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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Kaye v Nu Skin UK Ltd (Rev 1) [2009] EWHC 3509 (Ch) (11 November 2009) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2009/3509.html Cite as: [2011] 1 Lloyd's Rep 40, [2009] EWHC 3509 (Ch), [2010] 2 All ER (Comm) 832 |
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CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
ON APPEAL FROM ORDER OF DISTRICT JUDGE BRITTON
Bristol District Registry Lewins Place, Lewins Mead, Bristol BS1 2NR. |
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B e f o r e :
____________________
SOPHIE KAYE |
Claimant/ Appellant |
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- and - |
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NU SKIN UK LIMITED |
Defendant/ Respondent |
____________________
1st Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP.
Telephone No: 020 7067 2900. Fax No: 020 7831 6864
Email: info@martenwalshcherer.com
Web: www.martenwalshcherer.com
MR. EDWARD BROWN (instructed by Lawrence Graham LLP) for the Defendant/Respondent.
____________________
Crown Copyright ©
Mr. Justice Kitchin:
"For the mutual benefit of your business and the businesses of Nu Skin and its other Distributors, you agree to comply with the following procedures, as amended from time to time. These Policies and Procedures along with the Sales Compensation Plan ('SCP') and the Nu Skin Distributor Agreement for the three party Agreement among the company, Representative and Nu Skin Local [Nu Skin UK]. If you need any help in understanding these procedures, please contact the Nu Skin offices.
"9.1 If a Distributor has violated any of the terms or conditions of the agreement, the Company may elect, at its discretion, to terminate the Agreement or to impose sanctions in one or more of the following ways, without limitation;
(i) Written warning advising that further violation may result in further sanctions;
(ii) Probation, which may include requiring you to take remedial action. The Company may review compliance with this Agreement;
(iii) Withdrawal or denial of an award, denying recognition on Company publications, or restricting participation in Company sponsored events for a specified period of time until certain conditions are satisfied;
(iv) Suspension of certain privileges, including but not limited to placing an order, participating in Company programmes, progressing in the SCP, or participating as a sponsor;
(v) Withholding of commissions for a specified period of time or until certain conditions are satisfied;
(vi) Imposing fines or other penalties permitted by law;
(vii) Injunctive relief or other remedies available by law.
9.2 The following procedure applies when the Company investigates a violation or other complaint or request for mediation;
(i) The Company will send a formal written notice of its intent to impose sanctions for a violation.
(ii) The Company will give you twenty (20) days from the date of dispatch of the notification letter to present your case for review by the Distributor Conduct Review Committee (DCRC)
(iii) On the basis of any information obtained from collateral sources, from the Company's investigation of the facts or from your response, the Company will make a decision regarding the appropriate sanction, which may include termination of the Agreement. The Company reserves the right to impose sanctions for violations of the Agreement on a case-by-case basis. The Company will promptly notify you of its decision. Any sanction will be effective from the date the notice is dispatched.
(iv) Representative may appeal the decision to an Internal Appeal Review.
(v) Any dispute or claim arising from this Agreement not resolved by the above procedure, or disputes between Distributors arising out of business relationships as Nu Skin independent contractors, shall be submitted to mediation in Utah, USA and failing a satisfactory result from mediation a continuing dispute shall be settled by binding arbitration in the same location."
"13.1 This Agreement is governed by the law of the jurisdiction under which Nu Skin Local exists as a company. If any provision of the Agreement is held by any court to be unlawful, void or unenforceable that shall not affect any of the other provisions of the Agreement the remainder of which shall continue to be binding."
"9. Stay of legal proceedings
(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(2) An application may be made notwithstanding that the matter is to be referred to arbitration only after the exhaustion of other dispute resolution procedures.
(3) An application may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.
(5) If the court refuses to stay the legal proceedings, any provision that an award is a condition precedent to the bringing of legal proceedings in respect of any matter is of no effect in relation to those proceedings."
Ground 1: the arbitration clause was not incorporated into the distributor agreement. Alternatively, it is not fair or would be unconscionable to hold Miss Kaye bound by that clause
"Some clauses which I have seen would need to be printed in red ink on the face of the document with a red hand pointing to it before the notice could be held to be sufficient."
"Condition 2 of these plaintiffs' conditions is in my judgment a very onerous clause. The defendants could not conceivably have known, if their attention was not drawn to the clause, that the plaintiffs were proposing to charge a "holding fee" for the retention of the transparencies at such a very high and exorbitant rate.
At the time of the ticket cases in the last century it was notorious that people hardly ever troubled to read printed conditions on a ticket or delivery note or similar document. That remains the case now. In the intervening years the printed conditions have tended to become more and more complicated and more and more one-sided in favour of the party who is imposing them, but the other parties, if they notice that there are printed conditions at all, generally still tend to assume that such conditions are only concerned with ancillary matters of form and are not of importance. In the ticket cases the courts held that the common law required that reasonable steps be taken to draw the other parties' attention to the printed conditions or they would not be part of the contract. It is, in my judgment, a logical development of the common law into modern conditions that it should be held, as it was in Thornton v. Shoe Lane Parking Ltd. [1971] 2 QB 163, that, if one condition in a set of printed conditions is particularly onerous or unusual, the party seeking to enforce it must show that that particular condition was fairly brought to the attention of the other party.
In the present case, nothing whatever was done by the plaintiffs to draw the defendants' attention particularly to condition 2; it was merely one of four columns' width of conditions printed across the foot of the delivery note. Consequently condition 2 never, in my judgment, became part of the contract between the parties.
"The tendency of the English authorities has, I think, been to look at the nature of the transaction in question and the character of the parties to it; to consider what notice the party alleged to be bound was given of the particular condition said to bind him; and to resolve whether in all the circumstances it is fair to hold him bound by the condition in question. This may yield a result not very different from the civil law principle of good faith, at any rate so far as the formation of the contract is concerned".
"Turning to the present case, I am satisfied for reasons which Dillon L.J. has given that no contract was made on the telephone when the defendants made their initial request. I am equally satisfied that no contract was made on delivery of the transparencies to the defendants before the opening of the jiffy bag in which they were contained. Once the jiffy bag was opened and the transparencies taken out with the delivery note, it is in my judgment an inescapable inference that the defendants would have recognised the delivery note as a document of a kind likely to contain contractual terms and would have seen that there were conditions printed in small but visible lettering on the face of the document. To the extent that the conditions so displayed were common form or usual terms regularly encountered in this business, I do not think the defendants could successfully contend that they were not incorporated into the contract.
The crucial question in the case is whether the plaintiffs can be said fairly and reasonably to have brought condition 2 to the notice of the defendants. The judge made no finding on the point, but I think that it is open to this court to draw an inference from the primary findings which he did make. In my opinion the plaintiffs did not do so. They delivered 47 transparencies, which was a number the defendants had not specifically asked for. Condition 2 contained a daily rate per transparency after the initial period of 14 days many times greater than was usual or (so far as the evidence shows) heard of. For these 47 transparencies there was to be a charge for each day of delay of £235 plus value added tax. The result would be that a venial period of delay, as here, would lead to an inordinate liability. The defendants are not to be relieved of that liability because they did not read the condition, although doubtless they did not; but in my judgment they are to be relieved because the plaintiffs did not do what was necessary to draw this unreasonable and extortionate clause fairly to their attention. I would accordingly allow the defendants' appeal and substitute for the judge's award the sum which he assessed upon the alternative basis of quantum meruit."
Ground 2: estoppel arising from a representation that the contract was governed by the law of England & Wales
Ground 3: section 13(2) of UCTA
"3 Liability arising in contract
(1) This section applies as between contracting parties where one of them deals as consumer or on the other's written standard terms of business.
(2) As against that party, the other cannot by reference to any contract term-
(a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or
(b) claim to be entitled –
(i) to render a contractual performance substantially different from that which was reasonably expected of him, or
(ii) in respect of the whole or any part of his contractual obligation, to render no performance at all, except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.
13 Varieties of exemption clause
(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability it also prevents-
(a) making the liability or its enforcement subject to restrictive or onerous conditions;
(b) excluding or restricting any right or remedy in respect of the liability, or subjecting a person to any prejudice in consequence of his pursuing any such right or remedy;
(c) excluding or restricting rules of evidence or procedure;
and (to that extent) sections 2 and 5 to 7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty.
(2) But an agreement in writing to submit present or future differences to arbitration is not to be treated under this Part of this Act as excluding or restricting any liability."
Conclusion