, commission to agents on the Net Ticket Price rather than the Base Ticket Price so that agents were receiving commission on the fuel surcharge. At some stage, PIAC decided that it would no longer pay commission in relation to the fuel surcharge. Whether PIAC was contractually obliged to pay this element of commission is a matter of construction of the PSAA. This issue came before the Court in GSTA in which Master Leslie decided that commission was payable on the fuel surcharge element of the fare. He followed the appellate decision in an Australian case dealing with the same point: ALAEA v Qantas [2012] FWAFB 236. Although PIAC is not precluded from raising the same point in the current litigation, the Claimants' position is that Master Leslie was right for the reasons which he gave. I will consider this issue in due course.
- PIAC does not accept that any of those claims has any validity. In any event, to the extent that the claims would otherwise have any validity, its case is that they have been released under the terms of clause 6.2 of the New Agreement. It also raises a limitation defence in respect of claims for commission owed before 31 December 2008, the current proceedings having been issued on 31 December 2014.
- The New Agreement was signed by TT on 24 September 2012 and by NT on 18 October 2012. It incorporates an Appendix which was entitled "The PIAC Agent Productivity Scheme 01 July to 31 December 2012", that is to say the APS (although the Claimants contend that, as a result of representations and promises, the APS runs for longer than that). The New Agreement provides, materially, as follows:
- I now identify the witnesses and certain other individuals and say a little about the witnesses.
- The following witnesses gave evidence on behalf of TT:
- The following witnesses gave evidence on behalf of NT:
- The following witnesses gave evidence on behalf of PIAC:
- I found all of the witnesses from within the Claimant companies to be straightforward and honest. I have no reason to think that they were doing anything other than their best to recollect events. Their evidence was helpful, although I have to say that certain aspects of the witness statements were not as detailed as might have been hoped and some of what was said, both in those statements and in oral testimony, was unfocused and generalised and occasionally showed confusion or even inconsistency. I will in due course make findings of fact in the light of all of the evidence and assess whether the totality of the evidence supports the respective claims of TT and NT in the light of the reliance which I consider I can properly place on the witnesses. I note that Mr Baber (a witness for PIAC) confirmed that the Ahmads (of TT) were honest and professional in all their dealings with PIAC. There is nothing to suggest that the managers of NT behaved other than honestly and professionally.
- I found Mr Bijarani to be an honest and reliable witness who was concerned to give a full account to the Court and not to obfuscate in a way which might further PIAC's case.
- I also note, in passing, that there is no suggestion that the either of the Claimants failed to call any witness whom they could reasonably be expected to have called. Indeed, they took steps to ensure that Mr Bijarani was called as a witness, an individual whom it might have been expected, as I will explain later, that PIAC itself would call if intending to present a full and balanced account of events to the Court.
- In contrast, I found the evidence of the witnesses whom PIAC did call to be unhelpful. I found their evidence, in certain respects, unreliable. I will deal with these criticisms in more detail later.
- I also found striking the absence of evidence from certain individuals whom PIAC could have called. As will be seen, Mr Shah might have been able to give helpful (at least to the Court) evidence about what happened at a meeting on 24 September 2012 with TT or to say that no such meeting took place. It is reasonable to assume that his evidence would not have supported PIAC's case, otherwise surely it would have called him. The Claimants did obtain a short witness statement from him but in the end he was unwilling to come to court. I was told that this was because he feared for his pension from PIAC. It was asked to provide a letter of assurance that he would suffer no adverse consequences if he did give evidence but no such letter was forthcoming.
- The absence of Mr Mela is also inexplicable unless PIAC knew that his evidence would not support its case.
- PIAC have not called any of Mr Mela's or Mr Shah's superiors or members of the APTA case committee (as to which see paragraph 88 below). The evidence of such witnesses would have gone to the core of the allegations made by the Claimants about the real reasons for PIAC putting pressure on the Claimants in the way that is alleged.
- Further, I agree with Mr Shepherd that it is astonishing that PIAC did not call Mr Bijarani. As will be seen, he is a central character in part of NT's case. He was the representative of PIAC at the meeting with Asim Nazir when representations were made by him on behalf of PIAC. Even PIAC accepts that the meeting took place and that some representations were made, its case being that they were simply representations of future intention which were true when made but which changed after the New Agreement had been signed.
- It was, in the event, left to NT to procure Mr Bijarani's attendance. He was approached by NT's solicitors but declined to give a witness statement. I understand that this because he felt that he could not do so without the authority of PIAC which he did not have. On the first day of the hearing, I made it plain that I would find a witness statement helpful and I said that there was no reason why he should not give a statement. One was duly produced for subsequent use at the hearing.
- Mr Shepherd submits that in the circumstances, the conclusion should be that PIAC was more concerned with keeping material evidence away from court so as to win at any price and that PIAC knew that he would support the case advanced by the Claimants. This is conduct that the Court should condemn. It should not have been left to NT to secure his attendance.
- It emerged in his evidence that he had been interviewed over the telephone (although he denied having signed a witness statement). He said that his account then was the same as the evidence (to which I will come in due course) which he was in fact giving.
- Paragraph 25 (a) of the Defence contains an admission that Mr Bijarani informed NT orally that PIAC planned to offer agents who signed the New Agreement a further incentive scheme in 2013. It is impossible to see how such a pleading could have been produced unless Mr Bijarani had been interviewed by or on behalf of PIAC. Counsel who signed the pleading must have been instructed about what Mr Bijarani said. His evidence, however, shows that the pleading, in referring to what PIAC merely planned, is wrong. As Mr Shepherd submits, if Mr Bijarani had in fact told PIAC that he said what the pleading records, then I for one cannot understand why he was not called. If, by the time he was asked to give a witness statement, he had changed his account to conform with the evidence he actually gave, PIAC should not have maintained a defence which it had come to know was false.
- All this is, as Mr Shepherd correctly submits, contrary to the overriding objective of dealing with cases justly. It is also conduct which I would not expect of the national flag carrier of a great and civilised nation.
- Further, this is not, as Mr Shepherd again correctly submits, simply a matter of complaint: it has real consequences in the light of inferences to be drawn from the failure to call potentially relevant evidence. The relevant principles can be found in the judgment of Brooke LJ in Wisniewski v Central Manchester Health Authority [1998] PIQR P323 at [340]. I do not need to rehearse the well-known principles here.
- In the following paragraphs, I set out my findings of fact (as to which there is a considerable amount of common ground) derived from documentary materials and from the witness statements presented and the oral testimony given.
- In 2006, TT entered into a relationship with PIAC. It did not, at that time, have its own IATA licence and was unable to act as an agent for PIAC in its own right. It traded, instead, using the IATA licence of its partner, Gazelle Travel. Towards the end of 2008, TT obtained its own IATA licence and began trading as an Agent of PIAC.
- NT commenced trading on 1 January 2008. In May 2008, it joined APTA. It is not clear precisely when NT became an Agent for PIAC but it is certainly the case that this was sometime in 2008 and may have been from the earlier date when it commenced trading. Each of the Claimants operated under the PSAA.
- Part of the remuneration to which each of TT and NT was originally entitled was the 9% Basic Commission. I have not been shown any written agreement to that effect; certainly none was included in the bundle. It is accepted by PIAC, however, that this commission was originally payable but it contends that such commission came to an end as from 16 October 2010. PIAC does not give any detail about how this contractual arrangement between it and the Claimants arose. Mr Baber's evidence on this was simply that, at the time the Claimants began selling tickets on behalf of PIAC, the basic rate of commission paid by PIAC to travel agents was 9% of the applicable fare. In relation to TT, both Ismail and Asrar Ahmad say that there was an oral agreement (although they do not identify the individuals involved on the part of PIAC) that a basic commission of 9% on gross fares would be paid. And in relation to both TT and NT, I was shown the BSP reports for random 2 week periods in 2010 demonstrating that commission at the rate of 9% commission was deductible from the gross fare. Mr Shepherd submits that there are many other similar examples in the disclosure which I do not understand Mr Schama to challenge.
- Leaving aside for the moment the YQ aspect of the 9% Basic Commission, it seems to me that there must either have been an oral contract to pay that commission on Base Ticket Price or there was a course of conduct which is only explicable by reference to a contract to pay such commission. Further, that contract was given effect to through the IATA BSP system. Accordingly, it seems to me that the payment of commission was treated in exactly the same way as it would have been treated pursuant to the PSAA and Sales Agency Rules. It would not be right in my view to treat the contract actually made as operating outside the PSAA and the requirements of IATA. As to the YQ element, the conclusion must be that it was, initially, included in the commission arrangements. In relation to TT, there is the evidence from Ismail and Asrar Ahmad that it was paid and in relation to TT and NT there is the actual payment of commission in 2010 on gross fares.
- Another part of the remuneration to which each of TT and NT was originally entitled was the ORC. PIAC contends that the last ORC scheme offered to the Claimants ended on 30 June 2008, whereas the Claimants contend that it continued until 31 October 2012. Whichever is correct (a matter to which I will come), I find, on the basis of the evidence given by witnesses for TT and NT which I accept, the position to be as follows:
- So far as concerns TT, although PIAC had not paid the ORC claimed for 2009 to 2012, TT's position as explained by both Asrar and Ismail Ahmad was that TT was not able to stop selling PIAC tickets. The majority of its clients were and are of Pakistani origin and wanted to fly to Pakistan. PIAC was and is the only carrier that flies direct to Pakistan. TT's business premises were and are located in an area where the majority of resident are of Pakistani original: TT needs to sell PIAC tickets for direct flights in order to attract clients.
- They explain also that the bulk of TT's income throughout the relevant period (at least 90% of ticket sales) was made up from selling PIAC's tickets. If TT was unable to sell PIAC tickets it would be forced out of that market and ultimately out of business altogether. I accept all of that evidence.
- At about the end of 2008, Asrar and Ismail Ahmad both became aware of the formation of APTA and of its attempts to negotiate a deal with PIAC about amendments to the 9% Basic Commission for the benefit of APTA agents. Later, probably some time in 2009, Asrar Ahmad had one or more conversations with Mr Shah about the ORC and about the deal the APTA agents were hoping to achieve. Mr Shah subsequently informed Ismail Ahmad that the deal with the APTA agents had fallen through and that PIAC was going to stop paying the 9% Basic Commission and, instead, all agents would work on a net fare basis.
- Mr Ismail Ahmad explains that he regularly chased up the ORC payments via telephone and face to face with Mr Shah the Birmingham station manager for PIAC when attending PIAC's Birmingham Office which he did on at least a monthly basis. Each time he raised the issue of non-payment of the ORC and was informed that PIAC would get back to TT. Mr Shah also informed TT that PIAC was going to introduce a new commission scheme and assured TT that outstanding ORC for 2009 would be sorted out. I accept that evidence.
- Ismail Ahmad explains that in 2010 he was aware of the claims being asserted, and threat of proceedings to enforce those claims, by APTA members against PIAC for the recovery of the ORC and for commission on the YQ element of fares. Asrar Ahmad raised this issue with Mr Shah on or around October 2010. Mr Shah told him not to get involved with APTA and said that PIAC would look after TT. Ismail Ahmad was assured that the ORC due to TT would be sorted. He was told by Mr Shah that TT should not go down the legal route and issue court proceedings against PIAC and was told that an amicable solution would be agreed very soon. Mr Shah added that if TT did issue court proceedings then PIAC would pull all tickets. Ismail Ahmad was of the view that this would result in TT losing income and ultimately going out of business. I accept that evidence.
- So far as concerns NT, Asim Nazir gives similar evidence in relation to NT as I have recorded in relation to TT. His evidence, which again I accept, was that although PIAC had not paid the ORC claimed for 2008 to 2012, was that NT was not able to stop selling PIAC tickets. The majority of its clients were and are of Pakistani origin and wanted to fly to Pakistan. PIAC was and is the only carrier that flies direct to Pakistan. NT's business premises were and are located in an area where the majority of residents are of Pakistani origin: NT needs to sell PIAC tickets for direct flights in order to attract clients.
- On 14 September 2012, PIAC sent identical notices ("the Notice") to each of the Claimants. It referred to paragraphs 13.1 and 13.2 of the PSAA and gave notice, under paragraph 13.1, of withdrawal of the appointment of TT and NT as PIAC's agent with effect from 31 October 2012. The last paragraph of the notice provided: "PIAC offers the terms set out on the attached to the Agent with effect from 31 October 2012". Attached was a copy of the New Agreement. The notice was signed by Mr Mela as Country Manager UK & Ireland and was copied to "Marketing Manager London". A notice in the same form was, I understand, sent to all Agents in the UK.
- Each of TT and NT had up to the date of the Notice been allocated each fortnight a stock of tickets for sale to customers. The allocation in the period up to that date was for 300 TT and 200 for NT. On 17 September 2012, TT's allocated stock was reduced to 60 tickets. Subsequently, on 16 October 2012 NT's allocated stock was also reduced, without any warning, to 45 tickets. It is perfectly clear from the documentary evidence that the position concerning allocation of tickets in the case of NT is correct.
- The position in relation to TT is less clear. The evidence of both Asrar and Ismail Ahmad is that the reduction in ticket allocation took place on or around 17 September 2012. It was after that that a meeting with Mr Shah and Mr Baber took place, on 24 September 2012 (see paragraph 63 below). Their evidence is that the New Agreement was signed at that meeting; and that is borne out by the date inserted against Asrar Ahmad's signature on behalf of TT. It has not been suggested by PIAC that TT's ticket allocation had not, in fact, been reduced or that the New Agreement was signed other than on 24 September 2012. There is absolutely no reason to think that the ticket allocation would have been reduced after TT had signed the New Agreement. The inevitable conclusion, therefore, is that the ticket allocation was reduced, as the Ahmads say, on or about 17 September 2012: although the Particulars of Claim refer only to a threat to TT to reduce ticket allocation, I am satisfied on the evidence that this reduction actually took place.
- The bundle contains no notification of this reduction (indeed, it does not contain a notification in relation to NT either) nor any document informing TT that its allocation had been reinstated. This is consistent with the general lack of documentation concerning the contractual relations between the parties. Mr Baber gives some explanation for the reduction in ticket allocations in his evidence. It is, however, largely speculation since he was not involved in the decision-making process which took place in head office. There has been no disclosure of material relating to this process, in particular of minutes of relevant committee meetings.
- This reduction in ticket stock caused TT "immense stress" to use the words of both Asrar and Ismail Ahmad. Ismail Ahmad explains that TT:
- That is, perhaps, a statement of the obvious, but I record that I accept this evidence about the stress caused by the reduction in ticket allocation.
- I set out TT's evidence concerning events after service of the Notice in the following paragraphs. Save as otherwise indicated, I accept that evidence.
- In early September 2012 or thereabouts, Mr Shah telephoned Asrar Ahmad asking him attend a meeting with him at the PIAC's Birmingham office. Asrar Ahmad duly attended. On that occasion, Mr Shah showed him a new form of agreement (which was in fact the form of the New Agreement). Mr Shah told him that this was a new 2012 agreement to deal with ORC and to prevent any further legal action being taken by agents against PIAC. Mr Shah also stated that every agent was to sign the new agreement and that failure to do so would result in consequences and issues that would be out of the managers' (ie local managers') control. Asrar Ahmad did not sign the new agreement at this time. His request to take away with him a copy of the new agreement (in order to read it carefully, to discuss it with his son and to obtain legal advice) was refused.
- On 24 September 2012, Mr Shah and Mr Baber attended a meeting at TT's offices ("the 24 September meeting"). Present at the meeting were Asrar and Ismail Ahmad, Mr Zafar and Mr Rashid as well as Mr Shah and Mr Baber. The meeting was informed that Mr Baber was to take over from Mr Shah as station manager of PIAC's Birmingham office. Mr Shah and Mr Baber presented the new agreement which had been shown to Asrar Ahmad by Mr Shah as described above. Mr Shah and Mr Baber reiterated what had been said at the earlier meeting in PIAC's Birmingham office, namely that the new agreement was to be signed by all agents and that failure to sign would result in consequences that would be out of the hands of managers.
- Mr Shah and Mr Baber told the meeting that, once the New Agreement had been signed, the ticket stock would increase.
- Apart from those matters, there is dispute about precisely what was said at the meeting and what those present could reasonably have understood Mr Shah and Mr Baber to be saying. It is a very important meeting. I will deal with it in more detail later.
- On that occasion, the New Agreement was signed by Asrar Ahmad on behalf of TT. It had previously been signed by Mr Mela on behalf of PIAC.
- On 27 September 2012, PIAC reinstated TT's allocated ticket stock to its previous level of 300 tickets. TT continued in business selling PIAC's tickets.
- In January 2013, TT submitted its ORC claim for July to December 2012 to which it was entitled under the New Agreement. It was received through the BSP in due course.
- During April 2013, Ismail Ahmad spoke to Mr Baber. They discussed the ticket sales which TT was making, with TT expecting a good incentive commission at the end of the year. It is not accepted by Mr Baber that this discussion ever took place. I make no findings at this stage.
- After the settlement had been reached in the APTA agents' litigation in May 2013, Ismail Ahmad contacted Mr Baber and stated that the settlement was unfair to TT, which should be treated better than those who had taken PIAC to court. Mr Baber avised that there was nothing the could be done and said that TT should have taken PIAC to court itself. This is disputed by Mr Baber. I make no findings at this stage.
- In January 2014, TT made a claim for ORC for 2013. This claim was not met. The claim was chased up on a number of occasions both on the telephone and in face-to-face meetings at PIAC's Birmingham office with Mr Kazim, the acting manager, who advised that he would chase the matter up with head office and get back to TT. Mr Baber was also contacted regularly about the claim. TT was again told that PIAC would get back to it. It is not accepted by PIAC that this claim was made let alone that it was chased up as alleged. I make no findings at this stage.
- Ismail and Asrar Ahmad asked for a meeting with Mr Baber but he constantly declined, saying that he had other commitments. Eventually a meeting was arranged over dinner in August 2014. Present were both of the Ahmads, Mr Rashid and Mr Baber. On behalf of TT it was said that the settlement agreement with APTA agents was unfair. Mr Baber was asked why TT was not also receiving a similar treatment. Mr Baber was told that the settlement with the APTA agents would put TT out of business. He was asked to pay the incentive commission for 2013. Mr Baber responded that there would be no commission paid for 2013. He finished the meeting by telling those present that TT should take PIAC to court. This evidence is not accepted by PIAC. I make no findings at this stage.
- Asim Nazir's evidence is to the following effect.
- In or around September 2012 he was contacted by Mr Bijarani. Mr Bijarani told him that PIAC was going through a diffcult time as APTA agents were taking action against it. Mr Bijarani asked whether NT was one of those taking action and was informed by Asim Nazir that NT was part of the group taking action against PIAC. In the weeks after that, there were several telephone conversations between them during the course of which Mr Bijarani asked Asim Nazir to withdraw NT from APTA and the claims against PIAC. Asim Nazir did not, at least at that time, wish to withdraw NT from APTA.
- Asim Nazir was then contacted by Mr Mela by phone from the London office. Mr Mela asked that NT should not take legal action against PIAC. Mr Mela informed him that new agreements were being sent to all agents. He asked for a copy to be sent to him for consideration. The new agreement was duly delivered and was discussed between Asim and Khawar Nazir. Neither of them liked what they read; they did not agree with the contents of the agreement and did not want to sign it.
- A few days after receiving the agreement by fax, Asim Nazir received a telephone call from Mr Mela who wished to discuss the new agreement. Asim Nazir says that, during this conversation, he advised Mr Mela that NT refused to sign the agreement as it was not worthwhile to NT to which Mr Mela replied "OK" and put the phone down.
- Immediately following on from the reduction in ticket allocation to which I have already referred (down from 200 to 45 tickets per fortnight), Asim Nazir telephoned PIAC's Manchester office and spoke with Mr Rehan Ashraf (whose role I do not know). Mr Ashraf told him that the ticket stocks were being capped according to the bank guarantee. He also said to Asim Nazir words to the effect "You know why they have done it".
- Immediately after that conversation, Asim Nazir contacted Mr Bijarani on his mobile phone. He asked Mr Bijarani a question to the effect: "Why have you dropped my ticket stocks?". Mr Bijarani replied that it was a direction from PIAC's head office because NT had refused to sign the new agreement. Asim Nazir asked Mr Bijarani for more ticket stocks but was told that this was not possible because "head office is watching": see paragraph 24 of his witness statement.
- On or around 17 October 2012, Asim Nazir travelled to PIAC's Manchester office to have a face-to-face meeting with Mr Bijarani ("the 17 October meeting"). Also present were Mr Rehan Ashraf and Mr Baig. At this meeting, the new agreement was discussed. Asim Nazir expressed the view that the agreement was unfair. As he puts it in paragraph 25 of his witness statement:
- I accept all of the evidence described in the preceding six paragraphs.
- Asim Nazir gives further, evidence however, about what else was said at the meeting. In essence, he says that promises were made to him about the benefits NT would receive if NT signed the New Agreement. There is a dispute about what was said and, as with the TT meeting identified above, a dispute about what those present could reasonably have understood Mr Bijarani, in this case, to be saying. It is, again, a very important meeting. I will deal with it in more detail later.
- On his return to Nottingham, following that meeting, Asim Nazir discussesd what had happened with Khawar Nazir. His evidence is that ultimately NT had little choice other than to sign the New Agreement as NT could not survive on 45 ticket stock per fortnight. I accept that evidence, although I will be addressing the consequences of that later.
- The New Agreement was signed by Khawar Nazir on behalf of NT on 18 October 2012; it was then faxed to PIAC's Manchester office. Within a few days of signing the New Agreement, on 1 November 2012, NT's ticket stocks were restored to their previous level of 200 tickets per fortnight. Subsequently, PIAC made payment of 6 months ORC to NT but no other payment was forthcoming. In January 2013 NT made a claim for commission for 2012 and in January 2014 made a claim for commission for 2013. These claims have not been met, PIAC asserting that none is due.
- Some time in December 2012, Asim Nazir visited PIAC's Manchester office where he met with Mr Bijarani. He asked about the 2013 commission. His evidence is that Mr Bijarani replied to the effect "Head Office has given us the go ahead for 2013". I shall deal with that allegation later.
- On 28 September 2012, an email was sent from the Regional Management Team UK & Ireland, based in London, to the regions. Its title was "iNCENTIVE sCHEME uk 2012 (6MONTHS).jpg" [sic]. It recorded a meeting held at Head Office on 7 September 2012 regarding the "Incentive Scheme For UK Territory" when it was decided that an incentive scheme for UK travel agents could be floated for the period 1 July to 31 December 2012. This is clearly a reference to the APS. The email attached a table of approved tiers or "slabs" as they have been referred to. The attached document contains the following introductory paragraph:
- The table following that paragraph included the following:
- It is perfectly clear that these were banded commissions: an Agent selling in excess of £2,500,000 worth of tickets would be entitled to 2.5% only on that excess, not on the whole of its sales up to that amount.
- On 12 October 2012, an email was sent on behalf of the Country Manager UK & Ireland, Mr Khan, to regional station managers. It instructed the managers to ensure that capping of ticket quotas was maintained within the level of the Bank guarantee available for each agent; a supplementary quota was to be extended only against advance payment. From 16 October 2012, ticket quotas were to be reduced by 50% for agents not signing the New Agreement "to marginalise the financial exposure of the Airline, as sale proceeds of the 2nd fortnight are received by the 17th of next month i.e. November 2012". The email stated that these steps had "the concurrence of the committee formed to deal with the APTA case namely" and there followed a list of five unnamed senior managers by reference to their office.
- Matters were not going quite as PIAC had hoped. On 12 October 2012, Mr Baber (then Station Manager for Birmingham) reported that five agents in Birmingham had not yet signed the New Agreement and that a further six had not signed but had given a firm commitment in writing to do so. On the same date, Mr Bijarani (then Station Manager for Manchester) emailed the London office, copied to regional managers, setting out the capping of tickets in the light of the 50% direction from management referred to above and the amount of the relevant agent's bank guarantee. The figure for NT was 45 tickets. He drew attention to the fact that
- On the same day, Mr Kharai, Passenger Sales Manager in Manchester, sent an email with more limited circulation (forwarded to London on 15 October) including further information showing that some agents were capped on a monthly basis and some on a fortnightly basis, and also showing the amount of their bank guarantees (in one case a bank guarantee and a cash deposit). Capping was not proportionate to capped ticket allocation. The basis for the capping is not apparent and was not explained at the hearing. NT's own guarantee was for £100,000; given that the level of capping was being assessed counting £750 per ticket, it is not at all apparent – and has not been explained – why NT was capped at 45 tickets. 45 x £750 = £33,750 so that even if tickets were to be capped at 50% of £100,000, NT should have been allocated more than 45.
- The APTA litigation was also progressing. On 14 October 2012, there was an APTA Agents' meeting in Birmingham where it was reported that a summary judgment application against PIAC was listed for 11 December. The minutes recorded that the QC advising APTA had advised that the Agents should succeed. It was also recorded that the rest of the claim had been listed for 4 February 2013. These minutes somehow came into the hands of PIAC very soon after the meeting had taken place: they were forwarded from the PIAC London office by Mr Mela to various senior members of management in the UK and Pakistan on 16 October 2012 although it does not appear that Mr Baber was a recipient.
- On 17 October 2012, the chairman of APTA sent an email to APTA members urging them not to give in "to any propaganda being circulated by PIA UK as to the adversity of the matter unless you 'sign' the so called new agreements under 'duress'." This, as with the Minutes referred to above, came into the hands of PIAC on the same day.
- On 24 October 2012, Fareeda Masood Khan, Marketing Manager, London, emailed a number of senior managers in the UK and Pakistan attaching a document for the review of the APTA steering committee. The introductory background brief may be thought to be an extremely partisan resume for the Committee to approve for wider dissemination. It does, however, set the tone of the message PIAC was to adopt:
- PIAC was clearly concerned about what might happen at the cut-off date on 31 October 2012 when the agency agreement of Agents not signing the New Agreement would come to an end. Under the heading "Contingency Plan for October 31st 2012" appears the following:
- It has not formed part of the case that any Agent had been overcharging passengers or blackmailing the Airline and I have not been presented with any evidence which remotely supports such a conclusion. TT was not a member of APTA so the accusations levelled at a cartel of which it was not a member cannot, in any case, be seen as levelled at it. Moreover, as already noted, even Mr Baber regarded TT as honest and professional. It is impossible to see therefore how overcharging and blackmail can be prayed in aid as a justification for a change in the contractual arrangements with TT under which (in accordance with the New Agreement), TT was to give up its accrued rights to remuneration. The same can be said in relation to NT since there is no reason to think that NT was other than honest or professional. The whole thrust of the document to which I have just referred is to demonstrate PIAC's intention to force through reforms regardless of the position of any particular agent, regardless of the effect on its business and regardless of its loyalty to PIAC over the years.
- On 25 October 2012, 30 Agents issued an application for an injunction to restrain the notices of termination from taking effect. On 31 October 2012, the application came before Eder J. It was compromised on the basis of undertakings given by PIAC that Agents who signed the New Agreement would do so without prejudice to their case that the New Agreement was procured by economic duress. It was part of the compromise that ticket quotas would be restored to their previous level. It took some time for PIAC to implement that which it had undertaken to do, having to be chased by disgruntled agents.
- On 19 November 2012, PIAC informed Agents of a new incentive scheme in relation to flights from Manchester for a limited period. It provoked an immediate response from an Agent based in Tooting, London, complaining that it was unfair and that there should be some incentive for flights from London as well.
- On 27 November 2012, Mr Bilal Haider, Senior regional Officer, UK & Ireland at Karachi Head Office, sent an e-mail to a number of his colleagues including Mr Bijarani in Manchester. It was titled "Incentive scheme 2013". It stated that "we are in the process of the preparation of new incentive scheme for 2013" and sought information about how much incentive had been disbursed to agents by the Incentive Scheme 2012. Mr Bijarani's response on the same day was: "There was no incentive policy for 2012!". I will say more about this when considering Mr Bijarani's evidence.
- Notwithstanding that reply, which I assume was received by Mr Haider, he sent a further email on 5 December 2012 to a large number of managers in the UK, including Mr Bijarani. The email referred to his earlier email (which he appended). The main paragraph read as follows:
- In February 2013, the APTA litigating agents (or at least several of them) reached a settlement with PIAC. Those Agents received new commission agreements for 3 years commencing in February 2013 which, in summary, resulted in a £20 per ticket "kickback" for year 1 and £15 for years 2 and 3 for adult return fares. This was a matter about which Ismail Ahmad complained, protesting that it was unfair that those who did not issue proceedings against PIAC should be worse off than those who did.
- On 6 December 2013, Ismail Ahmad, on behalf of TT, sent an email to Mr Baber, who had moved to his more senior position as Country Manager, UK and Ireland in August. It is an important email, much of which I need to set out:
- Mr Kazim replied to that email on 21 February 2014. It did not address the points made but gave only a bland response of professed gratitude for TT's continued business support and stated that TT would be eligible for any future incentive scheme if and when PIAC ever chose to introduce one.
- Ismail Ahmad's response – in my view a very measured response in the circumstances – was sent the same day. He pointed out that he was not asking for the introduction of a new incentive scheme but was seeking the same treatment as other PIAC agents in receipt of the £20 kickback; he was complaining about the unjust and unequal treatment of agents such as TT for the year 2013.
- Having received no reply to that email, Ismail Ahmad sent an email on 7 May 2013 to Junaid Younis and Ghulam Rauf, both senior managers in PIAC. He repeated his complaints, emphasising that he had responded to the advice earlier given by management that TT should not proceed with legal action and that he had followed Mr Shah's advice not to join APTA.
- To complete this part of the picture, I mention an email from Mr Bijarani sent on 12 June 2014 to, among others, Head Office (in Karachi), Mr Baber (in London) and station managers in Birmingham and Manchester. He referred to the email dated 5 December 2012 (see paragraph 99 above) informing managers that the 2012 incentive policy for 2012 would continue for 2013, explaining the impact on agents:
- In an email to PIAC dated 23 February 2014, Asim Nazir put NT's claim in this way:
- By the time Invictus Lawyers and Advocates had become involved on behalf of NT, the claim was put differently and is to be found in a letter dated 18 June 2014. It is there contended that NT was "given an offer of settlement pre-issue of Court Proceedings on the basis that they would receive a special incentive for 2012 and onwards ticket sales as long as the original case was not pursued". The amount sought was a 2.5% commission on gross turnover on ticket sales.
- I have already described the genesis of the 24 September meeting, explained who was present and stated some findings of fact. As I have said, there is dispute about precisely what was said at the meeting and what those present could reasonably have understood Mr Shah and Mr Baber to be saying.
- Ismail Ahmad's evidence in his witness statement is that Mr Shah and Mr Baber advised the meeting that once the New Agreement had been signed, the ticket stock would increase (which it did) and that
- He added that under pressure the New Agreement was signed as TT's ticket sales had reduced significantly over the preceding weeks and TT did not want to be put out of business.
- I accept, of course, that that evidence is somewhat generalised and, hardly surprisingly, Mr Schama pressed him about how long "well into the future" might be with a view to demonstrating just how uncertain the alleged representation really was.
- He was asked about his evidence that the New Agreement was signed under pressure, in effect that there was no choice given the statement from Mr Shah and Mr Baber that failure to sign would result in consequences which were out of the hands of managers. Clearly, he believed that if TT did not sign the New Agreement, its agency for PIAC would indeed come to an end. The result of that, of course, is that TT would have no PIAC tickets at all to sell.
- Mr Schama asked whether, had PIAC not offered a year or more of extra incentive commission (it being TT's case that that was what was promised), TT would have signed the New Agreement. His reply was that TT would probably not have signed but would probably have taken legal action. It was then suggested to him by Mr Schama that if TT would not have signed in the absence of the alleged promise, TT was not under much duress, a suggestion with which Ismail Ahmad did not agree. I do not consider that Mr Schama's point is a good one. Even if the speculative element of the reply ("probably") is ignored, it does not follow from the fact that TT would not have signed the New Agreement in the absence of the alleged promise that it was not acting under duress in signing the New Agreement on the basis of the alleged promise. There is nothing inconsistent in TT's case that it signed under duress with the proposition that it would not have signed if the threat had been even worse than it was. The additional detriment might have resulted in TT considering that litigating would be preferable to an even greater capitulation.
- Mr Schama pointed out that TT's claim already runs up to 2016 and suggested that TT is saying that the promise alleged runs at least to 2016. Ismail Ahmad's response to that was that TT did not ask for anything nor did TT negotiate anything: on the contrary, it was PIAC which gave the promise in order to procure the signing of the New Agreement. The promise was simply "commission for 2013 and beyond" which he considered meant that the promise continued until TT ceased trading
- Mr Schama also pressed Ismail Ahmad to explain precisely what he was told at the meeting. He replied that he could not state what was said verbatim, but that the gist was as he had already explained.
- Asrar Ahmad (Ismail's father) also attended the 24 September meeting. His evidence in his witness statement is consistent with that of his son. Indeed, their witness statements are in large measure identically worded. He, too, was asked precisely what words were used to indicate that the incentive would continue beyond 2012. He replied "You will get commission for 2013" adding that he was told that "it was what everybody getting". As to whether the continuing scheme which was asserted would be on a 6 monthly or yearly basis, he said that nothing was mentioned and it "could be either". TT was, he said, promised a level of percentage based on sales.
- Mr Rashid has provided a witness statement on behalf of TT. In that statement, he says that he was present at the 24 September meeting. He says that Mr Shah and Mr Baber "advised…. that the commission would be paid and would continue beyond the 6 months and well into the future for all good agents who sign the agreement". It became apparent in his cross-examination that he was not present at the meeting in the sense of being a participant in it. Rather, he was in the same office and could hear what was going on. Asked whether his evidence was about what he heard or whether he had been told it (at the time) he said he could not remember. But either he heard it, in which case it is direct evidence of what was said, or he was told it by one of the Ahmads, in which case it makes it more difficult for PIAC to suggest that Mr Shah and Mr Baber did not in fact say anything like that which the Ahmads allege they said.
- Mr Shah and Mr Zafar were not called as witnesses, although they had provided witness statements for TT. The only other person present at the 24 September meeting apart from them, the Ahmads and Mr Rashid was Mr Baber. For reasons which I will come to when considering his evidence more generally, I found Mr Baber to be an unsatisfactory and unreliable witness.
- Mr Baber was appointed Birmingham District Manager as successor to Mr Shah on 24 September 2012. He was therefore very new in his post on the date of the 24 September meeting. Although he gives evidence in his witness statement about what Mr Shah did and did not tell him, it was surprising to see that his witness statement says nothing at all about the 24 September meeting. He does not address in any way the Ahmads' evidence about that meeting in their witness statements. When asked by Mr Shepherd why he had not done so he replies: "I do not recall any meeting on 24 September 2012. I recall other ones." He says that he had not seen the Ahmads' witness statements when he made his own. That may explain why he said nothing originally, but I find it surprising that there was no attempt to put in a short supplemental statement either disputing that there was such a meeting which he attended, or simply conceding that he had no recollection. Given the answers which he gave in cross-examination, there were no questions which he could have been asked about the meeting. I record that Mr Baber did not say positively that he did not attend the 24 September meeting with only Mr Shah present from PIAC, let alone that it did not take place at all. He simply has no recollection of it.
- It might be thought that PIAC would have called Mr Shah to give evidence if he, its employee or former employee, would have been able to gainsay what TT's witnesses had to say about the 24 September meeting. It did not do so.
- I am left, therefore, with the unchallenged evidence of the Ahmads and Mr Rashid about what was said at the meeting. I find the following facts:
- I have already described the genesis of the 17 October meeting, explained who was present and stated some findings of fact. As I have said, there is a dispute about what those present could reasonably have understood Mr Bijarani, in this case, to be saying.
- Asim Nazir says this in paragraph 25 of his witness statement:
- In referring to "an additional 2% ORC", it seems to me that Asim Nazir means the pre-existing ORC which he considered entitled NT to 2%, although there is, as already indicated, currently a dispute about when the pre-existing ORC ended. What Mr Bijarani must have been referring to, however, was the incentive scheme under the New Agreement. It was on that basis that Mr Schama carried out his cross-examination on this part of the witness statement. As to that it appears that, at one stage, Asim Nazir was suggesting that an extension of the scheme for 12 months would enable NT to claim commission by hitting, in 12 months, targets which had been set for 6 months. If that is really what he was saying – and I must say his answers did seem confused at this point – it cannot be right. But that does not detract from his understanding that the incentive would continue from 2013 onwards. Asim Nazir has not given any evidence of anything expressly said by Mr Bijarani about how far into the future the incentive scheme would last beyond 2013. In answer to Mr Schama's question "How long?" he replied "Until I make money that is to make up my loss, probably 5 or 6 years to make back what I was giving up". That may have been his hope or expectation, but his own evidence does not establish a representation that that would be so. His evidence, however, is clear on one point: he says, to use my words, that Mr Bijarani did not express himself in terms of PIAC's intentions about the future, rather he gave a clear representation about what would happen.
- Mizra Baig attended the 17 October meeting. I am afraid that I did not find him a very impressive witness, not because I thought him in any way dishonest, but I gained the impression that he did not have much of a grasp of what was being discussed. In his witness statement, all he said about the meeting was that the New Agreement was discussed and that Asim Nazir "advised that the new 2012 agreement was unfair and not in C2's interests to sign the agreement". In cross-examination, when asked about what Mr Bijarani was allegedly promising he said "incentive plus what APTA get". He said that there was no discussion about what would happen if APTA lost but that there was an understanding that NT would still get the incentive. The way in which I have recorded his answers does not reflect the somewhat confused way in which he responded. I can place no reliance on his evidence other than to take comfort from the fact that it is not inconsistent with the main witnesses.
- Khawar Nazir (Asim's brother) did not attend the 17 October 2012 meeting. He can, therefore, give no direct evidence about it. He relates in his witness statement what Asim Nazir told him on the latter's return to NT's office, which is consistent with the latter's own evidence in his witness statement; he also agreed with the latter's oral testimony. I gain no assistance from his evidence about the 17 October 2012 meeting.
- What does Mr Bijarani have to say about all of this? In paragraph 8 of his witness statement he says this:
- I allowed Mr Shepherd to ask further questions by way of examination in chief. Mr Bijarani's evidence included the following:
- In cross-examination, Mr Bijarani was asked a number of questions about the extent of his and Mr Mela's authority. He assumed that Mr Mela would not have had authority to change the terms of the New Agreement or the incentive scheme contained in Appendix I, unless such authority had been given expressly by Head Office.
- He was asked if he had authority to guarantee incentives. I understood this question to be directed at guaranteeing the incentives which had been promised, on its case, to NT. Mr Bijarani said that he was so authorised by Mr Mela in "a couple of phone calls".
- Mr Shepherd asked about Mr Haider's email dated 27 November 2012 and his own response to it on the same day. Mr Bijarani's answer to Mr Shepherd's questions was that there was no incentive scheme for the whole market in place for 2012; what was in place was a scheme for certain period and certain flights. The scheme contained in the New Agreement was not specifically put to him although such a scheme would, as I see it, have been for a certain period, 1 July to 31 December 2012 and only for agents signing the New Agreement. Mr Schama returned to this topic in cross-examination. Mr Bijarani explained that Mr Haider's email was directed at a general incentive scheme applicable to everyone. His own reply was a response to the effect that there was no such general scheme. Even if Mr Bijarani had misunderstood Mr Haider's email, Mr Bijarani's position is that there was no general incentive scheme in place in 2012.
- It was suggested by Mr Schama to Mr Bijarani that the paragraph of Mr Haider's email of 5 December 2012 (see paragraph 99 above) shows that authority for the 2013 incentive scheme was only given the day before and so was not in place in October 2012 when representations (to put it neutrally) were made to NT by him and Mr Mela. The response was that this was a final approval; the decision had actually been made earlier and "we operate on instructions". He was, however, constrained to agree that he did not know the details of the 2013 scheme which would only be known once an actual copy had been provided but none was ever sent. He also agreed that he did not (and could not) tell NT what its sales targets would be nor the percentage incentive. But he was adamant, nonetheless, that he gave a firm assurance (ie that the 2012 incentive would continue into 2013) and was not simply giving an impression (ie that PIAC was simply hoping or intending to introduce a scheme).
- He was questioned about how long the promised scheme would last to which he replied "simply beyond 2012, I don't recall saying how long". 20 years, he agreed, would not make sense and 10 years "of course not". Mr Schama suggested that it could mean 6 months but Mr Bijarani rejected that: "there was no precise period but I assumed for quite a while".
- My note records the following answer too (rather more cryptically, I fear, than the actual words used by Mr Bijarani):
- Mr Schama also asked what would happen if APTA lost its case. The response was that he told NT that if it signed the New Agreement, it would be better off because the incentive (by which he clearly meant under the New Agreement) would continue after 2012 and, importantly, that NT would "get whatever APTA get". He reiterated that NT was to receive the continuing incentive "plus whatever APTA get as well". So his evidence, which could not have been clearer on this point, accords with that which Asim Nazir gave.
- Mr Bijarani explained that, in his experience, incentive schemes such as that found in the New Agreement were usually set up for a year (often a calendar year) but for calculation purposes would run for 6 month periods. In answer to Mr Schama's suggestion that this was the consideration for not suing PIAC he said "Yes, the incentive, not breaking away from PIAC". Asked why NT should also get the kickback which the APTA agents eventually received under their settlement agreement, he replied (again as my note records):
- He said that some other agents were told the same thing, but NT was the only one to sign.
- As I have already noted, Asim Nazir's evidence is that ultimately NT had little choice other than to sign the New Agreement as NT could not survive on 45 ticket stock per fortnight. That is also Khawar Nazir's evidence. Matters were in fact, far worse than that. The reduction to 45 tickets was a temporary measure until NT signed the New Agreement, but if it did not sign, the agency would come to an end on 31 October 2012 and there would be no tickets at all.
- I make the following findings about the 17 October meeting and the signing of the New Agreement:
- Issues have been raised by Mr Schama about the authority of those who made the statements relied on (Mr Shah and Mr Baber in the case of TT and Mr Bijarani and Mr Mela in the case of NT) so as to bind PIAC to them.
- PIAC's pleaded defence does not allege that any of those persons lacked the authority to make, on behalf of PIAC, any of the statements which the Particulars of Claim allege were made. There has, so far as I am aware, been none of the disclosure which would be needed if such a defence were to be established. For that reason alone, a defence of lack of authority is not one which, in my judgment, can succeed in the present case.
- But that is not the only reason why it cannot succeed since, for reasons which I now explain, I consider that all of those individuals had ostensible authority to say what they did to TT and NT.
- It is convenient at this stage to say something about the evidence of Mr Niaz and Mr Baber not only in relation to the issue of authority but more generally.
- Mr Niaz was not a person able to give any evidence about the material facts relevant to the Claimants' claims. He is Senior General Manager Marketing, based in Karachi. At all material times, he worked in Pakistan in his current role or his previous role within marketing. Part of his current role, which commenced in May 2015, is responsibility for PIAC's marketing department which is involved in the approval of incentive schemes. PIAC's District Managers and Country Managers (including Mr Baber) report to the General Manager Passenger Sales who in turn reports, currently, to Mr Niaz. Mr Niaz is, currently, the most senior PIAC officer involved in approving incentive schemes. Mr Niaz lives in Pakistan. He has come to England especially to give evidence in this case.
- As Mr Niaz candidly admits in his witness statement, he cannot comment on what may or may not have been said to the Claimants by Mr Mela, Mr Shah and Mr Bijarani. What he does say, however, is that he knows that PIAC "has always had a very strict formal procedure regarding the introduction and approval of incentive schemes", a procedure which he goes on to explain. He states as follows:
- Mr Niaz is here clearly speaking of actual authority. He says nothing in that passage, and gives no evidence elsewhere in his witness statement, to indicate that any of Mr Mela, Mr Shah and Mr Bijarani lacked ostensible authority. As to actual authority, he does not say that the relevant procedures were not adopted or documents signed although it is perhaps implicit in what he does say. More signficantly, although PIAC may at all material times have had procedures in place for the approval of incentive schemes, it does not follow that non-compliance with those procedures necessarily results in an absence of authority. For instance, let it be supposed that a particular scheme had been approved at the highest level but that the relevant documentation had not been signed off in accordance with the procedures which Mr Niaz describes; and let it be supposed that the fact of that approval has been passed down the line, in emails and telephone calls, to local managers. It is far from obvious to me that a local manager who then implemented the scheme would be acting beyond his actual authority. In order to establish that, it would have to be the case that he was under an instruction which made clear that, in the absence of the appropriate paperwork, he had no authority to act whatever may have been passed down accurately but informally to him.
- Mr Niaz also explains that he has never seen or heard of an incentive scheme within PIAC extending beyond 12 months, the reason for this being that each incentive scheme is based on PIAC's annual budgeting which leads to a need for regular re-evaluation. He adds this:
- In reaching my conclusion that each of them made the statements which I have held that they did make at the 24 September meeting and the 17 October meeting as the case may be, I took into account Mr Niaz's evidence, which I found inadequate to displace the clear evidence of the Ahmads, Amir Niaz and Mr Bijarani.
- To my mind, it is surprising that Mr Niaz is surprised. It became clear in cross-examination that he had not approached any of Mr Mela, Mr Shah or Mr Bijarani to ascertain what they had in fact said. I would have thought that the first thing that a person in Mr Niaz's position, giving evidence in a case such as this, would do would be to find out the facts against which he would be giving his evidence. Further, asked whether, of his own knowledge, he had any idea whether Mr Mela had authority to make the promises alleged, he said that he did not know. When Mr Shepherd put to him that if Mr Bijarani had been told by his superior to make a promise he, Mr Bijarani, would assume that that "it was OK", Mr Niaz's response was "He may assume but that does not mean he was authorised".
- So far as TT is concerned, there was a line of questioning by Mr Schama designed to establish that Ismail Ahmad knew that the approval of senior management (in effect, Head Office in Karachi) was needed for the promises which he said had been made to TT, the point here being that, in the absence of such approval, TT could not rely on any promise. Ismail Ahmad's response was that in 2013 he was actually told that there had been such approval. He had not been told this in 2012 but he did not assume that approval was needed at that time. TT had an excellent relationship with its local manager.
- I find as a fact that Mr Shah, Mr Baber, Mr Mela and Mr Bijarani (for the purpose of this and the next few paragraphs "the Managers") had authority to say what they did on behalf of PIAC. I cannot make a finding on the evidence before me that they had actual authority, particularly in the light of the evidence of Mr Baber and Mr Niaz about internal procedures within PIAC. I do not, however, consider that the evidence establishes that TT or NT knew or ought to have known that any of the Managers were unable to commit PIAC to that which they were representing. They had ostensible authority, in my judgment, to say that which I have found they did say.
- It is not at all surprising to my mind that the Managers said what I have found they did say. The commercial imperative from management perspective – under a three-line whip from Head Office – was to achieve the maximum possible take-up of the New Agreement. Obtaining the commitment of TT to the New Agreement might break the resolve of at least some of the APTA litigating agents. That consideration has played no part in arriving at my findings about what was actually said, but it is some comfort to find some commercial rationale for what was said.
- In any case, it seems to me that, even if I am wrong to conclude that the Managers had authority to say what they did on behalf of PIAC, matters were effectively ratified by Mr Haider's email of 5 December 2012, as to which see paragraph 99 above. He gave the green light to the continuance of the "existing scheme for the next year as well". Had that authority been in place when the Managers said what they did, it seems to me that PIAC would have no case at all for saying that it was not bound by their representations. That being so, the subsequent provision of that authority should be treated as ratification (if any were needed) of what was said at the 24 September and 17 October meetings.
- Mr Baber is now Country Manager UK & Ireland, a role he took up in August 2013, having been promoted from his role as District Manager in Birmingham from 24 September 2012.
- His evidence is helpful at least in setting the scene for the current disputes and, from PIAC's perspective, the nature of the Claimants' contractual arrangements prior to the New Agreement.
- He says that he is not aware of any written agreements which the Claimants entered into prior to the time they began selling tickets for PIAC. But as IATA members, the relationships were governed by the PSAA. So much is, I think, uncontroversial.
- He goes on to say that, at the time when the Claimants began selling tickets on behalf of PIAC, the basic rate of commission was 9% of the applicable fare (this is the "9% Basic Commission" as defined at paragraph 8 above). It is common ground that the Claimants were each entitled to this commission when they started selling tickets for PIAC. There is, however, no documentary material which demonstrates how and when this was agreed (or at least none has been drawn to my attention).
- As I have mentioned, there is a dispute about whether the 9% Basic Commission has ceased to be payable. PIAC says that it came to an end on 16 October 2010 when, according to PIAC, it gave notice that it would cease paying such commission and would replace it from that date with Net Sale Remuneration. The Claimants' case is that the notice was invalid, one reason being that it purported to reduce commission, and hence remuneration, to nil which was not permitted by the PSAA. Mr Baber explains in his witness statement in more detail than that brief summary the replacement of 9% Basic Commission by Net Sale Remuneration but curiously makes no mention of the dispute about this nor even hints that there might be a different view.
- Mr Baber goes on to deal with ORC in a section of his witness statement headed "Overriding Commission". He explains that in the past PIAC issued ad hoc incentive schemes covering particular periods of time "where it was agreed that an additional amount of commission, usually around 2% of total sales of the applicable fare, would be payable to those agents in the UK whose sales reached certain thresholds during the relevant period". He states that such schemes were always in writing and had to be approved by Head Office in Karachi. Each scheme was of finite duration: PIAC never entered into indefinite or continuous incentive schemes. He states that the last such scheme ran from 1 July 2007 to 30 June 2008 and exhibits a copy. He states that no ORC was paid to any agent after 30 June 2008. He states that from the time when he became Area Manager in Birmingham in September 2012, he was never approached by TT regarding claims for outstanding ORC (TT's case now being, I add, that such commission is due from 30 June 2008).
- Next, Mr Baber turns, in his witness statement, to the YQ, the fuel surcharge. Mr Baber appears to accept that, following the judgment of Master Leslie on this issue in favour of the litigating APTA agents, the Claimants would have been entitled to 9% Basic Commission in respect of sales up to 16 October 2010 and ORC on the YQ element in respect of sales up to 30 June 2008. However, he points out that, by the time of that judgment, the Claimants had already signed the New Agreement and had therefore waived any such entitlement.
- Later in the witness statement (at paragraphs 32 to 35) he deals, albeit fairly briefly, with the internal procedures for the approval of incentive schemes which are dealt with more fully by Mr Niaz.
- As to TT, he refers to Mr Shah and his experience, and to what he asserts that every District Manager knows, namely about the formal approval procedures which need to be adopted before any incentive scheme is implemented. He feels able to say that it is very unlikely that Mr Shah would have made the (allegedly unauthorised) statement which TT contends was made to it unless the extension to the scheme had been formally approved in writing by Head Office. I have reached a different conclusion. In reaching it, I took into account Mr Baber's evidence, which I found inadequate to displace the clear evidence of the Ahmads.
- As to NT, he refers to the claim that Mr Mela told it that the incentive scheme under the New Agreement would be extended to 2013 and beyond. He says this in his witness statement:
- In the light of that statement, it is extraordinary to my mind that PIAC did not see fit to call Mr Mela or to explain why it could not do so if in fact it could not. Mr Baber's evidence is put forward, not as evidence of the fact that Mr Mela said what he did to Mr Baber, but rather as evidence of the truth of what Mr Mela said. Why, I ask, was the maker of the alleged statement not put forward on such an important issue? One answer which immediately comes to mind is that Mr Mela would not in fact have supported what Mr Baber says.
- The next statement which I mention is found in paragraph 39. After recording that he was not present at any meeting between Mr Bijarani and NT, and so could not say what was or was not said, he says this:
- I attach no weight to this evidence. It is largely speculation and is in any case inconsistent with the contents of Mr Haider's emails dated 27 November and 5 December 2012.
- Mr Baber refers to a claim by NT that Mr Bijarani informed it that the incentive scheme "would be extended for 2014 and/or on an ongoing basis". He makes similar observations about Mr Bijarani as he had made in relation to Mr Shah, reaching the similar conclusion that he did not think it likely that Mr Bijarani would have told NT that the incentive scheme was to be extended to 2014 and/or on an ongoing basis. I am not aware of any claim that 2014 was expressly mentioned; as I understand it, all the statement related to 2013 and ongoing and it is on that basis that I address the case. I see no reason to doubt Mr Bijarani's evidence to the Court on this aspect of the case. Mr Baber's evidence is wholly inadequate to cause me to reach a different view of Mr Bijarani's evidence.
- Mr Baber criticises NT for putting different cases at different times, showing inconsistency. That may be so, but I must reach my decision on the case put to me on the evidence before me. A shifting case may be a cause for treating evidence with caution, but it is not a knockout blow. As part of that criticism, Mr Baber says this:
- That last sentence, with respect, is misleading. There had been earlier 'per-ticket' deals in respect of certain flights for certain periods. It is true that there had been no general 'per ticket' deals across the board but, once it is acknowledged that there had been earlier, more limited, deals, the point being made by Mr Baber loses much of its force. In any case, the "£20 per ticket" itself was not an across the board arrangement but applied only to the group of litigating APTA agents.
- At paragraph 44 to 52 of his witness statement, Mr Baber goes into some detail about the nature of and reasons for the provision of bank guarantees by agents. At paragraph 48, he explains that agents can ask PIAC to increase the regular quota of tickets allocated to it. Then he says:
- I do not know what Mr Baber's source for this statement is. His use of the words "I am aware" suggests strongly to me that it is not because he has sufficiently wide hands-on personal experience to make this statement. There is not, in fact, any evidence at all to show that PIAC ever required an agent in the UK to increase its guarantee to cover additional ticket allocations. What is certainly the case is that neither TT nor NT were ever asked to increase their guarantees and that the levels of the guarantees actually given were those requested by PIAC.
- In paragraph 49 he states that, as the 31 October 2012 deadline approached, "It became clear to PIAC that, if any agents refused to enter into the New Agreement and were terminated, some of them might owe PIAC more than the amount covered by their guarantee." Again, I do not know the source of Mr Baber's information since it is clear that he is referring to PIAC at a high level of management, not at his own local level. As a matter of fact, what he says in that paragraph is almost certainly true: but it is also equally true of agents who did sign the New Agreement.
- The purpose of paragraph 49 appears to be setting the scene for paragraph 50, where Mr Baber refers to Mr Khan's email of 12 October 2012 (see paragraph 88 above). That email, it will be recalled, contained an instruction to area managers to ensure that an agent's capping was maintained within the level of the bank guarantee. The email also instructed managers to implement a 50% reduction in ticket allocation, although Mr Baber does not mention that. He goes on to say this:
- The first sentence of that quotation is, I imagine, Mr Baber's interpretation of the email which, I would agree, is the message that the email was sending. However, another way of dealing with the exposure would have been to ask agents to increase their bank guarantees. Mr Khan did not communicate that possibility to managers and there can be no criticism of Mr Baber that he did not think of it himself and suggest it to Mr Khan or Head Office. Clearly, the message, although communicated by Mr Khan, was coming from Head Office.
- I do not know the source of Mr Baber's statement that agents signing the New Agreement were not considered a financial risk, nor, indeed, that agents not signing the agreement were considered a financial risk. There has been no disclosure by PIAC of minutes of any meetings of the APTA committee or of any other meetings at which restricting ticket allocations to agents was discussed. No witness able to speak to these matters was called by PIAC. I have no evidence that the direction requiring capping was applied to agents who did sign the New Agreement. Indeed, when TT and NT did sign, their ticket allocations were restored without any requirement to increase their guarantees.
- Mr Baber's evidence, insofar as it goes, may be relevant to NT since, by the time of Mr Khan's email, NT had not signed the New Agreement. But his evidence is not relevant to TT whose ticket allocation had been capped on 16 September, long before Mr Khan's email. I am left entirely in the dark about why PIAC made the reduction in TT's ticket allocation.
- Mr Baber makes an argumentative, and in my view very surprising, statement in paragraph 51 of his witness statement. He says this:
- Given that, by the time he made his witness statement, Mr Baber knew that the Claimants were alleging that they had acted under economic duress, he should surely have appreciated that at least one other possible explanation would have been that Mr Shah, Mr Bijarani and Mr Mela said what they did precisely to pressure the Claimants. In any event, it has never been NT's case that it was told that its ticket quota would be reduced if it did not sign the New Agreement: its case is that the allocation was reduced without warning. And in the case of both TT and NT, far from being reduced if the New Agreement was not signed, the quotas would disappear altogether since the agency would terminate and the question of a ticket allocation would no longer arise.
- I make two further points in relation to Mr Baber's assertions about containing financial exposure. The first is that neither of the Claimants has ever in fact defaulted in payment. It will be remembered that payment is not made direct to an airline: rather settlement takes place through the BSP. An agent defaulting in its obligations to make payment through the BSP would in practice lose its IATA licence with a serious, perhaps terminal, effect on its business. Secondly, the amount which the Claimants provided by way of guarantee were those which PIAC requested. There is no suggestion that TT or NT would have refused to increase the amount of the guarantee had it been asked, but they never were.
- I am unable to accept, in the light of the above discussion, that capping was intended to apply other than to agents who were declining to sign the New Agreement; nor am I prepared to accept that the reduction to 50% for agents not signing was driven by concerns about financial risk. In the light of all the evidence, it is at least as likely an explanation for the capping and the 50% restriction that PIAC was attempting to place as much pressure on the agents as possible with a view to obtaining their signatures to the New Agreement.
- Although not strictly arising out of Mr Baber's evidence, I mention at this point that it was never suggested to TT or NT that they could obtain further ticket allocations by payment of cash, a possibility mentioned in the first paragraph of Mr Khan's email. In the case of NT, Mr Bijarani says that he was instructed by Mr Mela not to make any allocations for cash, evidence which I accept. The reality, in my judgment, is that it would not have been possible for TT or NT to obtain any additional ticket allocation for cash.
- At paragraphs 61ff of his witness statement, Mr Baber refers to the letters under which TT made claims for incentive commission. The first was a claim in respect of the calendar year 2013. It bears the date 8 January 2013. That date clearly cannot be correct since a claim for commission for the year 2013 could not have been made in January 2013: the correct date (unless the letter is simply a concoction) must be 2014, not 2013. PIAC's case is that this letter was never received. Mr Baber, District Manager in Birmingham in 2013, says that he did not receive such a letter. By January 2014 he had left Birmingham so that, if the date was an error, it is not surprising that he did not receive it.
- The second letter was a claim for the calendar year 2014, which also expressed disappointment that the claim for 2013 had not been paid "despite numerous telephone calls and conversations". This letter is dated 6 January 2014. Again, this date clearly cannot be correct: it must be 2015 not 2014. Mr Baber also refers to a claim letter dated 14 January 2015. I do not recall being taken to this at the trial and am unable to find it in the bundle. According to Mr Baber, it is a letter claiming incentive for 2015. The letter, being dated 14 January 2015, perpetuates the error in the year specified. PIAC says that these letters were never received, although the only evidence in support of that is a hearsay statement from Mr Baber saying that Mr Rauf, the Birmingham District Manager at the relevant times, had not received them.
- Although a point of submission rather than evidence, Mr Baber draws attention to the fact that the amounts claimed by way of incentive commission for the relevant years in the Particulars of Claim differ from those in the claim letters. Mr Baber appears to regard it as sinister (my word, not his) that the figures are not identical "considering the first letter was allegedly written and sent on 8 January 2013, almost two years before the Particulars of Claim were drafted". I do not follow that point. If the letters had been concocted, then I would expect the fraudster to have taken care that whichever was the later of the documents (concocted letter and Particulars of Claim) conformed with the other. To my mind, a more plausible explanation is that the Particulars of Claim were prepared on the basis of figures which were then available which might not have precisely matched those used for the preparation of (genuine) claim letters.
- Mr Schama put it to Ismail Ahmad that the letters were not sent but were created in order to assist TT in its case. This was denied. The explanation for the error in the dates was said to be because the letters were generated using a template which had inserted the wrong year. He did not ask any questions about the discrepancy in the figures between the letters and the Particulars of Claim.
- Although the explanation for the error in the dates is not entirely satisfactory, I am not willing to conclude that these letters were concocted. In the first place, although fraudsters can be careless, it would be extraordinary, if the letters were manufactured as Mr Schama suggested, that Ismail Ahmad (or anyone else) would have made the errors which were made. Secondly, this is not a pleaded issue and arises out of Mr Baber's speculation in his witness statement. Having identified the issue by the date of that statement (29 September 2016), PIAC could and should have taken steps to justify the speculation by attempting to obtain relevant helpful evidence. In particular, if the letters were fabricated, forensic examination of TT's computers may well have revealed when they were written. There was no request to allow such examination. It might be said against TT that, faced with Mr Baber's speculation, it could itself have produced expert evidence to show when the letters were written. It might have been better if it had done so. That it did not do so, however, does not justify me in making an inference that it had something to hide.
- For completeness, I record that I accept Ismail Ahmad's evidence that he personally delivered at least some of the letters to senior individuals at the PIAC Birmingham office, either Mr Kazim or Mr Rauf. PIAC realised that delivery of the notices was an issue (albeit not pleaded) otherwise Mr Baber would not have reported Mr Rauf's denial that he had received the later letters. I know of no reason why Mr Rauf could not have given evidence; indeed, there is no reason of which I know why his attendance could not have been secured even after Ismail Ahmad had given his evidence. In the absence of an opportunity for Mr Shepherd to cross-examine Mr Rauf, I have no hesitation in preferring Ismail Ahmad's sworn testimony to Mr Baber's hearsay evidence.
- In the light of this review of the evidence and my findings of fact, I now return to the position as it was before the service of the Notice. I address in turn the Claimants' rights, if any, prior to the service of the Notice on 14 September 2012, to 9% Basic Commission on Base Ticket Price (that is to say, the gross ticket price less tax and YQ), to 9% Basic Commission on the YQ element of the gross fare and to ORC on the Base Ticket Price and on YQ.
- I have already concluded that, originally, TT and NT were each entitled to 9% Basic Commission on Base Ticket Price. PIAC's case is that this entitlement was unilaterally terminated by it and replaced with Net Sale Remuneration as from 16 October 2010.
- The Claimants' case on the pleadings and in their witnesses' statements is not clear.
- So far as material to this aspect of the case, the Defence contends as follows:
- The Claimants' case is clarified to some extent by the Reply:
- It is not, therefore, entirely clear from the pleadings precisely what the Claimants are claiming. The Claimants case as developed in their skeleton argument and in their closing submissions became clear or at least clearer. With the exception of the allegations concerning collateral contracts, Mr Schama did not object to Mr Shepherd raising any of the claims which he did. This included the contention that, since Net Sale Remuneration was not validly introduced, the Claimants remained entitled to 9% Commission even after 16 October 2010. Further, in spite of the lack of clarity in the pleadings, the agreed List of Issues includes at paragraph 9 the question, if the New Agreement is avoided, on what basis the Claimants have been selling tickets on behalf of PIAC since September 2012. If the answer is that the Claimants remained entitled to 9% Basic Commission, then it would be a perverse result to say that they should not recover that same commission for the period between October 2010 and September 2012 giving credit for the benefit which they have actually received through Net Sale Remuneration.
- In order to change the basis of remuneration of agents, it is necessary to comply with the requirements of Resolution 818g (subject, of course, to the possibility of making an entirely new contract such as the New Agreement if valid).
- In this context, Mr Shepherd relies on ABTA at [40] to [52] dealing with "Issue B" which was whether the airlines had exercised their rights under paragraph 9 of Resolution 824 so that they were no longer liable to pay commission in respect of PSC after 1 June 1999 as the result of a letter and bulletin issue in May 1999. One of the questions addressed by the Court was whether paragraph 9 did, in fact, empower the airlines to alter commission in that way. The answer to that (see at [48] to [51]) was that paragraph 9 did not empower the airlines to alter the basis of remuneration set out in section 9 of Resolution 814. Paragraph 9 of Resolution 824 should be read together with section 9 of Resolution 814; by paragraph 2 of Resolution 824, Resolution 814 formed part of the contract and, although paragraph 2.4 provided that, in the event of conflict, contradiction or inconsistency between the provisions of the two, those in Resolution 824 should prevail, the two should, if reasonably practicable, be construed to avoid any such inconsistency. It had at one time been contended that the reduction of commission (ie to remove commission on PSCs) could be justified under section 9.1 of Resolution 814, but that contention had been abandoned. It is not difficult to see why: commission was payable under section 9.4 on the "fares applicable": to remove commission on PSCs would mean that commission was no longer so payable. The Court rejected the proposition that a similar reduction could be achieved under section 9.1 of Resolution 824 and thus override the rights and obligations of the parties under other resolutions contained in the Handbook such as Resolution 814.
- Although that line or reasoning is equally applicable to the interrelationship between section 9 of Resolution 818g (rather than section 9 of Resolution 814) and paragraph 9 of Resolution 824, that reasoning does not give the result for which Mr Shepherd contends. Resolution 814 required commission to be paid on the amount of the fares applicable, with commission being such as may be authorised by the Member from time to time. Removal of commission on PSCs alone could not be justified under section 9, and paragraph 9 of Resolution 824 did not rescue the airlines. In contrast, section 9.1 of Resolution 818g does not, as I have explained, require commission to be paid at all: it simply requires remuneration to be paid (consistently with paragraph 9 of Resolution 824). Provided that an Agent is left with "remuneration" of some sort which is not commission, and provided that the relevant change in remuneration has been notified in writing in accordance with section 9.1 of Resolution 818g, there is power for PIAC to effect the change.
- The question then is whether PIAC has effected the change in accordance with the requirements of Resolutions 824 and 818g. This issue was not properly investigated at the hearing. A further question which I asked counsel following the hearing was whether there were, in the bundle, notices purporting to replace commission with Net Sale Remuneration. I had not, so far as I recollected and so far as my Note records, been referred to any such notices. Mr Shepherd thought that there was no such notice in the bundle. He submits that PIAC has failed to establish that the required notice under Resolution 818g has ever been given. The mere fact that they have implemented the system of Net Sale Remuneration is insufficient to satisfy the requirement of section 9.1 that any change should be notified in advance by giving notice to the agent concerned. He points out that PIAC has not pleaded that it gave a notice for the purposes of section 9.1. That is true, but it has pleaded that it has, since 16 October 2010, "remunerated" its agents by Net Sale Remuneration. The validity of that remuneration is not challenged in the Reply, either on the basis that it is not remuneration at all or on the basis that the requirements of Resolution 818g were not complied with.
- Mr Schama's position was that the Claimants were given notice which complied with the requirements of Resolution 818g. In his response to my questions after the hearing, he has referred me to a number of documents in the bundle which were not referred to at the hearing. The principle document was an email from PIAC to a number of recipients (mainly agents throughout the UK) on 23 September 2010. Mr Schama had thought that TT was one of the recipients, but now acknowledges that this was an error. Given that the email was not sent to TT, the other documents relied on by Mr Schama are of no assistance to me in deciding whether TT or NT were given notice of, or knew of, a change to Net Sale Remuneration in October 2010 or thereafter.
- The only evidence that similar emails were sent to TT or NT is Mr Baber's belief. I have no idea of the reason why he believes that they were sent. I can speculate that it is because this is what ought to have happened; but I am bound to say that I can place no reliance on the proposition that PIAC's paperwork (or rather e-work) was in order. In the absence of this aspect of the case having been put to the witnesses for TT and NT, I am not prepared to accept that they received similar emails.
- In any event, I am not satisfied that the email was sufficient notice of the change of the basis of remuneration even to those agents to whom it was sent. Even assuming in the first place that "Net Fares reporting" is remuneration within Resolution 818g, the email is not, in my judgment, read by itself sufficient to qualify within section 9.1 of Resolution 818g as written notice of "Any changes in the level of commission or other remuneration or associated condition". Even if (as to which there is no evidence) the informed Agent reading the email is to be taken as understanding that it would cease to be entitled to commission, the email gives no information whatsoever about the detail of "Net Fares reporting" in particular the level of discount from published fares which would be made available to Agents or any restriction on the charge which an Agent might levy on passengers directly.
- It follows that Mr Schama has not identified anything which could possibly be described as a written notice to TT or NT of any change in their level of commission or other remuneration within section 9 of Resolution 818g.
- Not only have I not been provided with any such written notice, I have not even been provided with any evidence of any such oral communication. It is perhaps reasonable to assume that Agents were told in September or October 2010 that something was about to change, and even that commission was to be abolished with a move to Net Sale Remuneration. But whether they were told the level of service charge which they could obtain from customers is a matter on which there is no evidence and where no assumption at all can be made. Instead of a proper notice, or even oral communication of what ought to have been included in a notice, PIAC simply stopped paying commission and implemented the system of Net Sale Remuneration. Mr Shepherd submits that there has been no statement of or communication to the Claimants of remuneration to replace the commission to which they were previously entitled as required by paragraph 9 of the PSAA, with the result that, subject to the effect of the New Agreement, they remain entitled to that commission.
- In my judgement, the Claimants remained entitled to receive 9% Basic Commission (including commission on the YQ element of the fare) after October 2010. The issue, then, is for how long, the answer to which depends on the effect of the Notice and the New Agreement on that entitlement. There is one point which I make, for completeness, in relation to that conclusion. Mr Schama has not suggested that TT and NT are estopped from denying that the move to Net Sale Remuneration was effected in October 2010 having traded with PIAC since then on the basis of that form of reward. Such an argument would face considerable difficulties; it is not necessary or appropriate to address this aspect further.
- I do not consider that PIAC can complain that it has not been given the opportunity to raise an estoppel argument. The position at the end of the hearing was that Mr Shepherd had made the case that no written notice had been given terminating the right to commission and introducing net sale remuneration. On the evidence to which I had been referred at that stage, that part of his case was clearly correct. If Mr Schama was ever going to raise an issue of estoppel, he should have done so at the hearing.
- This conclusion means that it is unnecessary for the Claimants to rely on Mr Shepherd's further submission that Net Sale Remuneration is not, in fact, remuneration, with the result that the Claimants will be entitled to no remuneration at all if they are entitled neither to 9% Basic Commission nor 2% ORC. Nor do I need to decide the point. However, my provisional view is that the submission is not correct for the following reasons.
- Reading paragraph 9 of Resolution 824 and section 9 of Resolution 818g together (as must be done in accordance with the approach in ABTA), it is apparent that Agents are entitled to receive a reward which is either commission or other remuneration. Mr Shepherd contends that Net Sale Remuneration does not result in any payment by PIAC to an Agent: instead, the Agent is able to acquire tickets at a discount of 7% and then to make his money by charging the client a mark-up (described as a service charge) on the discounted price. His reward, if it was paid by anyone, was paid by the customer. It is not therefore remuneration within Resolutions 818g or 824.
- Mr Schama submits, however, that paragraph 9 does not apply because, as he puts it in his written closing submissions when addressing the YQ claim, the alleged agreement arises "outside the auspices of IATA". He points out that the Claimants' witnesses accepted in cross examination that, since IATA agreement must be in writing, the actual agreements were not governed by IATA Rules. That, with respect to him, is a legal issue on which the witnesses were not equipped to form a view. I do not in any case agree that the agreement arises outside the auspices of IATA: for the reasons already given, I consider that the contract between PIAC and the Claimants is to be treated as one which falls within the scope of Regulations 824 and 818g.
- Accordingly, in my view, section 9.1 does apply. The question then is whether Net Sale Remuneration is "other remuneration paid to the Agent" within that section. My (again provisional) view is that it is. In the context of Resolutions 824 and 818g, it is appropriate to give a reasonably wide meaning to the concept of remuneration paid. There is no reason in principle why IATA agents should not conduct business with an airline on the basis of Net Sale Remuneration. It is a fact that many airlines and agents have done so for a considerable period of time under the auspices of IATA Resolutions and, whilst that is not a guide to construction, it is a guide to what is in principle acceptable. If it were not in principle acceptable, IATA would no doubt have stamped on the practice. It does not strain the language to bring within its scope as "remuneration paid" the provision of tickets at a discount. After all, the economic effect is the same as selling the tickets at full price and then paying a rebate, something which would clearly be "remuneration paid".
- The first issue here is whether YQ (the fuel surcharge) in included in the "fares applicable" within the meaning of the Sales Agency Rules. There are three cases to consider in addressing that issue.
- The first case is ABTA, where the Court of Appeal was concerned with whether Passenger Service Charge or PSC formed part of the fare applicable or not. PSC was a charge levied by an airport on an airline's through-put of passengers. Unlike Air Passenger Duty, PSC was not a true tax: see [11] of Clarke LJ's judgment. The conclusion at [32] was this:
- The reason that commission was not payable on taxes was, of course, because they were expressly excluded by the definition of "fares applicable". There can be no doubt that the same conclusion would have been reached by Clarke LJ in relation to fuel surcharge had it been at issue in ABTA: if taxes were included then, a fortiori, so too would fuel surcharge. As with PSC, fuel surcharge is not a tax nor is it excluded from the definition of "fares applicable" any more than PSC was excluded. This was the conclusion reached by Master Leslie in GSTA, a conclusion with which I respectfully agree.
- The second case is the Australian case of Leonie's Travel Pty Ltd v Qantas Airways Ltd [2010] FCAFC 37 (Qantas"). This was concerned with the version of the Sales Agency Rules appearing in Resolution 816 which contained the same definition of "fares applicable" as Resolution 814. One issue in the case was whether the fuel charge was excluded from the definition. The Federal Court of Australia held that it was not excluded. It considered that the decision in ABTA was correct and applied the same reasoning to the fuel surcharge as the Court of Appeal had applied to PSC.
- The third case is GSTA. I am not, of course, bound by Master Leslie's decision. But I am bound by the Court of Appeal's decision in ABTA. Further, although I am not bound by the decision in Qantas, I treat it with great respect not least because inconsistency in the interpretation of agreements in use internationally is to be avoided if possible. I am in the happy position of agreeing entirely with all three of those decisions which I accordingly follow.
- Since YQ formed part of the "fares applicable" it ought, in principle, to be subject to the same commission as any other element of the fares applicable. Mr Schama contends that this is not so since the contract between PIAC and the Claimants arises "outside the auspices of IATA" adding that this is especially so "in light of clear written notice having been given to Cs that commission would not be paid on the YQ element of fares". I have already rejected the first limb of that argument (ie the "outside the auspices of IATA" aspect).
- In my judgment, there is nothing either in the second limb since there is no clear written notice such as he refers to. He relies on pages 352 to 356 in the bundle. Page 352 is a notice dated 24 April 2006 from PIAC to "All PIA Agents". There is no evidence that either TT or NT received this notice when they subsequently became agents. But even if they had, it does not, as I read it, say anything about commission but is concerned with the identification of tickets to which YQ would apply and with how YQ was to be shown on the ticket.
- He also relies on pages 353 to 356 as if they accompanied that notice. But whereas the notice was concerned with fuel surcharge as from 1 May 2006 (see its opening line), the later pages contain some Rules (presumably Rules as between PIAC and the Agents) which were effective only from 22 December 2007. It seems to me to be highly unlikely that these Rules accompanied the Notice and there is no evidence at all that they were provided at any time to the Claimants (or indeed to any Agents).
- The Rules, at the bottom of the first page provide under the heading "Commission" as follows:
- Under the heading "Fuel Surcharge" over the page, it is stated that "Fuel Surcharge is not a part of fare: hence it is not-commissionable". For the reasons just given, that was an incorrect statement. Fuel surcharge was part of the "fares applicable" within the definition in section 9 of Resolution 818g. Assuming, as must be correct, that these Rules were designed to cover agents whose remuneration arrangements were covered by valid written agreements within the PSAA and the Sales Agency Rules, these Rules misstated the Agents' rights and gave an invalid reason for saying that commission was not due on them. The Rules did not purport to change the remuneration of the Agents: it stated (incorrectly) what the Agents' existing rights were. It was not, in any case, open to PIAC to remove YQ from the part of the fare which was subject to commission even if clear written notice of the intention to do so had been given. Although commission does not have to be given at all, provided that there is some remuneration, if commission is given it must be given, under section 9.3 of Regulation 818g, on the whole of the "fares applicable". PIAC could no more remove YQ from commission under Regulation 818g than it was possible for the airlines to remove PSC from commission under Regulation 814.
- In my judgment, the Claimants' right to 9% commission on the YQ element of the fares paid by customers was coterminous with their rights to receive the 9% Basic Commission.
- Each of TT and NT claim 2% ORC on the price of tickets (including the YQ element). It is common ground that there was, up until 30 June 2008, a scheme for the payment of ORC. Under this scheme (contained in the "Revised Incentive Scheme July07 to June08"), Agents were entitled to the following tiered commissions: 2% on achieving sales of £0.5 million and up to £1million, 3% on sales between £1 million and £2 million and 4% on sales over £2 million. That is the last written record of any ORC scheme until that found in the New Agreement.
- The Claimants' evidence of any ORC scheme after July 2012 is, I have to say, thin. For TT, Asrar Ahmad and Ismail Ahmad each say the same thing namely that for 2009 to 2012 "the agreement between [TT] and PIAC was that ORC was agreed at 2% on the net fare value of the sales". There is no evidence about the identity of the individuals on each side making the alleged agreement. There is no evidence of other Agents having similar arrangements let alone of a general course of conduct under which Agents were paid ORC after the end of June 2008. The only evidence is to the effect that TT made claims and was told that ORC would be paid. The position is the same in relation to NT, similar evidence being given on behalf of NT by Asim Nazir and Khawar Nazir. The claim made by each of TT and NT is put on the basis of an alleged oral agreement. It is not contended that the statements made on behalf of PIAC, that they (TT and NT) should not worry and that ORC would be paid, of themselves gave rise to any legal liabiity, whether by way of contract, estoppel or otherwise: rather, such statements are relied on, as I understand, as confirmatory evidence of the existence of a pre-existing legal obligation on the part of PIAC to pay.
- So far as concerns TT, Ismail Ahmad stated in cross-examination that it was his understanding (that is to say, at the relevant time in 2008 when the ORC was still in operation) that all agents were entitled to 2% ORC. I did not understand him to be saying that, in each subsequent year, it was his understanding that all agents were entitled to 2% ORC. But even if that is what he meant, he gives no evidence about why he had that understanding or the source of it. It is wholly insufficient to support a case that TT was in fact entitled to ORC after July 2008.
- In my judgment, the evidence is insufficient to establish any entitlement of TT or NT to ORC after July 2008 (save under the New Agreement itself or the circumstances of its execution).
- The result of the above discussion is that the position immediately prior to service of the Notice on 14 September 2012 was this:
- The Claimants' claims are put in a number of alternative ways. One claim is that there was a collateral contract in the case of each of TT and NT under which, in consideration of entering into the New Agreement, the APS under that Agreement would be extended for 2013 "and beyond". An alternative claim is that the same statements as are relied on as giving rise to a collateral contract amount to material misrepresentations for the purposess of the Misrepresentation Act 1967, entitling the Claimants to damages. A further alternative claim is that the conduct of PIAC in procuring the Claimants to sign the New Agreement amounted to economic duress entitling the Claimants to avoid the New Agreement and to recover damages. In any case, it is alleged that the term of the New Agreement (if it stands) under which the Claimants give up their rights to accrued commissions is an unfair term within the meaning of UCTA and is therefore unenforceable.
- Before looking more closely at those claims, I turn to consider the effect of the Notice. The Notice clearly formed part of a course of conduct designed by PIAC to bring about a position under which Agents would operate under the terms of the New Agreement. When it comes to considering the issue of economic duress, I do not doubt that the Notice must be taken into account in assessing whether PIAC's conduct amounted to economic duress. However, even if the Claimants do have a valid claim under that head, it does not follow that the Notice is itself ineffective according to its terms. The remedy in the case of economic duress is rescission of the contract arising as a result of that duress with an alternative or additional remedy of damages. I do not consider that it is open to the court to declare what would otherwise be a valid Notice to be invalid. The position could be different if the Notice had been given in circumstances where it could not be seen as a genuine notice at all, in which case a declaration that it was ineffective could be made. That, indeed, may have been one of the remedies which the litigating APTA agents were seeking, something which would be consistent with the application before Eder J to suspend the operation of the notices given to those agents. But that is not the way in which the Claimants' case is put: it has not been argued that the Notice itself was invalid. Thus it is not suggested that, had the Claimants not signed the New Agreement, they would nonetheless have been entitled to continue operating as PIAC's agent on the same terms as they were operating before the Notice. Instead, the Notice forms part of the matrix against which the allegation of duress is to be assessed. If such a suggestion were made, I would reject it on the evidence before me.
- As a preliminary point, Mr Schama contends that it is not open to the Claimants to rely on the collateral contract point. The matter came into final focus in this way. I invited Mr Shepherd at the end of the hearing to provide me with a written submission about the interplay between his cases on misrepresentation and economic duress. He duly provided me with a Note dealing with this on 21 February 2017. In that Note (at paragraph 11), he submitted that in any event the promises could properly be characterised as collateral contracts. Mr Schama responded to that Note on 6 April 2017. In relation to the collateral contract point, he accuses the Claimants of seeking to raise this as a new point. He contends that the point was not raised previously in any of the following:
- Mr Schama submits that it would be unfair to PIAC to allow the Claimants to raise what he describes as an entirely new cause of action never before pleaded only after the conclusion of the evidence and the closing submissions. This would deprive PIAC of:
- It is, he says, plainly not possible to deal properly and appropriately with an entirely new cause of action raised "post-trial". To require PIAC to do so would be totally contrary to both the letter and the spirit of the overriding objective.
- Mr Shepherd's response to the absence of an express reference in the pleadings to a collateral contract is that the relevant facts were pleaded: the Particulars of Claim did, in his submission, plead the elements of a collateral contract, namely that PIAC promised that if the Claimants entered into the New Agreement they would receive the benefits of additional commission for the following year and beyond that they would receive the same benefit as the litigating APTA agents.
- He correctly points out that the issue at trial which was fully investigated in cross-examination was whether the promise had been made. It is extremely difficult to see what different questions of any relevance could have been asked if the real issue (that is to say, who said what to whom and in what circumstances) had been set in the context of an alleged collateral contract rather than an alleged misrepresentation.
- In any case, the point was, contrary to Mr Schama's submission, raised at paragraph 27(x) of Mr Shepherd's written closing. And at the very beginning of his oral closing submissions, Mr Shepherd affirmed his reliance on both the skeleton argument and the written closing submissions. Further, Mr Shepherd expressly referred to a collateral contract in his oral submissions. My note records him as saying "Actually, what was said is better put as a collateral contract: this is a classic case of collateral contract". So far as my Note records, Mr Schama did not object at that point to reliance being placed on a collateral contract nor did he do so in his closing oral submissions. Moreover, Mr Schama's written closing shows that he was alive to the point: at paragraph 135 he states that the Claimants' "evidence as to the representations made is too vague to form the terms of a contract".
- I can detect no injustice to PIAC in allowing the Claimants now to rely on alleged collateral contracts. None of the factors (i) to (vi) set out in paragraph 228 above indicates any injustice. With the exception of further cross-examination, there is nothing in those points because Mr Schama has had the fullest opportunity to address the issue. He could have done so at the hearing, the issue having been raised in Mr Shepherd's written and oral closings; and he has had the opportunity in the post-trial exchange of e-mail correspondence with myself to do so. It is true that he has not had the opportunity to ask the witnesses questions specifically in the context of an alleged collateral contract. But, as already explained, it is extremely diffiicult to see what further or different questions could have been asked of the witnesses to establish what was said (a matter of evidence) rather than the legal effect of what was said (a matter for submission).
- With the preliminary point decided in favour of the Claimants, I should say a little about the law surrounding collateral contracts, although I do not think that there is any doubt about the position. I need do no more that set out the citations contained in paragraph 11 of Mr Shepherd's Note to which I have already referred:
- In the light of my findings of fact in relation to TT, it can be seen that the ingredients of a collateral contract are present. In consideration of TT entering into the New Agreement, PIAC promised (i) that the ticket allocation would be reinstated (which it was) and (ii) that the APS under the New Agreement would continue to be paid beyond the period July to December 2012 "and well into the future". There was no representation or promise about how long "well into the future" would be, but, as I have said already, on any reasonable understanding of those words, commission would be payable for at least the calendar year 2013.
- Mr Schama contends that this is all too uncertain to give rise to a binding contract. The uncertainty arises in relation to duration and to the level of commission.
- As to duration, the answer, in my view, is that the representations by PIAC gave rise to a contract of indefinite duration with no provision for its determination: there is, however, to be implied a term that it may be terminated by PIAC on reasonable notice but so that it could not be determined before the end of 2013. It is also my view, although I have not heard argument on this point and will do so after hand-down of this judgment if requested by either party, that PIAC has consistently made clear that it is not liable to pay any commission after 2012 and is to be taken as having indicated a sufficient intention for the purpose of such implied term that the commission arrangement should not extend beyond 2013.
- As to the level of commission, I do not consider that the apparent contract is too uncertain to give rise to binding obligations. Commission should be paid at the same rate as it was being paid under the APS. Accordingly, the tiers by reference to which commission is assessed relate to 6-month periods, not the whole of the calendar year 2013. Under the APS, YQ is brought into account in establishing the relevant tier by reference to which commission is payable but is left out of account in the calculation of the actual commission within each tier.
- It has been suggested by Mr Schama that there could be no collateral contract because of the absence of the writing required to vary the terms of the New Agreement. There is nothing in this point since the collateral contract is not a variation of the New Agreement but stands outside it.
- In the light of my findings of fact in relation to NT, it can be seen that, as with TT, the ingredients of a collateral contract are present. In consideration of NT entering into the New Agreement, PIAC promised (i) that the ticket allocation would be reinstated (which it was) (ii) that the APS under the New Agreement would continue for 2013 and onwards (iii) that, as well as receiving the continuing APS, NT would receive the same benefits, if any, as the APTA agents achieved in their litigation.
- For the same reasons as given in relation to TT, there is no uncertainty in item (ii). Indeed, it is clear that commission was payable for 2013 since that was expressly stated. However, there is this difference as well. The promise that commission would be payable for 2013 "and onwards" must mean that it could not come to an end on 31 December 2013: some content must be given to "onwards" when it comes to formulating the implied term concerning termination of the APS. In my view, NT is entitled to a further 6 months' commission up to the end of June 2014.
- Item (iii) does, however, give rise to difficulties. There might be thought to be considerable non-legal merit in the point put to NT's witnesses that it cannot have been intended that NT should have both the APS commission and whatever the APTA agents obtained. That, however, is what was agreed. I do not consider that there is any scope for the implication of a term which allows PIAC to set one off against the other, even where what the APTA agents obtained what was essentially commission (ie the kickback). In any event, the APTA agents were claiming commission for the past: they were not simply seeking to have commission arrangements reinstated for the future. There is therefore an element of compensation in what the APTA agents obtained whereas the APS made available to the Claimants by the continuation of the incentive after the end of 2012 is reward for future sales. The element of double counting which Mr Schama suggests is present is more apparent than real.
- If the Claimants continue to rely on the collateral contracts alleged, it must follow, in my judgment, then a question arises whether they can at the same time nonetheless seek to recover the commissions (9% Basic Commission including the YQ element of the fare and ORC) which are waived under the terms of the New Agreement. I postpone answering that question until I have addressed the claims based on misrepresentation and economic duress.
- For there to be an actionable misrepresentation there must be a misrepresentation of fact, past or present (or sometimes of law, but it is not relevant to consider that in the present case). It is, of course, well established that a statement of opinion or intention is capable of amounting to a misrepresentation of fact if the opinion was not genuinely held or if there was no genuine belief that the intention could be carried out. A misrepresentation about an opinion or existing intention is as much a misrepresentation of fact as any other misrepresentation of fact. A statement about the future is not, of itself, a statement of fact; but it is implicit, at least in some statements about the future, that the maker of the statement believes that what he says will turn out to be true in the same way that a statement of opinion or intention may be regarded as a statement of fact. If a statement about the future is made with an honest belief that the future will turn out to be as represented, then, in my view, the statement will only be actionable if it amounts to a contractual warranty, whether as a free-standing obligation or as a term of some wider contract.
- If, as pleaded by PIAC, the statements made on behalf of PIAC to the Claimants (to the effect that the incentives under the New Agreement would continue beyond the end of 2012) had been no more than representations about PIAC's intention at the time when the statements were made then, provided that such intention was genuine, a subsequent change of mind for proper reasons would not give rise to a claim based on misrepresentation. I cannot, on the evidence before me, conclude that, when the statements were made, PIAC did not have a genuine intention to provide a further incentive scheme. Indeed, the evidence is to the contrary as Mr Haider's emails dated 27 November and 5 December 2012 demonstrate.
- The statements made on behalf of PIAC went beyond an expression of current intention. It is for that reason that I have concluded that there were collateral contracts. It is through the mechanism of contractual obligation that the Claimants are able to find a remedy for the failure to provide the promised incentive scheme. I do not consider that there is an alternative remedy based on misrepresentation.
- It is convenient, at this stage, to say something about the law concerning economic duress.
- The necessary ingredients for a successful economic duress claim are:
- If these ingredients are established then the victim of the duress is entitled to avoid the resulting contract.
- In DSND Subsea Ltd v Petroleum Geo Services ASA [2000] BLR 530 at [131], Dyson J said this (which I adopt as an accurate statement of the law):
- Lawful conduct can in some circumstances amount to economic duress. Mr Shepherd relies in that context on Cantor Index Ltd v Shortall [2002] ALL ER (D) 161 (Nov). I do not consider that that case supports the proposition. The illegitimate pressure in that case was a threat to close the customer's spread-betting account. The claimant was entitled to close the account, but only after a four-day period of request for margin. The claimant sought immediate payment. This was a demand which the claimant was not permitted to make. There was, therefore, a threatened breach of contract. On the facts, this threat was held to be illegitimate pressure and was a significant cause of the defendant closing his bets down.
- Nonetheless, the proposition is established: see the general discussion in Chitty on Contracts (32nd ed) at 8-046. That section includes the following, which I consider to be an accurate, albeit incomplete, summary:
- It is a necessary ingredient of economic duress that the victim's agreement was caused by the duress. The applicable test is a "but for" test. In other words, but for the duress, the victim would not have entered into the contract. It is not necessary to show that the threat was the overwhelming or predominant cause of the relevant conduct by the victim. I understand the parties to agree that this is the correct test. It is the one favoured in Chitty: see the conclusion at 8-037. I agree with that conclusion (and Counsel's common ground).
- The primary remedy where economic duress is established is rescission of the relevant contract. The authorities establish, I consider, that the resulting contract is voidable at the election of the victim: it is not void. Where the contract is avoided, the victim may be required to make restitution of the benefits which he has received. In the present case, if the Claimants are entitled to rescission, the issue will be the terms on which they are to be treated as having acted as agents since the date of the New Agreement: they must clearly give credit against what they ought to have received (possibly remuneration on some sort of quantum meruit) for the value of the benefits which they have enjoyed (Net Sales Remuneration and the ASP for 2012).
- There is, however, an issue in cases of economic duress as to whether damages are available in addition to rescission or where the contract is not rescinded (either because rescission is not available or where the victim elects to affirm the contract). This issue does not, in my judgment, arise since neither TT nor NT has a damages claim for reasons which will become apparent.
- There is an issue between the parties about whether the Claimants can rely both on misrepresentation and on economic duress.
- Put briefly, Mr Schama contends that there is an irresolvable tension between a claim based on misrepresentation and one based on economic duress. In each case, there is a "but for" test of causation although, I would add, in neither case does the misrepresentation or the duress have to be the sole cause of the victim's conduct. Thus, he says, on the one hand, that to succeed on misrepresentation, the Claimants would have to show that, but for the misrepresentation, they would not have entered into the New Agreement; they cannot show that since it also their case that they in fact entered into the New Agreement because of the duress. On the other hand, to succeed on economic duress, the Claimants must show that, but for the duress, they would not have entered into the New Agreement: they cannot show that since it is also their case that they in fact entered in the New Agreement in reliance on the misrepresentation. Mr Shepherd rejects that. He submits that it is clear that the "but for" test is consistent with there being more than one operative cause for the Claimants entering into the New Agreement: there were two causes in the present case, namely the economic duress and the misrepresentation.
- In the light of my conclusions concerning the alleged collateral contracts and the unavailability of any misrepresentation claim, the issue which I have just identified does not arise. I do not propose to address it further, other than to flag the following possibility (which has not been argued and on which I do not express even a preliminary view):
- I now turn to apply the principles discussed above to the present case. Whereas the collateral contract and misrepresentation claims relate to the benefits which the Claimants were promised, the economic duress claim relates to the disadvantages which the Claimants have allegedly suffered, although in assessing whether those disadvantages give rise to duress it is necessary to take into account the benefits promised, for they may be sufficient to render legitimate that which would otherwise be illegitimate.
- It is important to note the following matters:
- Although the main focus of the argument and discussion before me has been on the effect of any economic duress on the New Agreement, it must be remembered that the Notice, the collateral contract (which I have held to exist) and the New Agreement are all part and parcel of a single chain of events. It would be wholly artificial to see the economic duress as having been the operative cause of the making of the New Agreement but not of the collateral contracts and wholly artificial to see the Notice as standing outside of the matters to be taken into account in assessing whether there has been duress. It is not open, in my view, to the Claimants to assert the validity of the collateral contract – and thus seek to retain the benefit of the APS for 2012 and 2013 and in the case of NT the same benefits as were obtained by the APTA litigating agents – and at the same time seek to avoid the New Agreement itself. I reach that conclusion as an application of ordinary equitable principles in providing an appropriate remedy for the duress. I also reach the same conclusion on a rather narrower basis. The collateral contract provided for the APS to continue after 2012: it is necessarily implicit in that term that there was a right for the Claimants to receive the incentive under the APS in the first place, but that will not be so if the New Agreement is rescinded. If the Claimants are able to rescind the New Agreement and chose to do so, one consequence must, in my view, be that they lose the right under the collateral contract to any further incentive after 2012. It might be said that NT is in a different position in that the collateral contract in its case included in addition the right to receive the same benefits as those achieved by the APTA litigating agents. If, however, NT were to be allowed to rescind the New Agreement and yet retain the benefit of the collateral contract, it would be overcompensated: it would be entitled to make its claim for past commissions and yet receive as well the full benefit obtained by the APTA litigating agents whose compromise agreement was in full settlement of the same commission claims by those agents.
- So far as TT is concerned, I consider that it has established its claim based on economic duress. Taking account of all of the matters set out in paragraph 260 above, I consider that the elements required to be established are made out. This is one of those cases where, although acting lawfully, the defendant, PIAC, has placed illegitimate pressure on TT. Further, that pressure was a significant cause of TT entering into the contractual arrangements which it did, that is to say the collateral contract and the New Agreement. In reaching that conclusion I take account of the factors listed by Dyson J in the passage set out at paragraph 250 above. As to those factors:
- In my view, the pressure put on TT, in the light of all of the matters which I have identified and in the light of the factors listed by Dyson J, was illegitimate. The benefit of the New Agreement and of the APS for 2012 do not, in my judgment render the pressure legitimate. The New Agreement and the limited APS may represent a possibly adequate reward for future services; but they cannot be seen as compensating TT in an adequate way for its forced waiver of its existing claims.
- It follows, in my view, that TT is entitled to rescind the New Agreement, although if it does so, it cannot rely on the collateral contract as entitling it to the APS after 2012. If it elects not to rescind the New Agreement and instead relies on the collateral contract, it cannot, subject to one point, assert any claim for commission prior to 31 October 2012. The point (to which I will come) is the effect, if any, of UCTA.
- If the New Agreement is rescinded at the election of TT, then it can assert its claims for commission prior to 31 October 2012, at which date the Notice took effect and it ceased to accrue any further right to commission. The question then arises as to the terms on which it is to be treated as having operated since 1 November 2012. In theory, it is entitled to a quantum meruit. I have not heard argument on the appropriate level of remuneration. I do not see a case for continuing the 9% Basic Commission (whether or not including commission on YQ); but there is a strong case for TT retaining the full benefit of Net Sale Remuneration over the relevant period. The outstanding issue would then be whether any further remuneration should be provided to reflect the kickback received by the APTA agents. Since the kickback itself reflected a compromise of those agents' claims for commission, it is not immediately apparent why TT should obtain the same benefit when, as a result of my decision, it also retains the claims which the New Agreement purported to nullify.
- That last point is, of course, subject to Mr Schama's limitation point. These proceedings were issued on 31 December 2012; any claim for commission in respect of sales before 1 January 2008 is thus, on his submission, time-barred. In principle, Mr Schama is right that there is a time bar, but in one detail his submission cannot be quite right: the cause of action for the commission accrued not at the time when the sale was made but at the time when PIAC ought to have paid it. The precise date when each commission instalment ought to have been paid is, I regret, a detail which I cannot put my finger on although I feel sure it is in the evidence somewhere. I leave that detail open to further submission on or after the hand-down of this judgment. I add that it has not been argued that time only starts to run once TT makes an election to avoid the New Agreement.
- So far as NT is concerned, the position is slightly different. The difference in the positions of the two claimants arises out of the additional term of the collateral contract between NT and PIAC. Subject to that difference, precisely the same points can be made in relation to NT can be made as I have made in relation to TT at paragraph 262 above.
- Where the position of NT differs from that of NT is in the additional term of NT's collateral contract that it should become entitled to the same terms as the APTA agents might achieve in their litigation. It seems to me that this term effectively eliminates the objectionable element of the New Agreement, namely the giving up of all past claims. NT had the option of participating in the APTA litigating agents' action (or of bringing its own separate action). Had it participated, it would have obtained the same compromise as the participating APTA agents: its position under the collateral agreement is in fact better than that of such agents because, in addition to receiving what they obtained, NT is entitled, in accordance with my conclusions, to an incentive for 2013, to which the litigating agents were not entitled. In my view, the terms of the collateral contract are such as to eliminate the illegitimacy required to establish economic duress.
- Accordingly, NT's entitlement is as follows. It is entitled under the collateral contract to the same kickback arrangement as the APTA litigating agents and to any other benefit which they have received, as well as to the APS incentive for 2013. It is entitled to Net Sale Remuneration from 1 November 2012 together with the APS provided for in the New Agreement. Subject to the UCTA issue, it is not entitled to any commission in respect of the period prior to 1 November 2012 (and accordingly, no limitation points arise).
- I do not consider that there is anything in Mr Schama's submission that, by trading for 4 years under the Net Sale Remuneration provided for under the New Agreement, TT has ratified the New Agreement. [Ratification is not relevant to NT which, according to my conclusions, is bound by the New Agreement.] First of all, it was not until May 2014 that TT appreciated that PIAC would not honour the promises which it had (on my findings of fact) made and which TT had consistently asserted and relied on. As soon as PIAC had made it clear that it would not abide by its promises, TT indicated that it would litigate. Further, TT consistently asserted its claims to ORC. I have held that those claims are not valid, but that is not the point. The point is that TT was asserting claims which were inconsistent with the New Agreement. It cannot be taken as having ratified the New Agreement while it was maintaining those, albeit invalid, claims. The position is the same, mutatis mutandis, in relation to the claims to 9% Basic Commission on the YQ element of the fares.
- The Claimants rely on UCTA in relation to clause 6.2 of the New Agreement, which clause Mr Shepherd submits is, by any measure, extremely unfair. I do not consider that there is anything in this point.
- The starting point is section 3 which, it is to be noted, does not strike down an unfair contract term: rather, so far as relevant to the present case, it prevents, one party to a contract from excluding or restricting liability for breach of contract except so far as the contract term satisfies the requirement of reasonableness. This section is not directly relevant to the New Agreement. This is because clause 6.2 contains a waiver and discharge from any claims for commission or remuneration due "other than as set out in the New Agreement". This waiver and discharge therefore relates only to claims arising out of the agreements which are superseded by the New Agreement. I reject a construction which would amount to a waiver of any claims under any future agreement (other than the New Agreement which is expressly excluded in an any case).
- In order to get any case under UCTA off the ground, Mr Shepherd needs to rely on section 10 of UCTA. This provides as follows:
- Applying section 10 to the facts of the present case, Mr Shepherd's argument has to be this.
- An argument along these lines cannot succeed in the light of the decision of Sir Nicolas Browne-Wilkinson VC in Tudor Grange Holdings v Citibank NA [1992] Ch 53 where it was held:
- In any case, even if section 10 did apply, the compromise effected by the combination of the collateral contract and the New Agreement in the case of NT was not unfair for the same reasons that it was not illegitimate pressure. So far as concerns NT, clause 6.2 would, in my judgment, satisfy the reasonableness test.
- Finally, a point is taken by Mr Schama about the absence of an adequate pleading of damages. The conclusions which I have reached overall throw open the quantum of what is due and no criticism can be made that the relevant amounts have not been claimed in a schedule to the pleadings. There can be no damages claim by NT: instead it is entitled to the benefit of the same terms as the APTA litigating agents as well as under the incentive scheme for 2013 and the first 6 months of 2014. There must be an enquiry as to what is due if the parties cannot agree. I have, thus far in this judgment, only referred to the kickback as the benefit enjoyed by the APTA litigating agents. I understand that there may also have been a fund made available in addition, in the order of £6 million. I do not know enough about that aspect to assess how it should be reflected in NT's entitlement.
- TT does not have a claim for damages either. If it elects to affirm the New Agreement and the collateral contract, it will have no right to commission in respect of the period prior to 1 November 2012 and its rights thereafter will be to Net Sales Remuneration together with the APS for 2012 and a similar incentive for 2013. If TT elects to avoid the contractual arrangements, its claim is not for damages but for the taking of an account of what is due by way of commission in accordance with my rulings above if the figures cannot be agreed.
- TT must elect whether or not to be bound by the New Agreement and the collateral contract which I have held to exist. If it elects to be bound, it will not be able claim commission in respect of any period prior to 31 October 2012. It is entitled from that date to the reward of Net Sales Remuneration and the amounts due under the APS for the second half of 2012 (which as I understand it has in fact been paid). It is also entitled to a similar incentive for 2013.
- If it elects not to be bound, then it is entitled, subject to the limitation point, to payment of 9% commission on the YQ element of the fares up to 16 October 2010 (9% Basic Commission on the Base Ticket Price having already been paid as I understand the position). It is entitled to 9% Basic Commission on the Net Ticket Price (ie including the YQ element of the fare) from 16 October 2010 to 31 October 2012. From 1 November 2012, it is entitled to remuneration on a quantum meruit basis. I have already made some observations (see paragraph 265 above) about what its entitlement should be. If TT is to continue as an Agent of PIAC, it would be advisable to formalise the contractual arrangements for the future. I hope it will not be contentious that its contractual terms should be no different from other Agents (assuming that there is some uniformity about the reward package for Agents across the board). If Mr Shepherd contends that Net Sale Remuneration is not remuneration for the purposes of the IATA Resolutions which currently govern the arrangements between airlines and agents, the position will have to be investigated further.
- NT is bound by the New Agreement and cannot claim commission in respect of any period prior to 31 October 2012. It is entitled from that date to the reward of Net Sales Remuneration and the amounts due under the APS for the second half of 2012 (which as I understand it has in fact been paid). It is also entitled to a similar incentive for 2013 and the first half of 2014 and to the same benefits as the APTA litigation agents received under their compromise agreement.
Mr Justice Warren:
Introduction
(i) 9% basic commission;
(ii) 2% overriding commission;
(iii) Commission due on the fuel surcharge element of the fares applicable which PIAC wrongly excluded. YQ is the IATA code for fuel surcharge and features in the documentation. I adopt it in this judgment;
(iv) Commission due from 2013 onward at the rates applicable to an incentive scheme that applied in 2012;
Terminology
| Fuel Surcharge (YQ) | Variable surcharge levied by airlines on the price of a ticket as a result of fluctuations in the cost of fuel. |
| Base Ticket Price | Price of a ticket less tax and YQ. |
| Net Ticket Price | Price of ticket less tax, ie Base Ticket Price + YQ. |
| 9% Basic Commission |
This was a 9% Commission paid by PIAC on the price of the ticket. There is a dispute about whether the commission is payable on the Net Ticket Price or the Base Ticket Price. |
| Overriding Commission (ORC) | Further commission paid to TT and NT on top of 9% Basic Commission as incentive relating to total sales. PIAC contends that the last ORC scheme offered to the Claimants ended 30 June 2008, whereas the Claimants contend that it continued until 31 October 2012. |
| Net Sale Remuneration | A form of remuneration introduced by PIAC on 16 October 2010 in which the Claimants were offered tickets at 7% below the Net Price (thus at a price lower than that at which PIAC offered them for sale directly to the public) |
| Agent Productivity Scheme (APS) |
Further commission paid to the Claimants on top of Net Sale Remuneration as incentive after specific, tiered sales targets were met. PIAC contends that the APS scheme ran from 1 July 2012 to 31 December 2012 only, whereas the Claimants contend that it continued beyond that. |
The contractual arrangements and outline of claims
(i) Paragraph 1 provided for the terms of PSAA to become binding as between an airline and an agent upon the appointment of the agent by the airline and was to have effect as though they were both named as parties and subscribed their names as parties.
(ii) Paragraph 2.1(a) provided that the contractual terms were set out in the Resolutions contained in the Travel Agent's Handbook. This Handbook incorporated, among other things, the Sales Agency Rules and "the Billing and Settlement Plan rules set out in the BSP Manual for Agents". The BSP, the IATA Billing and Settlement Plan, was an accounting system operated by IATA.
(iii) Paragraph 9 provided for the Carrier (ie the contracting airline) to remunerate an Agent "for the sale of air transportation and ancillary services". Such remuneration was to be "in a manner and amount as may be stated from time to time and communicated to the Agent by the Carrier".
(iv) Paragraph 13 made provision for termination of the Agreement. Paragraphs 13.1.1 and 13.1.2 provided for termination where the Carrier withdraws its appointment of the Agent and where the Agent withdraws from its appointment by the Carrier. Paragraph 13.2 made provision for the implementation of those termination provisions in the following terms:
"notice of termination of the Agreement as above may be given at any time by notice in writing. Unless otherwise specified in the Sales Agency Rules, such notice shall take effect no sooner than the last day of the month following the month in which the notice of termination is given, and such notice shall include the effective date of termination, without prejudice to the fulfilment by each party of all obligations accrued prior to the date of termination."
"9.1 RATE OF COMMISSION
commission paid to Agents…shall be as may be authorised from time to time by the Member….
9.2 AUTHORITY TO PAY COMMISSION
Agents duly appointed by the Member shall be paid commission…..
……
9.4 CONDITIONS FOR PAYING COMMISSION
9.4.1 commission shall be paid to an Agent on the amount of the fares applicable to the … price paid over to the Member….
9.4.2 The 'fares applicable' are the fares (including fare surcharges) for the transportation in accordance with Member's tariffs and shall exclude any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges collected by the Agent."
"9.1 RATE OF COMMISSION OR AMOUNT
Any commission or other remuneration paid to the Agent shall be established by the Member or BSP Airline. Such commission or other remuneration shall be established in advance and communicated in writing to the Agent. Any changes in the level of commission or other remuneration or associated condition shall be notified in advance by giving written notice to the Agent.
….
9.3 CONDITIONS FOR PAYING COMMISSION
9.3.1 where commission is payable to an Agent it shall be calculated on the amount of the fares applicable to the air passenger transportation:
9.3.2 the 'fares applicable' are the fares (including fare surcharges) for the transportation in accordance with the Member's or BSP Airline's tariffs and shall exclude any charges for excess baggage or excess valuation of baggage as well as all taxes and other charges collected."
The 9% Basic Commission Claim
The ORC Claim
The YQ Claim
The New Agreement
(i) Clause 1 expressly incorporates the PSAA "as if its terms were repeated herein in full".
(ii) Clause 3 provides that the New Agreement "supersedes, nullifies, voids and replaces" all previous agreements between the parties "of any nature whatsoever and howsoever arising" and that "henceforth the New Agreement shall constitute the sole, exclusive and entire agreement between" the parties.
(iii) Clause 6 provides:
"In consideration for [the APS] 01 July to 31 December 2012 as set out in Appendix I it is agreed that:
(1) The aforesaid scheme supersedes, nullifies, voids and replaces any and all previous incentive arrangements made or binding as between PIAC, its directors, officers & employees and the Agent and/or anybody representing the Agent of any nature whatsoever and howsoever arising.
(2) The Agent hereby agrees to release and discharge PIAC, its directors, officers and employees from any and all claims, costs, liabilities or actions of any nature whatsoever and howsoever arising which have, may now or in the future arise from, or otherwise be connected in any way whatsoever with any commission or remuneration, or the calculation of the amount of any commission or remuneration, due to the Agent from PIAC on any basis other than as set out in the New Agreement."
(iv) Clause 7 provides:
"The New Agreement shall remain in force until terminated by either Party giving 60 days written notice of termination to the other Party."
(v) The APS contained in Appendix I, provides at paragraph 2:
"This incentive scheme will apply for the period 01 July to 31 December 2012 for the UK and will be based on the Net/Net sales (defined below) of the Agent. The incentive scheme lapses on 30 December 2012. The Agent acknowledges and accepts that it is not entitled to any payment and/or any other form of remuneration pursuant to this incentive scheme in respect of any sales made after 31 December 2012."
(vi) And at paragraph 3 provides:
"This incentive scheme does not entitle the Agent to seek any incentive for any sale in the period or time prior to 01 July 2012 and the Agent hereby acknowledges and accepts that it has no entitlement to any incentive of any description and/or nature from PIAC relating to any sales prior to 01 July 2012"
(vii) Paragraph 16 provides that no payment under the APS will be made in respect of a claim for disbursement submitted to PIAC later than 15 January 2013.
The Witnesses and other relevant persons
(i) Asrar Ahmad: a director of TT.
(ii) Ismail Ahmad: a director of TT and the son of Asrar Ahmad.
(iii) Saffiyan Rashid: and employee of TT.
Witness statements were obtained from Majid Zafar (the office manager of TT) and Ishtiaq Shah (a former District Manager, Birmingham, of PIAC) but neither of them was called.
(i) Asim Nazir: a manager of NT.
(ii) Khawar Nazir: a director of NT and a brother of Asim Nazir.
(iii) Mirza Faraz Baig: a former Reservations and Ticketing Assistant in PIAC based in Manchester.
(iv) Zulfiquar Bijarani: a former station manager in Manchester and now a manager in Islamabad.
(i) Asim Baber: District Manager, Birmingham for PIAC from 24 September 2012 to August 2013 and Country Manager, UK and Ireland, for PIAC from August 2013 to 30 September 2016.
(ii) Tahir Niaz: Senior General Manager Marketing for PIAC.
The facts
(i) Claims were made by TT for ORC as follows:
a) in January 2010 for 2009 yearly sales;
b) in January 2011 for 2010 yearly sales;
c) in January 2012 for 2011 yearly sales;
d) in January 2013 for 2012 yearly sales.
(ii) Claims were made by NT for ORC as follows:
a) in January 2010 for 2009 yearly sales;
b) in January 2011 for 2010 yearly sales;
c) in January 2012 for 2011 yearly sales.
(iii) In each case, TT and NT regularly chased PIAC for ORC to which it considered it was entitled and was repeatedly told that the matter was with head office (that is to say in Pakistan) but that there should be no concern as the ORC would be paid. It was not told until some time in 2014 of PIAC's position, namely that no ORC was due after 30 June 2008.
TT's position
NT's position
Notice of Termination of Agency
"could not no [sic] longer trade and service customers with such a limited stock as it had been selling the 300 tickets it had plus additional tickets of approximately 200 given on request by PIAC every fortnight. This reduction of ticket stock had a major impact on C1's business and if continued for much longer would have put C1 out of business."
TT's position following the Notice
NT's position following the Notice
"……it was not worth signing as it was only a 6 month agreement starting from 1st July 2012 till 31st December 2012 and we are now in September and there is only just over two months remaining and I am unable to push sales. Technically I am only getting two and half months of this agreement if I sign this. As PIAC had reduced the ticket stocks I felt pressured to sign the new 2012 agreement….."
Other events in 2012/13
"As per Management's decision, the earlier approved incentive scheme will be offered to the travel agents in UK market to entice them to drop all/any charges that they may have against PIA. However, the scheme is applicable from January 1, 2012 to December 31, 2012, whereas it has been decided that the period will be reduced to July 1, 2012 to December 31, 2012…"
| TOTAL SALE (GBP) |
INCENTIVE PERCENTAGE |
|
| Tier-1 | 250,000 – 750,000 | 1.0% |
| Tier-2 | 750,001 – 1,750,000 | 1.5% |
| Tier-3 | 1,750,001 – 2,500,000 | 2.0% |
| Tier-4 | 2,500,001 & Above | 2.5% |
"not a single IATA travel agent in our territory has come forward, so far, to sign the contract yet, therefore, it may also be kept in mind that on the day of cutover i.e. 31st OCT 2012, due to limited manpower we will be heading a crisis like situation at our end."
"A number of Travel Agents in the U.K , working and approaching PIA from under the umbrella of the so called "APTA" is a cartel, which over the years been overcharging passengers and blackmailing the Airline, with their unreasonable demand s of payment of excessive commission/incentives etc.
The decision by PIA to serve notice to all Agents in the U.K , for signing up a new business agreement has been done solely with the intention of empowering individual Agents , broadening its distribution base ( inclusion of multinational business partners) to facilitate public travel.
It is anticipated that the implementation of above will improve travel agency performance and more closely align them with the Airline. It will create a relationship that is mutually beneficially for the Airline, the Travel Agents (distributor) and the consumer."
"When the notice of termination takes effect on 31st Oct 2012 and Travel Agents in the U.K territory NOT signing the NEW PSA are delinked from PIA's Reservation System, following actions/procedures needs to be reviewed urgently by the steering committee for timely decisions/approvals and implementation.
The cruciality of the situation shall however depend on the number of top productive Agents NOT accepting the new agreement . Efforts are on to bring in as many Agents into the new arrangement, never the less the plan has to be in place to counter anticipated situation….."
"However, this is to inform that during LONUUPK's recent visit to head Office on December 04, 2012, Management decided to continue with the existing scheme for the next year as well. The approved copy of this scheme will be forwarded to you by LONUUPK whenever it is deemed feasible by the local Management to float incentives in the market."
"I am writing this email to firstly enquire but also request a decision with regards to the incentive payments that are be made and due to be made to both Non APTA and Ex APTA agents. We believe that these agents have been offered an incentive of £20 per ticket for every ticket issued from 1st January 2013 to currently. We also have confirmation that some ex APTA agents have actually been paid out this incentive and the rest are currently awaiting calculation and subsequent payments by PIA for their incentive.
We feel this is grossly unfair and does not treat all agents equally in an already very competitive market. We have been sincere and faithful to PIA which is reflected through our substantial sales and traffic on our countries national carrier position where as you know we are one of the top UK wide performing agents.
I request that we also have this same incentive provided to ourselves and should not be punished or excluded from such incentive due to the following facts:
1. That we were advised by senior management at PIA Birmingham not to join APTA to which we adhered to.
2. That we have not been involved any legal suit or action against PIA involving the APTA agent who have pursued such legal action.
3. That this incentive should only be a way to appease the ex APTA agents who have dropped out of the legal action and not be offered to high performing faithful agents such as ourselves.
4. That we are as I have mentioned one of the leading PIA agents in the UK and therefore should be treated as such.
Therefore, I again ask you to speak to your senior management and have approved the same incentive for ourselves of £20 per ticket issued since the 1st January 2013 to currently as we feel this is only right and deserved for our continued support of PIA."
"We were told in December 2012 that the management had decided that the incentive policy of 2012 will continue in 2013. Ref email RGM.UK dated 05.12.2012 10.06am, subject: Inventive Scheme 2013, according to which the agents having no benefit of APTA claim case were at a bit [sic] ease that they would at least get something in return to complete the APTA agents having edge over the rest. However PIA quietly went silent on the Incentive scheme 2013, and when the agents' incentive claims started coming in, we were unable to disburse the claimed amount, having the confusion in this regard; despite of having the clear email mentioned above.
This scenario has aggravated the situation as at the one end some agent (mostly of the LON and some of BRF) are getting GBP 20 (in year 2013) and GBP 15 Feb '14 till Feb '16 as kick back incentive, where as other agents, including some of the agents who were persuaded to withdraw their names from the court claim case of APTA and had signed agreement with PIA for the same and were supposed to get incentive scheme benefits in return, have been getting nothing since Dec'2012."
He went on to request that something be done for the loyal agents (which would, of course, include the Claimants in the present action).
"In 2012 PIA promised us if we sign the new agreement, we will get the incentive of £20 per ticket and we did sign the new agreement but we have not received any incentive as other agents are getting the incentives, can you please look into this matter and update me."
The 24 September meeting
"incentive commission would be paid and would continue to be paid beyond the 6 months and well into the future for all good agents who sign the agreement."
(i) There was a meeting on 24 September 2012 at TT's offices. Mr Baber and Mr Shah attended the meeting as representatives of PIAC.
(ii) At that meeting, the New Agreement was placed before the Ahmads. The Ahmads were told by one or both of Mr Baber and Mr Shah that the New Agreement was to be signed by all agents, and that failure to sign would result in consequences that would be out of the hands of managers. This was reasonably understood to mean that TT's agency would come to an end and it would cease to be able to sell PIAC's tickets.
(iii) The Ahmads were told that, if TT signed the New Agreement, its allocated ticket stock would be reinstated. They were also told that the incentive commission, that is to say the commission provided for in the New Agreement for the period 1 July to 31 December 2012, would continue to be paid beyond that period "and well into the future". There was no representation or promise about how long "well into the future" would be, but on any reasonable understanding of those words, commission would be payable at least for the calendar year 2013.
(iv) The Ahmads felt under pressure to sign the New Agreement in the light of the fall in ticket sales since the reduction in the ticket allocation and did not want TT to be put out of business, an outcome which they saw as the inevitable consequence of the withdrawal of TTs agency. They did not want to sign but considered that they had no alternative because of that pressure. I reject PIAC's suggestion that TT could have found other business to replace that derived from PIAC within a reasonable time-scale. It may well be that, in the longer term, TT would have been able to do so. But the result of a refusal to sign the New Agreement would have resulted in termination of the agency on 31 October, a matter of only weeks away, by which time TT could not have hoped to replace the PIAC business.
The 17 October meeting and the signing of the New Agreement by NT
"As PIAC had reduced the ticket stocks I felt pressured to sign the new 2012 agreement. I asked what benefit would C2 have on signing the new 2012 agreement and I stated that if C2 stays with APTA then C2 would have more benefit. Mr Zulfiqar Bajrani said that if C2 signs this new 2012 agreement, whatever the APTA case setteles [sic] at C2 will get that and an additional 2% ORC. Mr Zulfiqar Bajrani said "I know it is unfair but if you sign the new 2012 agreement the "ORC" incetive [sic] will continue from 2013 onwards and the ticket stock will increase. "This my promise to you and you have my word that we will look after you and also give such high incentive that you will forget the court case. You will make more money over these incentives over what the court will award you on conclusion of this case which is not even gurenteed [sic]."
"Under the instruction of Mr Mansoor Mela was the UK Country Manager for PIAC, I gave Mr Asim Nazir the assurance that if C2 signs this new 2012 agreement, C2 would get the same incentives 2012 onwards as were offered under the New Agreement."
(i) He had been interviewed by PIAC and was asked to give a witness statement. He was told on occasions that he would be a witness, but he never received a draft witness statement for approval.
(ii) He confirmed as true the contents of his email dated 12 June 2014 (referred to at paragraph 105 above). The addressees of email included Mr Baber. No reply was received from anyone to the email; nobody else, to the best of his recollection, suggested that it was in any way inaccurate.
(iii) He remembers NT as being one of the agents making the claims referred to the first paragraph of that email which I quoted in that paragraph. Claims were received by the manager, passenger sales.
(iv) He spent from September 2013 to February 2014 in Pakistan after which he was asked to return to Manchester, which he did. So he was unable to speak authoritatively about what happened in that period. He considered, however, that the 6 month scheme in place for the second half of 2012 had been extended into 2013.
(v) He stated that NT was one of the agents referred to in the second paragraph which I have quoted, that is to say one of the agents who were persuaded to withraw from the APTA claims. The "we" referred to were himself and Mr Mela; he does not recall anyone else being involved, although the Sales Manager, Mr Kharai, may have been. The statement in that paragraph that agents "were supposed" to get incentive scheme benefits in return was made because that was what both he and Mr Mela had told the agents concerned.
(vi) He agreed with the thrust of paragraphs 24 and 25 of Asim Nazir's witness statement above, which he said he had not read before. However, he described himself as the bridge between head office and the market. He would not have said "I promise" (or as Asim Nazir had put it "This is my promise"); rather, he would have said "I have been promised". In other words, he was saying, as I understand it, that he was conveying to NT a promise which had been made to him by Head Office.
(vii) He had no grounds for thinking that Mr Mela did not have the authority to give him the instruction referred to in paragraph 8 of his witness statement, which I have set out above.
(viii) What PIAC was trying to achieve was to get NT to sign the New Agreement and thereby remove it from involvement with the APTA court case. None of the Manchester agents had yet signed the New Agreement.
"They did ask how long. I was more precise. What I was told by Mela 'money made from incentives by signing a lot more than could claim from APTA case'. We were never part of APTA case: dealt with by London. Don't remember if NT said anything about what would make."
"Because APTA agents getting it. Get both if APTA gets it. That's what we told. APTA might lose. No difference if settled."
(i) At the 17 October meeting, the New Agreement was discussed by Asim Nazir and Mr Bijarani.
(ii) Asim Nazir made it clear that he considered the New Agreement to be unfair and that it was not worth signing it as the incentive was only for a 6-month period with only 2 months remaining.
(iii) Mr Bijarani stated that, if NT signed the New Agreement, the 2012 incentive scheme would continue for 2013 and onwards. In saying that, he was clearly referring to the incentive scheme under the New Agreement and not to some pre-existing scheme even if there was one in place. He did not state for how long after 2013 the incentive scheme would continue.
(iv) Mr Bijarani also stated that, as well as receiving the incentive as just described, NT would receive the same benefits, if any, as the APTA agents achieved in their litigation. Mr Bijarani did not use words to indicate that he was restricting his representation to whatever the APTA agents achieved by way of judgment following a trial. He simply indicated that NT would get whatever those agents achieved. Whether or not the parties' minds were focused on a judgment rather than a settlement does not matter. In any case, if someone had asked "What will happen if there is a settlement rather than a judgment" it is clearly the case, in my judgment, that the answer would have been "Of course that is covered too".
(v) Asim and Khawar Nazir felt under pressure to sign the New Agreement in the light of the fall in ticket sales since NT could not survive on an allocation of only 45 tickets. (let alone on no tickets at all). As with TT, I reject any suggestion that NT could have found other business to replace that derived from PIAC within a reasonable time-scale. It may well be that, in the longer term, NT would have been able to do so. But the result of a refusal to sign the New Agreement would have resulted in termination of the agency on 31 October, only a few weeks away, by which time NT could not have hoped to replace the PIAC business.
(vi) NT had no reason to think that either of Mr Bijarani and Mr Mela lacked authority to make the statements which I have held they did make.
(vii) Mr Bijarani made the statements which he did (conveying, as he put it, PIAC's promise) with the knowledge and authority of Mr Mela. Mr Bijarani had no reason to think that Mr Mela himself lacked the authority to commit PIAC to the promises conveyed to NT.
Authority and the evidence of Mr Niaz and Mr Baber on that issue; their evidence generally
"However, having explained the process above in detail, it is clear that none of these managers had any authority to approve, implement, modify or extend an incentive scheme on PIAC's behalf and they would have been well aware of this. Indeed, without the signed approval of the Director Marketing, even I do not have the authority to approve, implement, modify or extend an incentive scheme for agents or to bind PIAC in this manner."
"As experienced managers within PIAC, Mr Mela, Mr Shah and Mr Bijarani would have all been aware of the above and I find it extremely difficult to believe that any of them would have made such a statement to the Claimants."
"However, Mr Mela has previously told me that he did not make any assurances to Nottingham Travel about an incentive scheme for 2013 and beyond. Mr Mela was an experienced PIAC manager and knew about the formal written approval procedure which has to take place before any incentive scheme is implemented or modified, as I have described above. In any event, even if Mr Mela had made the statements alleged by the Claimants, he did not have any authority to extend or modify the incentive scheme as I have already explained."
"However, I understand that Mr Bijarani says he informed Nottingham Travel that PIAC planned to offer agents who signed the New Agreement a further incentive scheme in 2013 which was to be similar to the one provided in that document. I do not believe that, at the time Nottingham Travel signed the New Agreement on 18 October 2012, PIAC would have been considering a further incentive scheme for 2013 or an extension to the existing scheme. This is because, in my experience, if PIAC was ever to extend an incentive scheme or implement a new scheme, it would wait until it had been able to gauge the financial impact of the scheme and consider the feasibility of an extension or further scheme. I am certain that no incentive scheme was ever authorised or approved for 2013 and no authorised or approved scheme was ever offered to any agent."
"In addition, as far as I am aware, the "£20 per ticket" deal was first proposed by PIAC to reach a settlement with a number of APTA agents who had issued proceedings against it when that settlement was concluded in February 2013. To my knowledge, this was the first time PIAC had ever implemented a 'per ticket' deal in the UK and it cannot therefore be true that Nottingham Travel was promised "£20 per ticket" in October 2012."
"Strictly speaking, the agent should first increase the level of its bank guarantee but I am aware that historically this was not always done. In the case of many agents, PIAC was therefore giving them additional tickets whose total value exceeded the level of their bank guarantees."
"This meant that any agent whose allocated tickets exceeded the level of their bank guarantee needed to have their allocation reduced to limit the financial exposure of PIAC. This only applied to agents which had not signed the New Agreement, as the agents which had already signed it had agreed to continue trading with PIAC and were not considered a financial risk. It appeared to PIAC that the agents which had not signed the New Agreement were not intending to do so"
"If Mr Shah, Mr Bijarani and/or Mr Mela told Times Travel and/or Nottingham Travel that their ticket quotas would be reduced if they did not sign the New Agreement, this [ie to reduce financial exposure] is likely to be the reason why. Indeed, I cannot think of any other reason why they may have done so. It would not have been intended to be tantamount to blackmail, as the Claimants have asserted, but as a legitimate means of preparing to end the relationship between the agents and PIAC and to ensure that PIAC was not financially exposed in the event that those agents did not wish to continue the relationship."
9% Basic Commission on Base Ticket Price
(i) Paragraphs 11 to 15 of the Particulars of Claim appear to be dealing only with ORC; certainly, the evidence concerning the submission of claims for commission and the allegation that the Claimants were told they were being processed (as pleaded) relates only to ORC.
(ii) Paragraphs 16 to 22 deal with the events leading up to the signing of the 2012 Agreement by each of the Claimants. Paragraph 21 pleads the reduction of NT's ticket stocks (the reference to September is an error for October). There is no similar allegation of reduction in respect of TT in relation to which paragraph 17 pleads only a threat to reduce stocks if the 2012 Agreement was not signed. Paragraph 23 is concerned with the incentives provided for in the 2012 Agreement and the allegation that they would continue after 2013. There is, of course, no mention of 9% Basic Commission because, under the 2012 Agreement, if it is valid, the Claimants would be operating under Net Sale Remuneration and not commission (apart from the incentive).
(iii) Paragraphs 31ff address what is referred to as the 2013 Agreement and Incentive. This had not featured in submissions as a separate contractual arrangement at all. It is really no more an allegation of confirmation that the incentive would continue for 2013. Paragraph 36 refers to submission of the Claimants' claims for commission, claims clearly relating only to the incentive under the New Agreement. The references in paragraphs 37 to 40 to commission are clearly to the incentive and not to a continuing 9% Basic Commission.
(iv) Above paragraph 41 appears a heading "The Defendant's Breaches". Breaches of contract are alleged in the failure to pay commission for 2013 and for 1 January 2014 "to date" (ie 15 December 2014 when the pleading was signed).
(v) Paragraph 44 (a further or alternative claim) contends that PIAC is in breach of contract so that the Claimants are entitled to "payment of their commission during the period 2008 up to the date of the 2012 Agreement". This claim appears to be made on the basis that the New Agreement is in fact valid. The commission being referred to would appear to be ORC under the pre-existing arrangements. There is no hint that the 9% Basic Commission remains unpaid and is included in the claim.
(vi) Paragraph 45 (another further or alternative claim) contends that for the period 2008 to 2012, PIAC has "wrongfully deducted a proportion of each sales ticket as a fuel surcharge known as 'YQ'". The Claimants assert that any commissions payable should be calculated without deducting the YQ. This claim is not on its face limited to ORC on the YQ element of the fare and the parties have proceeded on the basis that the YQ claim extends to the 9% Basic Commission. Paragraph 47 appears to repeat this claim in slightly different language.
(i) At paragraph 12 PIAC contends that it has, since 16 October 2010 remunerated its agents (for selling tickets on PIAC's behalf) by providing them with tickets at a base fare discounted 7% below the price which PIAC makes them available to the public and permitting the agents then to charge and retain a passenger service charge on those tickets when selling them on to the public ie Net Sale Remuneration. There is no allegation in the Defence that it served the notices requisite to move remuneration from commission to Net Sale Remuneration (assuming that this was possible).
(ii) At paragraph 13, it admits that it has operated ORC in the past subject to achieving specified sales targets, stating that the last such scheme was for the period 1 July 2007 to 30 June 2008. It has not provided an ORC incentive scheme since then and has never been under an obligation to do so.
(iii) Paragraph 14 denies receipt of any claims for ORC being made by either of the Claimants.
(i) Paragraphs 4 and 5 clarify the case that for the period 2006 to about 15 October 2010, PIAC wrongfully instructed IATA to base agents' 9% commission by reference to the "net value" (ie after deducting the YQ element of the fare) rather than the gross amount. This appears to recognise that, as from that latter date, there was no right to 9% Basic Commission at all, reward to agents having been replaced by Net Sale Remuneration.
(ii) Subsequent paragraphs of the Reply appear to be focused on the YQ element of the fare. However, paragraph 12 contains this:
"To the extent that the Defendants has not paid commission including commission and overriding commission or has not included the fuel surcharge element of the fares applicable when accounting to and paying the Claimants, the Defendant has breached the PSAA agreements and is liable in debt or damages to account for all sums due…"
(iii) That is not sufficient to amount to an allegation (which ought, in any case, to be included in the Particulars of Claim) that 9% Commission has not been paid for any period, still less that it was due and unpaid for the period after 16 October 2010.
The YQ issue
"….I would construe 'fares applicable...as the total price to the passenger, including charges like PSC and indeed taxes because that is the only thing that the passenger, as a member of the public, is really interested in. Moreover….it represents the total cost of the 'air passenger transportation…."
"Rates are in GBP and commissionable by 9% on applicable fares which are exclusive of fuel surcharge/taxes."
The ORC Issue
Summary of position immediately prior to service of the Notice
(i) Each of TT and NT was entitled to 9% Basic Commission including the YQ element of the fare. Although the YQ issue had not been finally resolved between PIAC and the APTA claimants, the latter had, in my view, an enormously strong case and were justified in optimism about obtaining summary judgment. Accordingly, if I am right in my conclusion that the Claimants were entitled to 9% Basic Commission, they are entitled to the same commission on YQ. Even on PIAC's case, the right to 9% Basic Commission was not terminated until 31 October 2010 so that the Claimants would now have a valid claim for unpaid commission on YQ before that date subject to any limitation defence and subject to the New Agreement.
(ii) Neither TT nor NT was entitled to any ORC in respect of any period after July 2008. However, APTA agents were making such a claim and it cannot be said that there was a case for summary judgment against them on this element of their overall claims. The Claimants clearly thought that they were entitled to to ORC after July 2008, making regular claims for the same and being told that the matter was being looked into and, on some occasions at least, that it would be paid.
The Claimants' claims following the Notice and the New Agreement
Collateral contract
(i) the Amended Particulars of Claim;
(ii) the Claimants' Skeleton Argument;
(iii) the Evidence;
(iv) the Claimants' Written Closing Submissions; or
(v) the Claimants' Oral Closing Submissions.
(i) the opportunity to address the point in its own pleadings;
(ii) the opportunity to consider the extent to which this point was proved in the Claimants' witnesses' written evidence;
(iii) the opportunity to address the point in PIAC's Skeleton Argument;
(iv) the opportunity to cross-examine the Claimants' witnesses on this point;
(v) the opportunity to apply to adduce further written and/or oral evidence on this point during the trial from PIAC's witnesses; and
(vi) the opportunity to address the point in written closing submissions.
(i) Chitty on Contracts (14th ed) at 13-005:
"It is undoubtedly true that the courts are nowadays much more willing to accept that a pre-contractual assurance gives rise to a collateral contract, so that such collateral contracts are no longer rare.
(ii) Lord Denning MR in J. Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 W.L.R. 1078, 1081:
"When a person gives a promise or an assurance to another, intending that he should act on it by entering into a contract, and he does act on it by entering into the contract, we hold that it is binding."
I note that this same passage had been relied on by Mr Shepherd in his written closing submissions at paragraph 27(x).
Misrepresentation
Economic duress: the law
(i) Pressure which is illegitimate.
(ii) The pressure must be a significant cause inducing the Claimant to enter into the contract.
(iii) The practical effect of the pressure is that there is compulsion on, or a lack of practical choice for, the victim.
"In determining whether there has been illegitimate pressure, the courts take into account a range of factors. These include whether there has been an actual or threatened breach of contract; whether the person allegedly exerting the pressure has acted in good or bad faith; whether the victim had any realistic practical alternative but to submit to the pressure; whether the victim protested at the time; and whether he affirmed and sought to rely on the contract. These are all relevant factors. Illegitimate pressure must be distinguished from the rough and tumble of the pressures of normal commercial bargaining."
"8-046 Threatening to carry out something perfectly within one's rights will not normally amount to duress; for instance, a party who relies on his existing contractual rights to drive a hard bargain is not, on that ground alone, guilty of economic duress. But there can be no doubt that even a threat to commit what would otherwise be a perfectly lawful act may be improper if the threat is coupled with a demand which goes substantially beyond what is normal or legitimate in commercial arrangements. ….. Although it is, in general, true to say that a contract is not rendered voidable by reason of the fact that pressure has been lawfully applied so as to compel the promisor to accept its terms, it is unlikely that a court would refuse to entertain an action at the suit of one who had paid money under a threat amounting to blackmail, or to set aside any agreement entered into as the result of such a threat…"
Interaction between economic duress and misrepresentation
There was a single course of conduct on the part of PIAC, involving both misrepresentation and economic duress. Each of those elements constituted a wrong committed by PIAC. If there had been neither the misrepresentation nor the economic duress, the Claimants would not have signed the New Agreement (although if the objectionable element had not been present, that is to say the waiver of all claims, it is not easy to see why PIAC would have terminated the old agreements in the first place). It is arguable that it is not open to PIAC to rely on one wrong to defeat the Claimants' claim based on the other wrong by arguing that the necessary "but for" test is not fulfilled by either of those wrongs separately when, cumulatively, it clearly is fulfilled.
Economic duress: application of principles on the facts
(i) PIAC considered (wrongly, as I have held, but I have no reason to doubt that PIAC genuinely believed it to be true) that the 9% Basic Commission had ceased to be payable, having been replaced by Net Sales Remuneration in October 2010.
(ii) The New Agreement was in all material respects in precisely the same terms as the pre-existing arrangements, both incorporating Resolutions 818g and 824. One difference between the old arrangements and the New Agreement – and the only major difference – related to the giving up by the Claimants of their pre-existing claims to commission, thus including 9% Basic Commission on Net Ticket Price (ie including the YQ element of the fare) and ORC.
(iii) The New Agreement was offered to the Claimants in the very letter (that is to say, the Notice) which gave notice of termination of the old agreement. There was, therefore, quite clearly no desire on the part of PIAC that Agents should in practice cease to be agents for PIAC; what PIAC wanted to achieve was simply an end to any claims by the Claimants for their outstanding commission. The Notice was in reality a threat that, unless the Claimants gave up those claims, their agency would come to an end. It of course went beyond a mere threat because, if the Claimants did not sign the New Agreement, their appointments would come to an end automatically on the expiry of the notice period.
(iv) The Claimants were given no opportunity to discuss the service of the Notice. Some of the reasons which I have been given for the service of the Notice, in particular concerns about financial risk, simply do not stand up to scrutiny in relation to the Claimants.
(v) The Claimants' claims were all genuine and arguable. The YQ claim in respect of the period up to 16 October 2010 was very strong indeed in the light of the decisions of the Australian court and Master Leslie. Had the summary judgment application proceeded, it would, in my view, have been bound to succeed. The claim to 9% Basic Commission (including commission on the YQ element) for the period after October 2010 was less clear. For the reasons which I have already given, I consider that it would have been a good claim. The ORC claim is one which, on the evidence before me, I have rejected. It was, however, part of the APTA litigating agents' claim in relation to which the evidence may have been very different. It would be wrong to say that, when the New Agreement was made, there was no prospect of success in the ORC claim.
(vi) The New Agreement provided benefit for the Claimants in the shape of the APS and the collateral contracts provided the different benefits for TT and NT which I have described.
(i) The case concerning YQ at least prior to October 2010 was very strong. I feel confident that summary judgement would have been given. PIAC ought to have paid 9% commission on the YQ element in respect of the periods prior to October 2010 before the New Agreement was signed. It was in breach of contract in having failed to do so. There is no limitation point here, since all of the Claimants' claims arose in respect of periods within 6 years of the New Agreement.
(ii) Whether PIAC has acted in good faith or bad faith is moot. The Claimants have not established that there was bad faith but nor has PIAC established good faith. It is clear to me that the whole basis on which the Notice was served and the terms of the New Agreement were formulated was to ensure that agents would lose their claims to accrued rights in a situation where some of those rights (in particular, 9% commission on YQ) were clear. Indeed, Mr Schama accepted that this was the motivation for the Notice. Whether this demonstrates bad faith is a matter on which different minds might take different views.
(iii) It does not, I think on any view, reflect well on PIAC that it should treat this particular agent, NT, in the way which it did when TT was a successful, honest and reliable agent with a substantial period of loyal service. It was given no adequate period of notice to allow it to adjust its businesses; it was not allowed, even during the short period of notice, to acquire for cash its pre-existing ticket allocations.
(iv) TT, in my judgment, had no practical alternative but to submit to the pressure and take what was on offer.
(v) TT protested at the time, saying that the New Agreement was unfair.
UCTA
"A person is not bound by any contract term prejudicing or taking away rights of his which arise under, or in connection with the performance of, another contract, so far as those rights extend to the enforcement of another's liability which this Part of this Act prevents that other from excluding or restricting."
(i) The person referred to is TT or NT.
(ii) The contract term is clause 6.2 of the New Agreement.
(iii) The other contract is any of the earlier contracts under which TT or NT acted as Agent for PIAC.
(iv) The rights referred to are TT's or NT's rights arising under those earlier contracts.
(v) The words "another's liability" refer to PIAC's liability under those earlier contracts.
(vi) Finally, those liabilities are ones the enforcement of which section 3 prevents PIAC from excluding or restricting.
(i) that section 10 does not apply where the parties to both contracts (ie in the present case, the pre-existing contracts between TT or NT and PIAC and the New Agreement between TT or NT and PIAC) are the same; and
(ii) that UCTA is dealing solely with exemption clauses in the strict sense (ie clauses in a contract modifying prospective liability) and does not affect retrospective compromises of existing claims. Section 10 is dealing only with attempts to evade the Act's provisions by the introduction of such an exemption clause into a contract with a third party.
Summary of conclusions and disposition