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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Hills v Niksun Inc  EWCA Civ 115 (01 March 2016)
Cite as:  IRLR 715,  EWCA Civ 115
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ON APPEAL FROM THE WINCHESTER COUNTY COURT
MR RECORDER HARRAP
CASE No: 2QT24687
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE BEATSON
LORD JUSTICE VOS
| MARK HILLS
WordWave International Limited
Trading as DTI
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Mr Matthew Winn-Smith (instructed by Bookers & Bolton Solicitors) for the Respondent
Hearing date: 17th February 2016
Crown Copyright ©
Lord Justice Vos:
The contractual documents
"You may from time to time be eligible to participate in such commission plan(s), if any, as [Niksun] may in its absolute discretion determine.
Participation will be on such terms, and subject to such events, as [Niksun] may from time to time determine at its absolute discretion. …"
"All other details, eligibility requirements, terms and conditions as per the NIKSUN FY 2011 Sales Compensation Plan will apply, and shall take precedence. All disputes in compensation and commissions, and in any interpretations of this letter or NIKSUN's policies, will be solely decided by
"This plan is not a contract between NIKSUN and its employees and does not confer upon the employee any promise, express or implied, of continued employment, or any reasonable expectation of a particular amount or level of incentive compensation. NIKSUN reserves the right to determine what level of incentive compensation, if any, is fair and reasonable under the circumstances, and is in the best interest of NIKSUN. Until NIKSUN has made such a final determination, no portion of this incentive compensation shall be considered as vested in or earned by the employee."
Commissions are earned on shipments and paid on collections in accordance with this plan and the individual Compensation and Account Assignment Letters…"
"3. Commission Splits: Commission credits can be split between plan participants when multiple participants are substantially involved. For more details on this subject, see section on "Commission Splits"."
Notwithstanding anything to the contrary elsewhere in the plan, any and all commission and SE bonus splits must be pre-approved by the parties involved in the split, documented in writing with the signatures of the affected parties and VP of Sales, VP, Sales Operations with final approval by the COO/CFO/CEO. …
All orders booked by NIKSUN Regional sales managers to the end-user will be credited using 100% to the "Point of Influence". A variety of circumstances can occur which could justify considering commission splits or changes to this practice. The following sample split guidelines will be used to determine the appropriate percentages of the split commission:
Point of influence: This is the location where the major account control resides and from where global standards and strategy are set, including the negotiation with contract management to set terms and conditions (e.g. pricing, delivery, acceptance, etc). Point of Influence is allocated 34% of the order.
Point of sale: Location where purchase orders are received and enough work is done by regional sales managers receiving the purchase orders, such that the Point of Sale will be allocated from 0% to 33% at the sole discretion of the senior management of the company. In such cases, VP, sales Operations will make a joint case in writing to COO/CFO/CEO, who will determine the appropriate allocation. The remainder of 33% minus that allocated to Point of Sale will be awarded by COO/CFO/CEO either to Point of Influence or Point of Installation.
Point of Installation: Location where the product will reside once installed, and enough work is done by regional sales Managers at the Point of Installation, such that the Point of Installation will be allocated from 0% to 33% at the sole discretion of the senior management of the company…"
The judge's judgment
"I must put to one side the fact that senior management of the company who were in the United States had to be involved. That must be neutral between the national sales teams. Whilst I can clearly take into account the historic input from the United States in deciding the location where the major account control resides and from where global standards of strategy are set, including negotiation with contract management to set terms and conditions. I must look at the actual global deal as done. Based on the evidence of Mr Denton-Powell that I have accepted, I find that the [Point of Influence] in regard to the deal actually completed on 30 June 2011 was the United Kingdom".
Mr Hills' argument in response
Lord Justice Beatson:
Lord Justice Elias: