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OUTER HOUSE, COURT OF SESSION [2007] CSOH 48 |
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CA5/06 |
OPINION OF LORD CLARKE in the cause GIFTEX CORPORATION Pursuers; against DIVEX LIMITED Defenders: ннннннннннннннннн________________ |
Pursuers: Sheldon;
Maclay Murray & Spens, LLP
Defenders: McBrearty;
HBJ Gateley Wareing
Introduction
[1] In
this action the pursuers aver that they carry on a business in
"In early June
1998 the defenders agreed with the pursuers that the pursuers should act as
exclusive agents for the supply of the defenders' 'stealth' rebreather products
to the armed forces of the UAE ('the UAE').
The agreement was made verbally.
It was made during a meeting between the pursuers and the defenders at
the Novotel Centre Hotel,
[2] I
have emphasised the last averment as it was the focus of a great deal of the
controversy in this case. The pursuers
go on to aver "The defenders executed a letter 'To whom it may concern' dated
"Esto there was no agreement between the parties to the effect that the pursuers would be entitled to all sums charged in excess of the base price (which is denied) the pursuers are entitled to payment as second concluded for on the basis of the 10% basic rate of commission agreed".
[3] The defenders' averments in response to the pursuers' averments regarding the agreement between them, are to be found, in Answer 2. They are as follows:
"Explained and
averred that the defenders were first contacted by Dr Fouad Aoudi of the
pursuers in or about June 1998. The
pursuers indicated that they would be able to secure the sale of the defenders'
diving equipment to the UAE armed forces.
In consequence, in or about June 1998, the parties verbally agreed that
the pursuers would be authorised to act as agents for the defenders for the
supply of the defenders' 'Stealth Rebreathers' to the Abu Dhabi Military and
Ministry of the Interior. The parties
agreed that in the event of the Pursuers' procuring a contract, they would be
entitled to a commission of 10% on the sale price. There was no agreement between the parties to
the effect that the pursuers were to be exclusive agents for such supply. There was no agreement between the parties to
the effect that the pursuers would be entitled to all sums charged in excess of
the base price. The parties executed a
Minute of Agreement dated 31 March and
The pursuers aver in Article 5 of Condescendence inter alia as follows:
"In about June
2003 the SOC '(a branch of the UAE Armed Forces)' placed an order with the
defenders for 24 stealth rebreathers and related equipment. The defenders issued an invoice to the SOC
for г1,291,130.... The said order was procured or materially contributed to by
the pursuers' agency. They are
accordingly entitled to commission at the rates agreed between the parties in
respect of their agency during the period 30 June to at least
The Evidence and Discussion thereof
[4] The matter came before me for proof before answer. The pursuers' principal witness was Dr Fouad Aoudi. He explained that he was employed by the pursuers whose business was to supply Ministries of Defence with equipment. This included medical equipment, and mobile field camps. In particular his company supplied the Ministry of the Interior and the Ministry of Armed Forces of the UAE. From an early point, in his evidence the witness maintained that the finalising of contracts with these government departments might take up to between 2-5 years.
[5] In
mid-1998, Dr Aoudi had read an article in a British newspaper concerning
the manufacture by the defenders of military diving equipment which had, as one
of its most significant features that, while in use, it did not send bubbles to
the surface of the water in which the diving operations were being carried
out. That allowed for covert operations
to be carried out. Dr Aoudi told
the Court that he thought that the UAE authorities might well be interested in
purchasing such equipment. He,
accordingly, contacted the defenders. As
it happened the defenders had a representative, Mr Scott Jamieson, in the
region at that time. A meeting was,
accordingly, quickly arranged to take place between Dr Aoudi and
Mr Jamieson. It took place at
Mr Jamieson's hotel, the Novotel Hotel in
[6] It will be noted that as the evidence developed, the alleged method of the payment of 30% was not that the defenders would pay the pursuers 30% of the price charged and received by them for the goods sold, but that the customer would be charged 30% above the defenders' list price, as it were, and that the 30% would then be received by the pursuers. Dr Aoudi, in evidence, said that he asked Mr Jamieson to send him further written material about the product. That information was sent to Dr Aoudi and he said that, thereafter, he transmitted it to technical persons within the armed forces.
[7] On
"Attached Agreement as requested for the supply of Stealth Rebreathers.
Agreement will be valid for a period of six months from today's date."
The attached document was the "To whom it may concern" letter referred to above (6/6 of process).
[8] Dr Aoudi
said that Mr Jamieson had also agreed with him that, in the event of a
contract for the purchase of stealth rebreathers being obtained, then the
pursuers would be appointed by the defenders as their agents on a more general
basis both with regard to territory and range of products. It was, thereafter, a running theme of
Dr Aoudi's evidence that he, his company, his colleagues, his family and
others acting on his behalf exerted extraordinary efforts in seeking to obtain
a contract from the SOC for the supply of the defenders' equipment. These efforts, it was said resulted in the
defenders being invited to make a demonstration to the SOC. In the first place a meeting was arranged for
Mr Jamieson with Colonel Suhail Al-Dhaheri, of the SOC, in late September
1998 at which Mr Jamieson carried out a power point presentation about the
defenders' product. Dr Aoudi did
not attend this meeting. Mr Jamieson
was accompanied by a Mr Al Akra of a company known as Al Badia. Mr Al Akra was a friend of Dr Aoudi
who initially, it appears, was engaged by Dr Aoudi to assist in securing
the obtaining of the contract. The
initial meeting with Colonel Suhail Al-Dhaheri was followed up with a full
demonstration of the operation of the defenders' equipment which took place
just outside
[9] In
early November 1998 Dr Aoudi was pressing the defenders' representative
Mr Jamieson and their sales director, David Smith for the execution of an
agreement to regulate the parties' relationship, both with regard to the range
of products covered and territories to be covered. A draft agreement then passed between the
parties. On
"3. Duration
Subject always to the provisions of clause 8 hereof, the Appointment shall commence on the date of signing this contract and shall continue for a period of Five years thereafter until determined by either party giving the other not less than Six months notice in writing subject always to the provisions on Clause 8 hereof.
....
6. Agents
Commission
(a) Agent may add his margin to the price of Divex for the product, in this case there is no commission to the Agent for the product, unless Divex should give his written approval for the commission. So, Divex must undertake to settle the price difference between the quoted price to the Agent and the selling price to the client by effecting telex transfer to the Agent's account within 7 (seven) days after receipt of the payment (partial or complete) from the client.
(b) The Agent shall maintain adequate records of all enquiries and transactions in relation to the Agency and shall permit the Principal or its representative to inspect the same or (sic) any reasonable time."
At about the same time Dr Aoudi telephoned the defenders to inform them that the military authorities had agreed to purchase the defenders' stealth rebreathers. In reply, Mr David Smith of the defenders faxed Dr Aoudi, inter alia in the following terms (6/21 of process):
"Congratulations on winning the order! It is excellent news and obviously relied on much hard work and good effort from Giftex.
I enclose a copy
of the revised Agreement which I hope is now correct. I look forward to your visit to our premises
in
We need to send the Military a quotation for the equipment but need to confirm some details to allow us to do this and I therefore ask you to respond with the following:
....
4. Commissions - Your request does seem very high. It increases the price from г25,000 to г36,526. We are concerned that this is a very high market price and may cause us to lose orders in future against our own competitors. I wish to avoid any embarrassment in terms of pricing. Could I therefore ask you to review your request for commissions at the level stated and reduce them to lower percentages, as I believe this will be necessary to give us the best opportunity for future business."
The attached draft Agreement provided in clause 3 as follows:
"Duration
Subject always to the provision of clause 8 hereof, the Appointment shall commence upon the date of the official order from Abu Dhabi Armed Forces for a quantity of 24 Stealth sets and shall continue for a period of Five years thereafter until determined by either party giving the other not less than Three months notice in writing subject always to the provisions on Clause 8 hereof."
Clause 6 of the draft Agreement provided as follows:
"Agent's Commission
(a) The Agent shall be entitled
to commission on the net revenue derived from provision of products within the
Area. The rate of commission to be agreed
between the Principal and the Agent on a case-by-case basis. Such rate of commission to be included in the
Principal's product prior to quote.
(b) The Agent shall maintain adequate records of all enquiries and transactions in relation to the Agency and shall permit the Principal or its representative to inspect the same at any reasonable time."
[10] Two important features of Mr Smith's fax message require to be commented upon at this stage. The first is that the words "your request for commissions at the level stated"(emphasis added) are totally at odds with the pursuers' case, as pled, and as spoken to by Dr Aoudi in his evidence that the parties had agreed conclusively the terms of commission to be paid to the pursuers, on or about 2 June 1998, at the meeting in the Novotel Hotel. The second feature is that as the evidence in the case clearly demonstrated, and despite Dr Aoudi's repeated assertions to the contrary, Dr Aoudi's claim in November/December 1998 that the SOC had agreed to purchase the stealth equipment from the defenders and Mr Smith's acceptance that this was so, were completely without foundation. An agreement by the SOC to purchase the stealth rebreather equipment did not come until almost five years later.
[11] Following on his fax message of
"Further to our
telephone conversation of yesterday, I enclose for you a copy of our quotation
to the
1. I have increased the selling price as discussed by the additional amounts requested - 10% 'Expenses', 15% 'other', and 5% for 'negotiation'. A 10% commission is acknowledged to come off the base selling price for Giftex Corporation.
These prices are calculated by compounding the previous price e.g. if the base price is г100, Giftex will receive 10% commission (Divex will therefore receive г90).
Add 10% Gross 'Expenses' to г100 = г111.11
Add 15% Gross 'Other' to г110 = г130.72
Add 5% Gross 'Negotations Fee' to г129.41 = г137.99.
Please confirm that your understanding is as above."
[12] Mr Smith, the author of that document, did not give evidence at
the proof. None of the witness who did,
including Dr Aoudi, and who was asked to comment on it, was able to
explain the arithmetical calculations contained therein. Be that as it may, attached to the fax was a
quotation dated
"As I have promised you, today at 8.30A.M, we had a very fruitful meeting with Colonel Suhail and others in the S F Committee. They thank us for our daily follow up and support to them and of course for our Stealth Breather, and he shows us a very good report about it from his people.
He has one urgent request, he wants us to make the 50 metre underwater test, before signing the contract."
Dr Aoudi then set out various other items of
equipment which it was said the Colonel had asked to see. He then continued, "because of this meeting
we are very happy today." In evidence,
Dr Aoudi said that at that time he was attempting to keep relations with the
SOC good to ensure that no competitor to the defenders would come on the
scene. That evidence, it should be
observed, hardly squared with his evidence that there was already a "done deal"
for the purchase of the defenders' equipment.
In due course a second demonstration of the defenders' equipment was
arranged to be given on or about 20 or 21 March by the defenders. The demonstration was given by Mr Scott
Jamieson and Mr Paul Haynes. As
previously noted it was attended by Mr Al Akra of the Al Badia Trading
Company. Dr Aoudi informed the
Court that the demonstration went very well.
He wrote to Mr Smith of the defenders on
"Since our very successful demonstration to the UAE special forces, We are planning our marketing of your products in other areas. I feel that we shall see some positive response in the near future.
I feel that we should initially concentrate our
effort in
[13] On
"Our today's meeting was very good with Captain Khalifa, and he said that they pass good report to the top levels and he told us to wait for the order but we don't know when. So, we are more confident about it and we might have something in hand within two weeks."
Once again, Dr Aoudi in his evidence, did not appear
to be able to accept that the terms of that letter were obviously inconsistent
with what he had said in his assurance of late November 1998 that a decision
had been taken by the SOC to place an order.
As regards this particular document, the witness said that Captain
Khalifa had told him everything was fine and that he was going to send reports
to the top level so that matters could be carried forward. The SOC were also planning to visit the
defenders' factory in
[14] On
"Regarding the Stealth order approval, yesterday we have received the news, that already approved and pass to Purchasing department to prepare the contract. It may take another one to two weeks and they might contact us or contact you direct."
[15] I am satisfied that, on the evidence, as a whole, that what was said in that letter was a complete misrepresentation by Dr Aoudi of the position at that time. In his evidence, the witness initially said that any such purchase required the consent of the Crown Prince and that matter took some time. He maintained that the SOC had agreed to buy the equipment subject only to clarification of certain "routine matters". He went on to say that he had told Mr Jamieson in May 1999 that the Purchasing Department had said that while the decision had been taken it may take another year for the matter to be finalised but if they were lucky it might be concluded in three or four months. It all depended on "the queue". I disbelieved this evidence. Nothing of this sort was said by Dr Aoudi in the correspondence which forms the productions in the case.
[16] Mr David
Smith of the defenders wrote to Dr Aoudi on
"I am disappointed to note that you indicate perhaps another two weeks are required before a contract will be in place. Please excuse my scepticism but is this likely to be delayed even further, or do you feel that we will see some concrete progress in terms of an actual contract?
I am pressing on this as we are trying to plan production for the rest of this year and such an order would have a fair impact. We are similarly awaiting decisions out of a number of other countries on Stealth and would not wish to disappoint or delay on delivery to your country. Is there any additional help or assistance we can offer?"
[17] Dr Aoudi claimed that he had been phoning Mr Smith almost every day to reassure him and to ask him to be patient. He told him, he said, that it was 100% certain that the order would be forthcoming but that it might take 11/2 to 4 years to be finalised. He went on to retract what he had previously said as regards consent to the contract being required of the Crown Prince. That, he accepted, was only required in relation to contracts of higher value.
[18] On
"There is a confirmed order for the Stealth Breather and it's still on the desk of the Brigadier and waiting his signature. But, unfortunately he is away from the country and every body is expecting him to come back and sign so many things for other companies also. We are following day by day, so just be patient. Everything is out of our hand and SOG (sic) peoples hand. Again we confirm that there is a confirmed order for the above, so just be patient."
Having regard to the ordinary meaning of the words "confirmed order" the statements in that fax, in my judgment, were untrue and this was simply one of many examples of Dr Aoudi seeking falsely to impress upon the defenders that matters were being, or had been, achieved. In any event, on 8 August 1999 Dr Aoudi wrote to Mr Jamieson as follows (6/44 of process):
"We would like to inform you that the Brigadier come back to the country and he will start his work tomorrow. Now we are trying to get an appointment with him next week, if possible. As soon as we will let you know after getting the appointment with him."
[19] Dr Aoudi,
in evidence, said that the appointment was to be fixed to enable
representatives of the defenders "just to go to see how things were
going". The SOC had, he said, decided to
send a delegation to the defenders' premises in
"I regret that the lack of information provided makes it extremely difficult to identify your clients requirements. We need more detail to be able to quote correctly. Do they really want 30 video cameras and 20 compressors?"
[20] Notwithstanding
the significant delay in any order actually emerging from the SOC, the
defenders were apparently prepared to continue, in the meantime, to deal with
the pursuers and both parties executed an agreement on 31 March and
"2. Appointment
The Principal appoints the Agent to be its agent for the area defined in
Annex A for all enquiries from companies and organisations as are
specified and included on the Annex B, for deliveries of products offered
by the Principle (sic) (details of
which are set out in Annex C), and such other products as may hereinafter
be mutually agreed (and added to Annex C) and the Agent hereby agrees to
act in that capacity.
3. Duration
Subject always to the provisions of clause 8 hereof, the Appointment shall
commence upon the date of the official order from the Abu Dhabi Government for
a quantity of 20 to 24 Stealth sets and shall continue for a period of 3 years
thereafter, after which shall be reviewed, until determined by either party
giving the other not less than three months notice in writing subject always to
the provisions on Clause 8 hereof."
[21] Clause 6 of the Agreement provided:
"Agent's Commission
The Agent shall be entitled to commission on the net revenue derived from
provision of products within the Area and is only due upon receipt of the full
invoiced amounts due from the customer.
It shall be paid within 30 days of receipt of funds. The rate of commission to be agreed between
the Principal and the Agent on a case-by-case basis. Such rate of commission to be included in the
Principal's product price prior to quoting the customer. A 'Commission Form' as shown in Annex D shall
be submitted and signed by both parties for the avoidance of confusion,
otherwise no commission shall be paid".
[22] The terms of clause 3, it may be observed, were entirely inconsistent as Dr Aoudi would have had it in his evidence that an order for 24 Stealth sets had already been in existence at the time of the execution of this Agreement. The number 24 had been the agreed figure between the parties from the earliest stage of their dealings and represented what it was thought was the requirement of the SOC.
[23] As
previously noted the pursuers had engaged with a company known as "Al Badia" to
assist in seeking to obtain the order from the SOC. The defenders were made aware of this and on
"Further to our various meetings in
1. Stealth
Re-breather enquiry from Special Forces - Equipment only.
We confirm this is to be re-bid to GHQ as per their specific requirements and
that we shall include 10% commission for yourselves in our prices. That is we shall add that amount on to our
basic net price before arriving at any finally quoted price. This would apply to the prices for the actual
Stealth Set and not to training/servicing amounts etc.
This arrangement would apply only to the re-bid due to be submitted within the next week and would not necessarily apply to any further re-bid which may be required. In that case the commission level may require to be reviewed.
You are already aware that we may have to provide for a contractual liability to Giftex in this case. It was agreed that in the event that we agree a percentage for them in this case, 50% of that amount would be deducted from the consideration due to yourselves.
2. All
other sales of equipment and services to Special Forces, Navy,
Coast Guard and ADPOC
We confirm that for a trial period of one year from
This arrangement would be reviewed on
3. All commission amounts would be payable upon receipt by us of payments from customers.
4. It was also agreed that we may have the use of office facilities during our Sales etc visits. It is proposed that this would not be charged for except for Telephone and other actual communications costs.
5. All quotations are to be made directly by Divex Ltd. Badia Trading will however use their very best endeavours to ensure that we are invited to quote for all relevant enquiries from the establishments identified above. .....We look forward to a long and successful association with Badia Trading".
[24] Dr Aoudi
in evidence accepted that Al Badia had contacts with the Military which he and
his company did not. He claimed, also,
in his evidence that Al Badia would have told him of the content of 6/50 before
it was executed. He also claimed that up
until its date everything had been going fine as to the processing of an order
for the defenders from the SOC. The SOC
were about to send a committee to
"We would like to inform you that, we have succeeded with our new partners to market and sell Divex products to the UAE Special Forces and this order of Stealth Re-breather and other orders are ready and waiting you to come so we can go together and receive them.
You should know that from the first time we have contacted you and asked you to come to Abu Dhabi and received you in our office and guest house and introduced to the end user, we were very serious to obtain all orders and make a good cooperation with our two companies, but what delayed these orders was the middleman who was in between us and the end user and it was for the reasons, we will explain it to you in details when we meet face to face.
We can guarantee you that our new partners are very well connected and powerful and they are the best of all even more than what you can expect. The End user have promised to give us all current and future orders and without any delay. I have told Mr Scott about all this information three months ago and asked him to come to meet with the new partners and to go with them to the end user to push this and other orders.
We have informed you that, we are going to have a new partners with us and you have agreed and send your approval for that.
We are always ready to work with you and serve you."
[25] The
reference to the "middleman" in that document, was, as Dr Aoudi said, in
evidence, a reference to Al Badia. On
"Please note we are being inundated with faxes and telephone calls from Dr Fouad H. Aoudi and a copy of the latest fax is attached for your information. We have so far had no contact whatsoever from the Special Forces regarding our quotation. I am now under pressure from our Managing Director to secure these orders and he is suggesting that we should perhaps use Giftex to secure them.
Unless I hear from you or the Special Forces within the next two days, I will have no alternative but to pursue other means which may be at my disposal. This arrangement would cancel any agreement which we have made, on the basis that no results have so far been achieved. Please give this matter your urgent attention."
[26] On
"Please be informed that;
Using other channels or going through indirect ways or using other persons will take no where and will complicate things and reach a dead end only. So, kindly we ask you to stop all these means in your own deplomatical (sic) and reasonable ways.
We can guarantee you our stealth order and other much
valued orders are waiting for you to arrive to
This elicited the following response from Mr Godsman
dated
"Please desist from sending messages and telephoning Scott Jamieson (who no longer works for Divex) and to Mr Smith who is not dealing with this matter. Your constant messages are doing no good at this time. Please also note that your reputation is done no good when you tell Mr Smith that you have the orders on your desk and then we get a fax from SOC two weeks later clearly proving otherwise.
Please be patient on this matter as we do all that we can to negotiate an order from SOC. As I have already confirmed, we acknowledge that you are entitled to a commission on this order and I will personally ensure that it is not less than 10%. However this will only happen if we ever get an order. In the event that it is necessary to visit UAE again this will quite possibly be in January and I will definitely advise you of our travel details prior to this in order that we may arrange a meeting."
[27] On
"We have reviewed your proposals and have the following requests:
(a) Please accomplish your survey or our re-compression chambers and prepare a proposal for us. This survey is to be accomplished at your cost and the SOC will make our facilities available.
(b) Technical Training Courses. Please review this proposal making the requested changes at the attachment. Please also add the Gas Mixture Training Course within this proposal. Please reduce the prices and then submit it back to the SOC as a separate proposal.
(c) Equipment items for the SOC. Your prices are viewed to be extremely high. Please ensure to provide a detailed listing of all special tools and equipment required to maintain these items. Please reconsider these prices and submit a proposal back to the SOC.
We would appreciate a proposal back to after the first of the year."
[28] Dr Aoudi,
in the meantime, on
"We have never said that the stealth order is on our
desk. We have told Mr Smith to come
to
Towards the end of the fax Dr Aoudi wrote, "our reputation can (sic) be questioned and we are not the one who should talk about it, but I can give you some references and you can call and ask them about our reputation". He proceeded to give the names of two companies.
[29] Mr Paul Haynes
replied to the points raised by the Brigadier in 6/55 of process by faxes dated
8 and 11 January 2001, 6/58 and 6/59 of process. These communications included detailed
quotations of prices of equipment and other services. Those communications were promptly replied to
on
"Please note that in order to move this issue forward
Paul Haynes and myself may be prepared to re-visit
(1) You have mentioned now many times that if we are to return to Abu Dhabi and meet with various parties the net result will be that we shall receive confirmation of the Stealth order during that meeting or at least immediately thereafter.
(2) That you can arrange a meeting with both your partners and Brigadier Juma Bawardi together for the purposes of achieving the above. This meeting should be held outside the SOC headquarters.
(3) That in the event this visit does not produce the order confirmation, you will re-imburse 50% of our travel costs and that you will relinquish any further involvement in representation of Divex Ltd.
I believe that I basically summarised your suggestions/undertakings from previous correspondence.
I look forward to receiving your confirmation of 1 to 3 above by return."
The reply to this was a fax from Dr Aoudi (6/63 of process):
"(1) We are still in our word and optimistic of the net result that will come out of the meeting with the concerned people, even though this was almost two months ago.
(2) Meeting with our partners and Brigadier will be arranged for sure, but we never promised any meeting with him out side SOC Head Quarters and that's where we will meet him.
(3) As we
mentioned before, your stay will be on our account and if you wish we can pay
the 50% of your visit, even if you are awarded the order. Regarding our agreement, we will discuss this
during your stay in
[30] On
"I would propose to visit on 24/25 March on my return
from
[31] Mr Godsman followed up that e-mail with another (6/70 of process) dated 26 March 2001 which was in the following terms:
"I am surprised that you have not responded to my
earlier messages regarding a possible visit to meet with the Brigadier. As it happens my plans have changed and I now
expect to be in
[32] Dr Aoudi,
in evidence, said that in the meantime he had been arranging a meeting with the
Brigadier for 3 April but that Mr Godsman had tried to postpone
it. Be that as it may, Dr Aoudi
e-mailed Mr Godsman on
"Ref. to our telephone conversation last week, until now we didn't get your confirmation to come to Abu Dhabi on 3rd of April to meet with His Excellency Brigadier General Jumaa Al-Bawardi, and as he set an appointment for you on Tuesday, 3 April 2001 at 10.30am.
I hope that you will be in
We hope that you will not listen to any advise (sic) from others, which will keep you from coming to this meeting, because this could delay our efforts again."
[33] Dr Aoudi
explained, in evidence, that the "good news" referred to in that communication
was good news about the contract since the Brigadier would say that he would
now send a committee to check everything.
The meeting with the Brigadier was re-scheduled to 7 April (see
6/72 and 73 of process). In his
evidence-in-chief, Dr Aoudi was remarkably uncertain and vague about the
meeting with the Brigadier. In
particular he said that he could not remember if he himself had attended. It was clear that the military authorities
continued to be uncertain about who in fact was representing the
defenders. Accordingly Mr Godsman
wrote to the pursuers on
"Further to our conversation on Thursday, I write to confirm that the current status of representative in UAE for SOC has been fully discussed by our Board of Directors and following that we propose the following:-
(1) In view of the fact that SOC say they do not wish to move forward with the Stealth order until Representation is clarified, it is imperative that this is dealt with immediately in order to remove this barrier. If it does not move forward as a result of that, I think we can all stop getting upset about it!
(2) Badie (sic) have been given an undertaking for representation but this expires on 30th September 2001 and in order to deal with this issue it is proposed to confirm that this in place to SOC and to clarify that until that date Al Badie (sic) are our representatives. A copy of that communication would be given to you.
(3) As already confirmed your are entitled to a 10% commission on the prices already submitted.
(4) In
the event that we receive an order before
(5) In the event that no order is forthcoming during that time, the double representation issue will dis-appear.
(6) It
would be our intention to formulate a new agreement with Neibal Group effective
Please give me your thoughts on this as soon as possible. I wish to clarify the position to SOC this week."
Mr Godsman sent a reminder to the pursuers of this message
on
"Thank you for your e-mail, as I informed you before
that in order not to harm your business and to let things go towards a fruitful
results, I am fully agreeable with your
suggestion to continue with, and fulfil your commitments with Al Badia Company
till 30th September 2001. At
the meantime, I have discussed this matter with Neibal Group & convinced
them to accept your suggestion. They do
not have any objection to wait till
- (5%) is for covering GIFTEX all expenses (Follow up expenses for the past two years, communications, public relations, traveling.... etc.) and Other arrangements.
- (2.5%) to Neibal Group (this will be arranged between me & Neibal).
- (2.25%) for GIFTEX as profit margin.
This will help a lot to bring things into the right track. You may go ahead with SOC and clarify your position in this regard, but I prefer to get your draft letter, which you will address it to SOC, before you sent it."
Mr Godsman replied e-mail of 5 June (6/78 of process) in the following terms:
"Please find attached draft letter to SOC.
I will propose an official agreement for Neibal to take effect from 1st October within the next few days. It will basically follow the same format as the one you have but with duration and territory extension directly related to success."
Dr Aoudi, in examination-in-chief, said that that letter entirely reflected his own agreement on the matter. The draft letter attached to Mr Godsman's e-mail was addressed to the Brigadier at the SOC and said as follows:
"This letter is to officially confirm that our sole representative for Divex products and services to the SOC is Al Badie (sic) Establishment and specifically Khalifa Harib Alkhaili. We can further confirm that no other individual or Company is authorised to represent us in any matters whatsoever.
We would apologise for any confusion which may have arisen in the past and trust that this clarification is now clear for all concerned. For your further information our Commercial agreement with Al Badie (sic) Establishment is due for reconsideration on 30th September 2001". (emphasis added).
[34] Dr Aoudi
e-mailed Mr Godsman on 6 June in the following terms (6/79 of process), "Please
go ahead with your letter and try to send us the draft of agreement as
mentioned." In examination-in-chief,
Dr Aoudi said that the Neibal Group belonged to "VIP persons". The pursuers, he said, were to be partners
with Neibal for the project. He was
working with the defenders but at that stage he was happy to have Neibal seek
to finalise the project, ie. the Stealth order, and to push it forward. His reference to VIP persons, he said, was a
reference to "sheikhs". A draft
agreement between Divex Limited and Neibal was sent to the pursuers by
Mr Godsman (6/82 of process). It
was in similar terms to that which had been provided to the pursuers. Dr Aoudi said he gave the "green light"
to Mr Godsman to send this to Neibal. On
"I am sure that you will be aware that we have had absolutely no result from our association with Neibal Group. In fact all we have received (after asking about seven times) is information to the effect that the SOC have placed an order with an american company for equipment and that we had lost the order. We have asked for clarification and further information and again have received no replies.
Clearly under these circumstances there is absolutely no intention on our part to extend our agreement. (It) is up for review at the end of this month."
[35] Dr Aoudi accepted, in examination-in-chief, that any agreement with Neibal and the defenders had expired in May 2002. He had, however, he said, learned from Neibal that a new company belonging to the same family as owned Neibal was coming along "which would handle everything". He did not consider he needed to do anything more as his commission would be protected. The new company turned out to be a company known as "IGG". When asked if the involvement of that company made a difference to the status of the order, he replied, "yes because the new company belonged to well represented people".
[36] In the
course of 2004, Dr Aoudi ascertained that the SOC had placed an order for
Stealth equipment from the defenders. He
managed somehow to obtain an invoice issued by the defenders for the order
which is 6/85 of process. On
[37] Dr Aoudi when asked about the make-up of his invoice (6/86 of process) was unable to explain the calculation. On returning to court, after an overnight adjournment, he advised the Court that he had spoken to his accountants overnight, who had prepared the invoice. He then endeavoured to explain what he thought his accountants had told him but he did not do so with much clarity. It did appear that the calculation of the commission being claimed was made, at least in part, by reference to prices set out in the defenders' quotations of 1998 and 2002. His position, in any event was basically that the price paid to the defenders had included 30% above the base price of the equipment plus 10% commission which he said he was now entitled to recover from the defenders. IGG, he said, had not introduced the defenders to the SOC nor did they do any of the initial work to present to the SOC the defenders' product. His last remark, in evidence-in-chief, was that the deal would never have taken place without his introduction.
[38] In
cross-examination Dr Aoudi said that when he made his approach to the SOC
at the outset they wanted to know if he was well organised and if there was a
problem with any ensuing contract he could assure them that this would be
sorted out. He accepted he was not known
in the SOC until he started acting for the defenders, though he claimed to be
well-known in the Ministry of Defence and the Ministry of the Interior. He insisted that he told the defenders from
day one that the conclusion of a contract might take up to five years. He said he did not, as a non-technical man,
know how many versions of the Stealth Rebreather equipment there had been
between 1998 and 2003. He accepted that
the pursuers were never to get an enforceable agreement with defenders, to act
as their representatives, beyond getting an order for 24 stealth rebreathers,
until the pursuers obtained a signed contract for 24 rebreathers. That was the condition upon which the
Agreement (6/47 and 7/11 of process) turned.
In cross-examination Dr Aoudi was at pains, again, to stress the
work he said he had carried out on behalf of the defenders in seeking to obtain
a contract for the purchase of the Stealth equipment during the period 1998-1999. As I have already indicated, I consider a
good deal of this evidence to be grossly exaggerated. He maintained that members of his extended
family it seemed were engaged almost continuously on the project working with
him and others seven days a week, 365 days a year on the matter. While he maintained that the first contact
with the SOC was made by him he accepted that the involvement of Al Badia
thereafter helped matters in this respect particularly because the owner of
that company had been a General in the army.
He accepted that he did not himself attend the first presentation
carried out by the defenders in October 1998 or the demonstration which
followed in November 1998. Again he
admitted that he had not been at the further demonstration which took place in
March 1999 and that those occasions were attended by Mr Al Akra of Al
Badia. His own role, he said was to
bring the defenders to
[39] The
witness's attention was drawn to 7/4 of process. This is a letter from Al Badia addressed
to Mr Smith of the defenders. It is
dated
"First of all, I will brief you our relations with
Giftex. Badia and Giftex were working
together on this deal. Giftex was in
contact with you and we were doing all the rest in
[40] Dr Aoudi said that what was therein stated was not entirely true and Mr Al Akra had been following his instructions. Dr Aoudi said that he arranged the meeting with the Brigadier and the defenders and representatives of Neibal in April 2001 but, once more, could not remember if he himself attended. Neibal, he said was more important than he was because they were VIPs from "the family". He did not think that he attended the meeting with the Brigadier.
[41] He
disagreed that nine months was the normal time to elapse between the
introduction of a supplier like the defenders to the SOC and the placing of an
order if the SOC were interested in the supplier's product. He continued to maintain, under reference to
6/21 of process, that as at
[42] Dr Aoudi
maintained that the defenders should have understood that the order was
definite at that time but that completion might take 1-2 years. He said the defenders knew from day one that
this was to be the position. I do not
accept that the defenders were informed by Dr Aoudi in such terms. Dr Aoudi said he saw no difference
between an order and a completed order.
An order meant "what they wanted to buy". In cross-examination Dr Aoudi,
furthermore, insisted under reference to 6/43 of process that, as at
[43] When what
he wrote to Mr Smith in his fax of
"We would like to inform you that, we have succeeded with our new partners to market and sell Divex products to the UAE Special Forces and this order of Stealth Re-breather and other orders are ready and waiting for you to come, so we can go together and receive them."
he indulged in some blatant prevarication but, ultimately,
maintained there was a final contract for the rebreathers. Under reference to 6/52 of process, however
the witness said that reference to "the two orders" was a reference to "a
letter of intent" from the SOC to the defenders confirming that they wanted to
purchase 24 stealth rebreathers and were requesting the defenders to give the SOC
their bank details or to set up a letter of credit. The witness, immediately, however went on to
say that there was no such letter of intent in fact because the SOC wanted a
revised offer. When writing as he did to
Mr Smith on
[44] Dr Aoudi,
under reference to Captain Al-Kaabi's fax to the defenders' Paul Haynes of
[45] Dr Aoudi did not agree that the content of 6/77 of process indicated that at least by that stage, the commission payable was to be only 10% on any concluded deal with the SOC. The "uplift" he said was already agreed and included. Dr Aoudi accepted that no contract for the purchase of stealth rebreathers was obtained by Neibal. They had left matters to be concluded by the new company IGG. The witness said he felt no need to contact the defenders between November 2001 and December 2004 because there was nothing else for him to do. He said that his "aeroplane had already landed". He knew that the order was "going through" with the company IGG. He did not want to disturb things.
[46] Counsel for
the defenders in cross-examination re-visited the first chapter of events
namely the meeting between Dr Aoudi and Mr Scott Jamieson on
[47] Dr Aoudi
said that the invoice which he presented to the defenders in 2004 was based on
the revised quotation which he had "designed" for the pursuers. He claimed he was entitled to anything paid
by the UAE Military in 2003 above the defenders' base selling price at that
time. He did not, however, appear to
know what the base selling price for the equipment was in 2003. He was unable, or unwilling to answer the
question as to why, in presenting his invoice, he did not seek to apply the
terms of his 1998 Agreement to the 2003 prices.
When it was pointed out to him that what he was claiming appeared to
amount to 44% of the base price of the equipment sold, he said that that was
what he was entitled to because that was what had been agreed between the
parties. He also concluded that the
Agreement between the parties dated 31 March and
[48] In re-examination Dr Aoudi claimed that he had known persons in the SOC prior to dealing with the defenders. He also said Mr Al Akra of Al Badia always acted under his instructions. He had, he said, engaged the services of Neibal because Al Badia had proved they could not do any more than he himself could do. Neibal were chosen because the defenders "wanted the order quickly - to facilitate receiving the order in their hands". IGG was not established as a company, he said, until 2002-2003. They simply took the order and discussed the terms of payment. Dr Aoudi accepted that his contacts with the defenders ended in 2002 but he said "the order was there by then". IGG, he said, acted as an intermediate buyer in the transaction whereby the equipment of the defenders was eventually bought by the SOC. The pursuers, he said, under the arrangements he had made with the defenders would never have been an intermediate buyer. They were to be and remain agents. The pursuers are what he described as a "normal company" which could not import goods and sell them having no licence to do so. That was to be contrasted with the position of IGG.
[49] Dr Aoudi
said that at the meeting with Scott Jamieson, held on
[50] Mr Al
Akra gave evidence at the proof. He
had travelled from the
[51] This witness informed the Court that his company Al Badia co-operated with Dr Aoudi's company from time to time. Dr Aoudi had, in 1998, drawn his attention to publicity regarding the defenders' Stealth equipment. Dr Aoudi contacted the defenders in his presence and a fax came from the defenders' Mr Scott Jamieson within 20 minutes. The witness claimed that he was present at the meeting with Dr Aoudi and Mr Jamieson in the lobby of the Novotel Hotel. Mr Al Akra said that there was a discussion about prices and commission and that Scott Jamieson had said "You can add whatever your want" in addition to 10%. Dr Aoudi had said he wanted to add 30%. The witness confirmed that he subsequently took Mr Jamieson to a meeting at the SOC in order that a presentation should be made. The people from the SOC at that meeting had been impressed by the stealth rebreathers. They wanted to have a live presentation to see the actual equipment being used. A subsequent demonstration was arranged which he attended. Dr Aoudi had paid money to get the equipment cleared through customs. The demonstration took place out at sea. SOC representatives liked what they saw at that demonstration and said they would discuss possibly acquiring the rebreathers and giving an order for 24 of them. They wanted to place an order. The defenders had already quoted prices which included added commission and had sent these to the SOC.
[52] Mr Al Akra said that this was the beginning of the process. The process took time. The proposal to buy had to go to various committees - a technical committee and a finance committee. This process could take 2-5 years. Sometimes a project could take 10 years to finance. The technical committee would go and visit the supplying company to check on their reliability. Mr Al Akra said he kept in contact with the SOC. They kept on saying that they liked the product but needed further meetings and discussions. The witness said that when the defenders gave his company a contract to work for them he did not like this because, if he and Dr Aoudi were not working together, this would delay things. He claimed, therefore, that he gave the Agreement back for this reason. He said he told Dr Aoudi to continue with the job and he himself had no involvement with promoting the defenders' products thereafter. I did not accept the witness's evidence in this respect. It was clear to me that, as will be seen, it was the defenders who terminated the relationship with Al Badia because of the failure by Al Badia to progress matters.
[53] Mr Al Akra subsequently had heard that a company with whom a Colonel, who the witness described "Fadel" was involved, and who had been purchasing officer in the SOC, had purchased equipment from the defenders for the SOC.
[54] In
cross-examination Mr Al Akra sought to distance himself from the content of 7/4
of process and attempted to explain away some of the things said therein. He accepted that between March 1999 and 2000
he was in disagreement with Dr Aoudi and had fallen out with him. The defenders, he said, had known about this
falling out. He eventually accepted that
he had been trying to take business away from the pursuers. A Commanding Officer of the SOC, he said, did
not like the fact that two companies seemed to be acting for the
defenders. Under reference to 6/50 of
process and the provisions therein regarding commission the witness said that
he thought he would get payment of an uplift on the price of the equipment but
that this was to be provided for in another letter. I did not believe the witness in respect of
this matter. This was not put to any of
the defenders' witnesses and no such other letter was produced. The witness said that by
[55] Mr Al Akra agreed that there was no confirmed order until there was a signed contract. He, nevertheless, considered that the defenders had got the contract for the stealth rebreathers. Dr Aoudi had told him about IGG placing the order with the defenders.
[56] In cross-examination the witness was asked about the initial meeting between Dr Aoudi and Mr Jamieson. He claimed that he was present at the meeting in the Novotel Hotel together with another friend of Dr Aoudi. In contrast to Dr Aoudi's evidence that the meeting lasted for three hours Mr Al Akra said that it lasted for half an hour. Scott Jamieson had agreed at that meeting that Dr Aoudi would represent the defenders and he would be paid 10% commission together with any uplift he wanted. The witness also maintained that Scott Jamieson gave the prices of the equipment to Dr Aoudi at the meeting in the Novotel Hotel lobby.
[57] In re-examination Mr Al Akra accepted that there was no confirmed order obtained from the SOC during the whole time he was involved in acting either on behalf of his own company or on behalf of the pursuers.
[58] The next witness heard at the proof was led on behalf of the defenders and was interposed before the close of the pursuers' proof. The witness was Major Ahmed Ashehi. This witness is presently a serving officer in the Armed Forces of UAE. He has been in the armed forces for 19 years. Between 2002 and 2003 he was in charge of the diving unit of the SOC. Prior to 2002 he also served within the diving operations unit. In total he had served within the SOC for 18 years. In the period between 1998 to 2003 the witness explained the Commander of the SOC was Brigadier Bawardi, Colonel Suhail's Deputy Assistant, No 3 in the chain of command. Major Ashehi explained that any business interests which the officers may have while serving in the Forces required to be discussed with GHQ. After retirement, however, officers were free to work with any commercial company. The Major explained to the Court the procedures followed by the SOC when they were intending to purchase equipment from a manufacturer. In the first place they would carry out checks on the company in question and, in particular, they would enquire as to whether the company had a local agent who had good credit and who was well known to GHQ. If satisfied that there was a local agent in place who met the foregoing criteria, the manufacturer would then be invited to provide a demonstration of the equipment in operation. If the technical staff of SOC liked the equipment, in the light of the demonstration, reports would be sent to Headquarters recommending the purchase of the equipment. It did not necessarily mean, that at that stage, a contract was certain to be forthcoming. It was the Commander or Deputy Commander, who saw the reports, who would make final checks about the company and its agent. The Major emphasised that the SOC's requirement that there should be an appropriate agent in place arose from the need to ensure that there will be no problem with after sales service. Only if the Commanding Officer was satisfied with the status of the company and its agent, would a report go to GHQ recommending the purchase of the equipment. One of the chiefs of staff would consider that recommendation and if he thought it appropriate he would pass it on to the purchasing committee. The purchasing committee would then finalise the order by issuing a purchase order. On occasions, particularly if the product in question was a novel one, members of the SOC would visit the manufacturer in their premises prior to the issuing of the purchase order. The whole procedure, the Major said, would normally take about a year from beginning to end. After the technical committee had recommended a purchase, the matter would never take 2-5 years. The reason for that was that the technology of military equipment was changing quickly. Once a recommendation to purchase was made, the Military generally required the equipment to be obtained quickly. Something would have gone wrong if a transaction took 2-5 years to complete. The Major said that the first contact he had with the defenders was when Colonel Khalifa called him to come and see him. He wanted the Major to meet someone from the defenders. The Major had heard of the defenders before because they had fixed certain plant at the diving unit. Colonel Khalifa's request to the Major to meet someone from the defenders occurred in late 2002. A meeting was arranged, in late 2002, between the Major and Mr Godsman of the defenders. Mr Godsman showed the Major a variety of equipment from the defenders' catalogue. The major said that he and his colleagues were interested in all of the defenders' equipment because they were about to establish a new diving centre. The Major was particularly interested in the Stealth Rebreather equipment. At this stage he only saw it in the defenders' catalogue. The Major said that he told Mr Godsman that he would require a technical demonstration of the equipment before considering purchasing it. Mr Godsman refused to provide a demonstration which the Major found surprising. Mr Godsman explained however that the defenders had carried out previous presentations and demonstrations over a period of time with as he put it "no luck". The Major, however, persuaded Mr Godsman that he and his colleagues were really interested in the equipment.
[59] The Major
and his team then visited the defenders' premises in
[60] In
emphasising the importance of the SOC having a local agent to deal with, whom
they could trust, the witness said that they were not looking for a "suitcase
agent" but for a big company. It was
important not to engage with an agent who appeared one day and disappeared the
next. His discussions with the Brigadier
led him to believe that the pursuers had been seen as falling into the category
of agents last described. In all of his
experience the Major said the SOC had never dealt directly with a
supplier. At the material time when the Major
went to the defenders' premises in
[61] The witness said that he had never dealt with the pursuers and had only recently heard of them in connection with the present proceedings. He had never dealt with the Al Badia company though he knew of that company. He had never dealt with Neibal and did not know of them. It was the Major's clear evidence that none of those companies played any part in the decision to purchase equipment and training courses from the defenders in 2003. IGG was a well-known big company. The involvement of Fadhel Al-Kaabi, formerly an officer in the SOC, in that company, was not decisive in the contract being placed with IGG. Mr Al-Kaabi did inform the Major that if there was any problem experienced with the equipment purchased from the defenders, the chairman of IGG Limited himself would deal with it. The procedure was that IGG recommended the defenders and that made the SOC comfortable regarding after sales service. It was this witness's evidence that there never had been a definite decision to purchase the defenders' stealth rebreather equipment before 2003. Any recommendation, if there was such, made in 1998 to purchase the defenders' rebreathers did not result in any decision to buy until 2003. There never was any letter of intent from the Brigadier to purchase the defenders' equipment during 2000 and 2001. Even if the pursuers had remained working on the project for 2000 years, they would never have got a contract from the SOC, he said, because they did not provide the security to the SOC in relation to any problems that might be experienced with the equipment. The Major thought that there may be differences between the equipment that the defenders were offering to supply in 2001 and what was offered for supply in 2003 although he was unsure about that.
[62] In
cross-examination under reference to 6/59 of process the Major accepted that
there may have been some interest expressed by the SOC in 2001 regarding the
defenders' rebreathers but he himself had been unaware of any such interest at
that time. Whatever interest there had
been, however, ran into the problem that the technical people in SOC who
reported on the stealth rebreather were uncomfortable with it because of it
having incorporated a computerised system.
The concern was that the computerised system would not operate in saline
conditions. The technical assessment
committee had reached the conclusion that they could not recommend the
acquisition of the defenders' rebreather because of this. In due course, however, the defenders
convinced the Major and his team that the perceived problem did not exist with
their equipment and they did so, in particular, by the demonstration of the use
of their equipment in
[63] The last
witness led for the pursuers was Ghassan Al Masri. He informed the Court that he was engaged
business development. He had worked for
the pursuers for three years. In 1998,
however, he was not working for the pursuers.
He was working for the Bin Khaled Group, which is owned by the Emirates
Royal Family. Nevertheless the witness
said he got involved in 1998 with Dr Aoudi and his dealings with the
defenders. At that time he said he was
giving advice to a number of companies including the pursuers. Dr Aoudi had asked him to join him at a
meeting after he had heard about the defenders' stealth rebreathers in a
newspaper article. The witness said that
he attended a meeting which he said took place on
[64] In cross-examination the witness said that though he had to leave the meeting at the hotel before it ended, he was satisfied that a concluded agreement had been made between Dr Aoudi and Scott Jamieson. The defenders' witness, Scott Jamieson, was brought into court. Mr Al Masri said that this was the same man that he saw at the meeting in the hotel but that he had been larger then and his hair was, now, perhaps a bit thinner.
[65] In re-examination, the witness repeated that no final agreement had been reached at the meeting in the hotel regarding the level of commission. He then said he was not 100% sure if the person brought into court was the same person as he saw at the hotel. He was similar to that person but he was not sure it was the same person.
[66] The
defenders led Scott Jamieson. He
is presently employed by the defenders, as area director, for the
[67] The witness
explained that the stealth rebreather product was being continuously developed
over the period to which the present proceedings relate. The non-magnetic version was not introduced
until 2000-2001. The advantage of this
development was that certain mines have "signatures" which will be exposed if
they detect equipment with magnetic signals.
The defenders' only other competitors for such equipment are Dragor, a
German company and
[68] A second meeting took place between Mr Jamieson and Dr Aoudi on 3 June at the pursuers' offices. At the first meeting Dr Aoudi showed Mr Jamieson the article about the defenders' product which had appeared in the British Sunday Times. Mr Jamieson was impressed that Dr Aoudi had taken the initiative to follow that up. They had a general discussion about what the pursuers' company did and what products they dealt in. The witness informed Dr Aoudi a bit more about the stealth rebreather. Dr Aoudi was, he said, very non-technical. Mr Jamieson showed the defenders' sales brochure to Dr Aoudi. The meeting lasted about one hour. Dr Aoudi said that he would be able to take the defenders' equipment and "get it into the Special Forces". He offered also that the pursuers should act more generally as the defenders' agents. Mr Jamieson informed the Court that the only agreement arrived at at the hotel was that Dr Aoudi and himself should meet the next day. No contract was concluded. The witness emphasised that he would have never agreed to have Dr Aoudi or the pursuers acting as the defenders' agents at such a meeting, held in a hotel lobby, which lasted for one hour. It was necessary for the defenders to be sure about the people they acted through. The defenders prided themselves in the quality of their products and services. Mr Jamieson said that he could not have concluded an agreement on 2 June. He needed to discuss the matter with Mr David Smith and fellow directors in the company. He would not have agreed any figure in relation to commission nor any "uplift" payment. The witness said that, as at the first meeting on 2 June, Dr Aoudi did not inform him of the procedure that would be required to be followed before an order might be placed by the SOC. As to timescale, however, Dr Aoudi said that he had been told that this equipment was needed very very urgently and that he could get a deal in a short space of time. A deal would be obtained within six months. No mention was made of 2-5 years. Dr Aoudi said the deal would be concluded very very quickly.
[69] At the
meeting the following day, 3 June, at the pursuers' offices, there were
further discussions about the defenders and their products. The witness said that, in turn, he himself
asked a lot of questions about the pursuers.
Dr Aoudi said that he did a lot of business with the SOC. His company provided portable hospital tents,
food supplies, uniforms and memorabilia.
Dr Aoudi claimed that he worked both for the SOC and the Armed
Forces generally. Dr Aoudi said
that he was being pressed to get the defenders to act through him. Mr Jamieson said that he did recall
Dr Aoudi asking him about how much the commission was likely to be. He asked what the base or list price of the product
was and was informed it was, at that time, between г20,000 and г22,000. Dr Aoudi asked what was included in that
"for the distributor". Mr Jamieson
said that he said that would be 10%. He
could not recall any question of any further "uplift" being payable to the
pursuers, being raised. He accepted,
however, that he was aware of an approach adopted in certain parts of the world
by agents, or distributors, which involved them seeking an uplift above the
standard 10%. That would depend on the
particular case and would be for expenses incurred by the agent or distributor e.g.
for provision of accommodation, transportation, customs clearance and the
like. It was not intended to represent
additional income as such.
Mr Jamieson was adamant that at the end of the meeting on
2 June there was no concluded agreement between the parties. He still required to discuss matters with his
boss and the other directors of the defenders on his return to
[70] Although
initially he denied this, the witness accepted that the pursuers were, in due
course, appointed as the defenders' agents for the sale of rebreathers to the
Abu Dhabi Military and the Ministry of the Interior. As has been seen, in 6/5 of process, he
himself wrote to Dr Aoudi with prices of the equipment and said "above
prices are inclusive of a 10% commission".
By 6/6 of process, the witness accepted the pursuers were appointed as
agent for a period of six months from
[71] Mr
Jamieson recalled making a presentation to the SOC in October 1998. The purpose of this was to try to get closer
to the potential end user. Mr Al Akra
had accompanied him to that presentation.
Mr Jamieson considered that, at that stage, it was seen to be necessary
for a sale to be made through an agent.
Mr Jamieson said that after the first presentation, whenever he
went to
[72] Mr
Jamieson described what occurred at the demonstration on
[73] From
December 1998 until February 1999 the witness said that he was making phone
calls to Dr Aoudi to have the order pushed along. As regards the demonstration that took place
at the end of March 1999 this was for the purpose of seeing the equipment
operated in deep waters. The set
performed well on that occasion. On
receipt of Dr Aoudi's letter 6/39 of process it was Mr Jamieson's
understanding that the order was to come within 2 weeks. Mr Jamieson wrote to Dr Aoudi on
[74] In
cross examination, Mr Jamieson said that, with the benefit of hindsight, he
considered that the pursuers did not know the local market for the equipment
the defenders produced. Under reference
to 6/85 of process, the initial invoice of the defenders for the equipment in
the event purchased in 2003, Mr Jamieson said that the equipment sold under
that invoice was considerably different from that being made the subject of
quotations in 1999 and 2000. He remained
adamant that at the meeting at the Novotel Hotel no concluded agreement was
reached about anything and, in particular, about any rate of commission. He was convinced only two persons, himself
and Dr Aoudi attended that meeting.
At the second meeting he would have told Dr Aoudi that 10% was the
normal rate of commission. It was
possible that, at that meeting, the question of an "uplift" might have been
raised by Dr Aoudi. Mr Jamieson
said that after the second demonstration, the representatives of the SOC seemed
interested in ordering the product and he would have expected an order in due
course arising from this. They
definitely had a requirement for the equipment and it performed well. Quite apart from Dr Aoudi's reassurances
the witness said that he was expecting that there would be an order.
[75] In
re-examination the witness said an uplift of approximately of г500,000 on the
order which was in the event placed for the equipment was, in his experience,
"potentially a crazy number".
[76] The
final witness was the Joint Managing Director of the defenders, Douglas Godsman. This witness has considerable experience of
working in the
[77] The
witness explained that as regards trading in the
[78] The
witness confirmed that the defenders had contracted with the SOC, prior to the
involvement of the pursuers. That was in
relation to supplying a gas mixing system.
This was in 1997. The defenders
had sold the equipment to a company based in
[79] Mr
Godsman said that he only became involved in the matters, to which the present
proceedings relate, sometime after those matters had been initiated. Mr Smith and Mr Jamieson had, in
general terms, told him that they were hopeful of obtaining an order for the
stealth rebreathers from the SOC and that the pursuers were being considered as
a possible representative of the defenders in parts of the Middle East but
that any such appointment would depend on them securing an order from the SOC
for the defenders' stealth rebreathers.
Mr Godsman was aware that a demonstration of the defenders'
equipment had taken place in 1998 and that the equipment was well received by
representatives of the SOC. The witness
explained that demonstrations were expensive to arrange. They may take up many days of senior
management time. He was always keen,
therefore, to ensure that there was a real requirement on the part of the
potential purchaser for the equipment in question before agreeing to carry out
such a demonstration. Military bodies
were always keen to have demonstrations.
They kept them busy in peace time.
Accordingly, in advance of authorising the second demonstration to the SOC,
Mr Godsman specifically sought a letter of intent from the potential end
user. The letter of intent was never
forthcoming. Under reference to 6/20 of
process, Mr Godsman said that he did not see that document at the time that it
was written. The format of the attached
agreement had come from Mr Godsman.
He was the draftsman of it. Had
the witness seen 6/22 of process he would have asked for figures contained
therein to be accurately calculated and verified. It was pure speculation as to what the "10%
expenses" referred to. The same could be
said of 15% "other". Even if these sums
had been for legitimate purposes, for example, in respect of payments to third
parties like Al Badia, Mr Godsman would have expected an explanation and
justification to be given. The defenders
would normally prefer to make any such payments, if otherwise legitimate,
directly by themselves to the third parties involved. Mr Godsman quite frankly and candidly,
however, said that he wanted to make it clear to the Court that at the time Mr
Smith wrote what is set out in 6/22 of process, the defenders had just
completed a merger with another company.
Two different commercial cultures were, as a result, brought into
conflict. There was pressure on the
sales manager, Mr Smith, to increase sales because the defenders' costs at that
time were rising. That kind of pressure,
Mr Godsman said, might be an explanation for Mr Smith writing on the lines he
did in 6/20. It did not reflect the
company's standard policy. It was to be
contrasted with what was provided for in the draft agreement attached to it
regarding commission.
[80] Within
the defenders, by the time of the second demonstration, the pursuers' assurance
that an order was available was being treated as a joke. Had SOC really felt they needed the equipment
and wanted to acquire it then they could have fast tracked the order. No such order was forthcoming and there was
an erosion of confidence within the defenders that such an order would be forthcoming. The witness said that he could not understand
why Mr Smith had given the pursuers the contract, 7/11 of process, given that
erosion of confidence in the pursuers being able to obtain an order. It was a commercially unwise decision of Mr
Smith, who shortly thereafter left the defenders, to give such a contract to
the pursuers.
[81] The
witness had himself really become directly involved at the time when
Al Badia was appointed by the defenders to act for them. The background to his becoming so involved
was that Mr David Smith had told him that he was "a bit distraught" that his
dealings with the pursuers were bearing no fruit and there were periods of time
when there was no communication from the pursuers. Al Badia had recently written its letter
to the defenders 7/2 of process. Mr Godsman
understood the reference to "other companies" in that letter, was a reference
to the pursuers. Mr Godsman saw the
letter and it sparked his interest since it was suggesting a meeting with the
apparent decision maker in the SOC, Brigadier Bawardi. The fax of
[82] Mr
Godsman met Major General Khalifa, who was introduced as the owner of
Al Badia. He claimed to be a
personal friend of the Brigadier who could bring about an order. There was, however, no outcome from Mr
Godsman's meeting with the Brigadier.
Contrary to what he had been led to believe by both the pursuers and
latterly by Al Badia, there was no order waiting to be uplifted. The Brigadier, indeed, appeared to express
some surprise as to why Mr Godsman and Mr Haynes were there. He said "Oh you are from Divex. Have you anything new?". Mr Godsman said that he was there to
demonstrate equipment that had already been demonstrated and for which, he
understood, SOC wished to place an order.
The Brigadier responded "No, who told you that?" There was some embarrassment all round. The
Brigadier told Mr Godsman to speak to two other officers "Suhail" and "Khalifa"
who had raised certain issues about the equipment with him. Arrangements were in fact made for
Mr Godsman to meet Khalifa who at that time was on vacation. He had been instructed to prepare a report
for SOC on the equipment. He raised a
number of issues with Mr Godsman. One of
them was that the potential end user of the equipment had raised concerns about
it being computer controlled. The
operators' lives would depend on there being no computer fault. Mr Godsman explained that there was a backup
mechanical system. Khalifa said that he
would complete his report but Mr Godsman was still sceptical as to whether
or not there was truly a requirement within SOC for the defenders'
equipment. There was no further contact
from the pursuers between October and December 2000. Then, according to the witness, "out of the
blue" came Dr Aoudi's fax of
[83] That
communication elicited the response from Dr Aoudi (6/57 of process).
Mr Godsman did not know what Dr Aoudi was referring to
in using the expression "the new big order" in that communication. The witness said that he was aware of the
quotation 6/59 of process. Despite his
emerging scepticism about Dr Aoudi and the pursuers, Mr Godsman wrote to
Dr Aoudi on
[84] The
reply from Dr Aoudi came in his email of 4 June (6/77 of process). As has been seen Mr Godsman followed that
reply up with another email of
[85] Mr
Godsman's evidence was that from November 2001 until May 2002 there was
absolutely no further contact with Mr Aikibi who was the contact person at
Neibal. He could not be contacted. There was no further contact between the
defenders and Dr Aoudi from November 2001 until on 23 December 2004 when
he made his claim for commission (6/25 of process) and Mr Godsman had, of
course, in May 2002 emailed Dr Aoudi advising him that the agreement with Neibal
was over (6/84 of process).
[86] Mr
Godsman then went on to explain how the contract between the defenders and SOC
was achieved. In the latter part of 2002
he was in
[87] Mr
Godsman was invited to meet representatives of IGG as a result of which he
signed a two year agreement with IGG for them to represent the defenders. It was what Mr Godsman described as a
"standard agreement". Commission was to
be agreed on a case by case basis. The
initial understanding was that the defenders would sell equipment direct to the
SOC. IGG subsequently telephoned the
defenders to make arrangements to set up the visit of SOC to
[88] In
cross examination Mr Godsman said that Mr Smith had been invited to leave
the defenders for a great number of reasons, only one of which was the discovery
that he had been discussing "uplift" payments with the pursuers. Mr Godsman repeated his disapproval of
agreements with agents about unspecified uplift payments beyond agreed
commissions. Mr Godsman said that the
sums specified in 6/22 of process were being raised at the quotation
stage. It was completely unstated as to
whom any such payments were to be made and in respect of what. The witness accepted that after the date of
6/6 of process, the pursuers had been acting as agents for the defenders. The fact that Dr Aoudi was Palestinian might
have been the cause of his not being regarded as an appropriate person to act
as agent in dealings with the SOC. Mr
Godsman said that he was absolutely certain that the involvement of Major Ashehi
setting up the new diving unit and his requirement for non-magnetic sets, was
the reason for the order being placed which was in the event placed. Prior to that he did not consider that there
had been any real intention on behalf of the SOC to place an order. It was in addition the selling job which the
defenders themselves had done on the Major and his colleagues which had brought
about the transaction. He did not accept
that such would not have taken place without the pursuers' involvement.
Submissions
for the Pursuers
[89] Counsel
for the pursuers invited the Court to sustain the pursuers' first and second
pleas-in-law and to grant decree for the sum first concluded for. His alternative motion was that the Court
should sustain the pursuers' first and third pleas-in-law and grant decree for
the sum second concluded for. Counsel
set out eight propositions.
[90] The
first was that the evidence established that the pursuers were acting as agents
for the defenders between 1998 and 2001.
The next proposition was that an agent was entitled to be paid
commission when it was established that he had made a material contribution to
a purchase or sale on behalf of his principal.
The third point made by counsel for the pursuers was that in determining
the question as to whether a material contribution had been made, proof that
the agent had effected an introduction between the principal and the other
party to the transactions was of considerable significance. Counsel's fourth proposition was that delays
in procurement of the contract do not preclude the Court from finding a
material contribution to the bringing about of the transaction. The fifth proposition was that the
intervention of a third party may not prevent the Court from finding that there
has been a material contribution by the agent.
Counsel's sixth proposition was that, on the evidence, the pursuers, in
the present case, did make a material contribution to the procurement of the
contract obtained by the defenders in 2003 for the sale of the 24 rebreather sets. The next proposition was that the pursuers
were entitled to payment of commission on the basis agreed between the parties
and on the evidence were entitled to recover the sum first concluded for. The last proposition was that if the pursuers
were not entitled to payment of the sum first concluded for, which required
proof of an agreement regarding "an uplift payment", then they were entitled to
payment of 10% commission which was represented by the sum concluded for in the
second place.
[91] Junior counsel
for the pursuers then proceeded to cite certain authorities in support of some
of the foregoing propositions. The first
of these was the case of Robertson v Burrell (1899) 6 SLT 368. In that case, the Lord Ordinary,
Lord Kincairney sought to state the law regulating the rights of property
agents for their commission on the sale of a property. His Lordship held that "a property agent is
entitled to commission although the transaction has been taken out of his
hands, and has been settled without his direct intervention in regard to the
final contract, if he introduced the parties as buyer and seller and, was in
fact the causa causans of the sale." He,
furthermore, held that it was not required that it should be proved that the
introduction by the "house agent" should have formed the purchaser's sole motive,
but only that the agent as such materially contributed to the sale. His Lordship went on to say that
"An agent's commission has
even been held to be due when the agent brought intending buyer and seller
together, although, on account of special circumstances, the bargain was broken
off. But if the proprietors sell without
the house agent having been informed, introduced or influenced the purchaser
then the seller will not be liable for commission".
It should be observed, at this stage, that it may be
of some importance to note that that authority was concerned with the position
of a house agent acting in respect of the sale of house properties. It may be, as shall be seen, that its
application to the kind of factual circumstances with which the present case is
concerned requires some degree of caution.
The case of
"Shortly put, I think the
test is whether or not the ultimate sale ...was brought about, or materially
contributed to, by actings of the pursuers, as authorised agents of the
defender. Actual introduction of the
purchaser to the seller is not a necessary element in a case of this sort; it is enough if the agents introduce the
purchaser to the estate, and by their efforts contribute in a substantial
degree to the sale. A careful
consideration of the evidence leads me to hold that the pursuers have
sufficiently compiled with the test indicated".
Later in his Opinion his Lordship said:
"I think the fair inference
to be drawn by the Court, viewing the matter as a jury, from the evidence, is
that the pursuers' exertions, as duly authorised agents in the matter for the
defender, did to a sufficient extent contribute to the ultimate purchase of the
estate ...".
The Opinion of Lord Dundas was approved of in the
House of Lords in the subsequent case of Brett
& Co v Bow's Emporium 1928
S.C.(H.L.) 19. This case involved a
company who carried on business as "agents for the sale of businesses". They sued the defenders for a sum
representing the commission which they alleged was due to them from the
defenders in connection with the purchase by the defenders of a business. The House of Lords held that the case was one
which raised pure questions of fact. The
report of the case contains only extracts from the speech of Lord Shaw of
"In the end it comes back
exactly to the line which has been so long adopted in the law of England, and
which is thus expressed by Chief Justice Erle in Green v Bartlett:- 'The
question whether or not an agent is entitled to commission on a sale of
property has repeatedly been litigated;
and it has usually been decided that, if the relation of buyer and
seller is really brought about by the act of the agent, he is entitled to a
commission although the actual sale has not been affected by him'. There is no difference, whatsoever, as it
appears to me, between the law thus laid down by Erle, CJ and that laid down by
Lord Dundas".
His Lordship concluded:
"In my view the sum of the
matter is as follows:- (1) When it is proved - and it must, of course, be
proved - that parties to a transaction are brought together, not necessarily
personally but in the relation of buyer and seller, through the agency of an
intermediary employed for the purpose, the law simply is that, if a transaction
ensues, the intermediary is entitled to his reward as such agent; (2) nor is he in disentitled thereto because
delays have occurred, unless the continuity between the original relation
brought about by the agent and the ultimate transaction has been, not merely
dislocated or postponed, but broken; and
(3) finally, the introduction by one of the parties to a transaction of another
agent or go-between does not deprive the original agent of his legal rights,
and he cannot thus be defeated therein".
In the present case, counsel for the pursuers
submitted that although there had been delay between the introduction of the
defenders to the SOC the continuity between the introduction and the
transaction had not been broken but merely dislocated or postponed. The pursuers brought the SOC and the
defenders together in the potential relationship of buyer and seller. The function of IGG was simply that of
intermediary and guarantors for a sale always intended by the SOC. What one was looking for was whether or not
it could be said that the pursuers were an effective cause of the ultimate
transaction or whether or not they had materially contributed to it. The authorities just cited, it was submitted,
made clear the importance of an introduction being affected by the agent. In Gibb
v Bennett (1906) 14 S.L.T.64 the
Lord Ordinary (Lord Johnston) posed the question, at page 66, as to
whether the sale of the pursuer's business was a remote consequence of the
pursuer's agency or had it been obtained through the agency. His Lordship continued:
"This class of question must
always be one of circumstances, on which different minds may form different
impressions, but I have come to the conclusion that the ultimate transaction in
the present case was not a remote consequence, but was brought about by or
through the pursuer's agency in a sufficiently direct manner to entitle him to
his commission".
Later on in his Opinion Lord Johnston said:
"But for the pursuer's
action ... the sale .. would never have taken place. That per
se might not be sufficient ...I think ... the transaction was so closely
attributable to the pursuer's original introduction as to entitle him, as the
defender himself originally conceived, to his commission".
Reference was then made to the decision of The Privy
Council in Burchell v Gowrie and Blockhurst Collieries Limited
1910 A.C.614. In that case an agent
sought to recover an agreed commission on the proceeds of a sale of a mining
property by the respondent company. The
company contended that the agent was not the efficient cause of the particular
sale affected. It was held that as the
agent has brought the company into relation with the actual purchaser he was
entitled to recover the commission although the company had sold behind his
back on terms which he had advised them not to accept. In giving the judgment of the Board,
Lord Atkinson, at page 624 said:
"There was no dispute about
the law applicable to the first question.
It was admitted that, in the words of Erle CJ in Green v Bartlett, 'if the
relation of buyer and seller is really brought about by the act of the agent,
he is entitled to commission although the actual sale has not been affected by
him' or in the words of the later authorities, the plaintiff must shew that
some act of his was the causa causans
of the sale (Tribe v Taylor), or was an efficient cause of
the sale (Millar v Radford)".
At page 625 his Lordship said:
"......if an agent such as Burchell
was brings a person into relation with his principal as an intending purchaser,
the agent has done the most effective, and, possibly, the most laborious and
expensive, part of his work, and that if the principal takes advantage of that
work, and, behind the back of the agent and unknown to him, sells to the
purchaser thus brought into touch with him on terms which the agent theretofore
advised the principal not to accept, the agent's act may still well be the
effective cause of the sale".
Junior counsel for the pursuers founded particularly
on the last dicta as showing the high
importance, in deciding such matters, of the introduction by the agent of the
purchaser to his principal. In this
connection reference was also made to Allan
v Leo Lines Limited (1957) Lloyd's
Rep 127 where Devlin J (as he then was) in the context of a claim by a
shipbroker for commission on the sale of a ship, emphasised the importance of
the fact that the broker had elicited the introduction of the buyer to the
seller (at pages 132-133).
[92] Turning
to how the Court should regard the evidence of the witnesses in the present
case, counsel for the pursuers said that he had to accept that Dr Aoudi's
evidence was at times difficult to follow.
It might be suggested that his evidence, and the written correspondence
from him, contained elements of exaggeration but, said counsel, much of the
witness's evidence was, ultimately supported by the documents, taken as a
whole. Mr Al Akra was, it was
conceded also, a difficult witness to follow, but he at least had been
disarmingly frank in his admission that he had attempted to take the business
from the pursuers. Mr El Masra
should be regarded as a straightforward and frank witness. His position regarding what happened at the
Novotel Hotel was, it was said, supported by what was contained in subsequent
documents. Counsel for the pursuers
accepted that the defenders' witness, Major Ashehi, was a straightforward
witness. As far as the defenders other
witnesses went, a question mark might be raised over some of Mr Jamieson's
evidence since he was, it was said, clearly seeking to protect Mr Smith
and the defenders. Mr Godsman in his
evidence was making a clear attempt to lay blame at the door of Mr Smith for
bad practice in discussing uplift payments with Dr Aoudi. Counsel for the pursuers submitted that there
was no doubt that the pursuers were appointed as agents for a period of six
months by virtue of 6/6 of process, but that they continued to act as such well
beyond six months. It was the pursuers
who established contact with the SOC. It
was also clear that the pursuers did a considerable amount of work to promote
the defenders' products. They arranged
for a presentation to be made by Scott Jamieson. Questions regarding the
product were passed back and forth through Dr Aoudi. Accommodation and transportation were
provided by the pursuers. Dr Aoudi
observed and co-ordinated activities of Al Badia in the first place and
then Neibal to assist in promoting the transaction. Dr Aoudi provided advice on the text of
letters to the SOC and assisted in the completion of quotations. The demonstration in 1999 was arranged by the
pursuers.
[93] On
turning to address what were in fact the terms of the contract between the
parties, counsel for the pursuers sought leave to amend in terms of a proposed
Minute of Amendment, No.29 of process.
In particular he sought to add to Condescendence 2 the following
averments:
"Esto no verbal agreement was concluded at the Novotel (which is
denied) an agreement was constituted verbally and in writing by
The amendment also sought to add two new conclusions
and a new plea-in-law 3. The two
new conclusions seemed to seek to address the difficulties which the witness Dr Aoudi
had got into in explaining the calculation of the sums he was suing for. The only reason given by counsel for the
pursuers for seeking to amend, in these terms, at such a late stage in the proceedings,
was that the proposed amendment might reflect better the state of the evidence.
[94] The
motion to amend was opposed by counsel for the defenders. To allow amendment, it was submitted, would
cause significant prejudice to the defenders.
The whole action, to date, had been premised on a concluded contract
having been entered into on certain terms at the Novotel Hotel. The proof had been conducted on that
premise. The defenders'
cross-examination of Dr Aoudi had been conducted on the basis that that
was the case. As far as the new
conclusions were concerned, there were no averments to support them.
[95] I
refused the motion to amend in terms of the Minute of Amendment. In doing so I took the view that the
averments sought to be added came far too late in a situation where no
reasonable explanation had been given for seeking to add them at this
stage. This being a commercial action,
there had been significant case management of the cause. It is a case based on contract. Right up until closing submissions, the
pursuers had based their claim on a contract concluded in the Novotel Hotel on
[96] In
advancing his submissions further, counsel for the pursuers contended that the
sale of the rebreathers in 2003 was for exactly the quantity which had been
envisaged would be sold when the quotations were sent in 1998 and 2001. The product in question was simply a
development of what was their product quoted for in terms of 6/59 of
process. Major Ashehi had, in his
evidence, said that in his experience sales orders might be produced within 12
months from initial enquiries being made but that they could take 2-5 years if
problems arose, for example, confusion about who were to be the agents. The Major conceded that there was a reason
for delay in the present case. There
were initial doubts about the use of the equipment in saline conditions. In September/October 2000 when Mr Godsman
met Colonel Khalifa, all the elements were in place for an order to go
ahead. All that was needed was the
rejection of the possibility of the existing equipment being modified by the
American company
[97] Counsel
for the pursuers then turned to address the question of the quantification of
the claim. He accepted that the evidence
on this was somewhat contradictory. He
invited the Court to hold that the evidence supported Dr Aoudi's repeated
assertion that the parties had agreed that, in the event of an order being
placed, the pursuers would be entitled to a 10% commission plus any further
amount which as counsel for the pursuers, though not any of the witnesses for
the pursuers, put it "the market would stand".
Dr Aoudi's evidence had been that the possibility of a 30% uplift
payment was discussed as the Novotel Hotel meeting but that that matter was
qualified by subsequent dealings between the parties. That approach, however, it has to be noted,
is not referred to in the pursuers' pleadings.
Counsel for the pursuers however contended that 6/20, 6/21 and 6/22 of
process were reflective of the true position.
It had to be accepted that Dr Aoudi was unable to explain the
calculations set out in 6/22. Although
no witness spoke to this, counsel for the pursuers said that the computation of
the figures set out in 6/22 resulted in a 37.99% uplift. The prices set out in the quotation 6/59
process reflected an uplift on the base price to that extent. Dr Aoudi in preparing his calculations
did not know what the base selling price of the equipment was as at 2003. He, or his advisers, had used the figures in
the quotation 6/59 and 6/22 and had sought to apply these to 6/85. In essence, in any event, what he is claiming
was the sum charged to the SOC above the defenders' then selling price. Counsel did accept, however, if the agreement
regarding uplift payments was to be found in 6/22 of process, then this
required one to apply 37.99% of the base price in 2003 as now known. Carrying out that exercise, counsel
submitted, in respect of the 24 rebreathers brought out the amended sum sued
for in the first conclusion. This was
all, of course, evidence given by the pursuers' counsel and was not evidence
that had been led at the proof. Neither Dr Aoudi
nor any other witness on his behalf spoke to any of this.
Defenders'
Submissions
[98] In
reply counsel for the defenders invited me to repel all the pursuers'
pleas-in-law and to grant absolvitor. As
regards the witnesses, he invited me to hold that Dr Aoudi was an
incredible witness. He had been evasive
throughout his evidence. He sought to
answer questions not put to him and declined to answer questions put to
him. For example, he refused to say what
arrangement there was between the pursuers and Al Badia regarding
payment. He was reluctant to name who he
said were his contacts within the SOC. Dr Aoudi's
evidence was that he had told the defenders from the outset that it could take
between 2-5 years for an order to be placed.
That evidence was contradicted by Scott Jamieson and Major Ashehi had
said that such a length of time would be unusual. Mr Jamieson has said that Dr Aoudi initially
told him that the requirement was for stealth rebreathers to be provided within
six months. Dr Aoudi had repeatedly
sought to lead the defenders to believe that an order was waiting for
them. Reference was made to 6/39, 6/44,
6/51 and 6/52 of process. Dr Aoudi,
it was said, clearly exaggerated the amount of time that he spent on the
project with reference, for example, to himself and members of his extended
family spending 24 hours a day, 7 days a week on it. I was invited by counsel to prefer the
evidence of Mr Jamieson to that of Mr Al Akra and
Mr Al Masri as to what happened at the Novotel Hotel meeting. Scott Jamieson, it was submitted, gave his
evidence in a straightforward fashion, to the best of his recollection. He had been attacked as to his credibility in
cross-examination under reference to 6/22 of process but he had had no
knowledge of that letter at the time and did not know what Mr Smith's
thinking was in writing it. Counsel for
the defenders invited the Court to hold that Major Ashehi was an entirely
credible and reliable witness who had a unique knowledge of the internal
workings of the SOC. Mr Godsman clearly
did not approve of how Mr Smith had dealt with Dr Aoudi. He was however, it was said, an impressive
witness with regard to the detail of events.
He had considerable experience of doing business in the
[99] Before
turning to address the factual history and the law on the matter, counsel for
the defenders stressed that, in the authorities relied upon by the pursuers,
there had been at the time of the appointment of the agent no purchaser
identified. In the present case the
parties knew who the potential purchaser was from the outset. That was an important factual feature of this
case and distinguished it from the position in the earlier authorities.
[100] Turning
to the facts, counsel for the defenders emphasised that the equipment
ultimately supplied to the SOC was a non-magnetic set, quite different from the
equipment in existence in 1998. The
defenders were market leaders in this equipment. Scott Jamieson said that prior to meeting Dr Aoudi,
he was aware that SOC might have a requirement for rebreathers. SOC was clearly a known and potential
customer. Counsel for the defenders
invited me to hold as credible and reliable the evidence of the Major regarding
the SOC's procedures in relation to procurement of equipment. In the first place he said that they almost
always insisted in purchasing through an intermediary. SOC would first of all require to see the
equipment and if interested would then try to arrange for a demonstration of
it. Thereafter if there continued to be
interest in the equipment the officers responsible would report to HQ
commanding officer or his assistant. The
commanding officer would check with the intermediary or agent regarding after
sales service. If he was satisfied about
this and the recommendation to purchase was otherwise accepted by the commanding
officer, he would recommend the purchase of the equipment to HQ. The recommendation would then go to the
purchasing committee who in turn would issue a purchase order. The timescale would be approximately six
months from the point of the recommendation to the commanding officer and
thereafter a maximum period of one year to complete the contract. Any further delay would normally be
incompatible with their wish to have modern equipment as it became
available. The Major had said that the SOC
did not want to deal with "suitcase" agents.
[101] Reverting
to the evidence as to the initial meeting or meetings in early June 1998 in Abu
Dhabi, attended by Dr Aoudi and Scott Jamieson, counsel for the defenders
suggested that, in the result, the considerable discrepancies among witnesses
as to who attended the meeting or meetings, how long it or they lasted etc did
not matter too much. What did matter was
that the Court should hold that, on the evidence, the pursuers had failed to
prove their case as pled and spoken to by Dr Aoudi namely that a concluded
contract was reached with Mr Jamieson that in the event of a contract
being placed with the SOC the pursuers could add anything they wished as an
uplift to the price of the equipment which uplift would be payable to
them. Mr Al Masri and Mr Al Akra
spoke to a discussion of an uplift of about 30%. The correspondence between the parties after
the first meetings between Scott Jamieson and Dr Aoudi made it clear that
the defenders were only offering to pay 10% commission, see for example, 6/5 of
process. To earn that commission what
was required of the pursuers was, as Mr Jamieson had put it "they had to
close the contract". That was consistent
with Dr Aoudi's own evidence. He
himself never considered it was enough simply to effect an introduction. The several draft agreements produced by the
defenders whereby the pursuers' role on behalf of the defenders, might be
extended, were inconsistent with the pursuers' argument that they could add to
the base selling price of the defenders' goods whatever sum they wished and
recover that sum. They were to be paid
commission, the rate of which was to be agreed on a case-by-case basis. It was Al Badia who had had any contacts
within the SOC and who did the initial work to effect and introduction of the
defenders to the SOC. Dr Aoudi, in
December 1998, was saying that the order had been won. There was simply no evidence that that was
the case. Indeed the evidence of the
Major was that there was not even an initial recommendation at that time. The evidence was that there was never any
recommendation within SOC to purchase the stealth rebreathers at any time prior
to the Major becoming involved in 2002.
Even if there had been a recommendation in 1998 the equipment being
referred to at that time was very significantly different from what was
purchased in 2003.
[102] The
content of the documents 6/20 and 6/22 of process could only be regarded as, at
best, part of a negotiation process, (if it was accepted as it ought to be,
that prior to then, there had been no concluded agreement between the parties
regarding the pursuers being entitled to any uplift payment). The content of 6/20 and 6/22 was ill thought
out by Mr Smith. What appeared to be
proposed could only have been given effect to if there was a direct contract
between the defenders and the SOC. It
was impossible to say what the 15% and 10% in 6/22 referred to - did they refer
to legitimate expenses incurred or to bribes or to what? Dr Aoudi's evidence that these
percentages reflected expenses incurred by the pursuers' in staff time etc
ought not to be accepted. He was seeking
hundreds of thousands of pounds above the basic 10% commission itself which was
commercially quite unrealistic.
Mr Godsman had said that the defenders would have expected any such
sums to represent expenses actually incurred and which could be vouched. In any event what was being proposed in 6/22
was to apply, if at all, only to the quotation made at that time.
[103] Counsel
for the defenders was prepared to accept that the pursuers had expended some
time and effort on behalf of the defenders between December 1998 and March 1999
but not to the extent suggested by Dr Aoudi. Between April and August 1999, when no order
was forthcoming, there was an erosion of confidence on the part of the
defenders in the pursuers as spoken to by Mr Godsman, particularly when Dr Aoudi
was giving assurances that an order was imminent and then was constantly giving
excuses as why it did not materialise.
Between August 1999 and October 2000 little happened except for the
dispute between the pursuers and Al Badia.
The difference between the pursuers and Al Badia came to affect the
SOC particularly when Dr Aoudi started to talk to the SOC about the
involvement of Neibal after he had heard of the defenders' agreement with
Al Badia. Thereafter Dr Aoudi was
bombarding the defenders with inaccurate and exaggerated statements regarding
the imminence of an order or indeed orders from the SOC. The Major had given evidence that even at the
time of Mr Godsman's meeting with the Brigadier in April 2001, there was
no recommendation that the SOC should purchase the defenders' equipment. It was significant, it was submitted, that
when Mr Godsman tried to sort out the difficulties and confusion that had
arisen over representation and to repair the damage done, he was corresponding
with Dr Aoudi in 6/75 and 6/77 and no mention was being made of any uplift
to the price. In all the correspondence
between Dr Aoudi and Mr Godsman no mention was ever made of any
uplift.
[104] The
Agreement between the defenders and Neibal, 6/82 of process was to endure for
six months with the possibility of renewal.
As a matter of contract law, this Agreement, it was submitted,
superseded all prior arrangements with the pursuers because it was brought
about by the intervention of the pursuers and its terms were discussed with Dr Aoudi
who accepted these. Any entitlement on
the part of the pursuers to receive commission, thereafter, was based on the
premise that Neibal would get the contract for the defenders' equipment. Reference was made to 6/77 of process. This showed, it was said, that Dr Aoudi was
accepting that Neibal was now required to be the effective cause of obtaining
the contract. The Neibal Agreement came
to an end without the order having been placed.
Counsel for the defenders invited the Court to hold that the order came
to be placed as a result of the dealings between Mr Godsman and the Major and
the appointment of IGG by the defenders to represent them. The actings of the Major showed that there
had been, before he came on the scene, no pre-determined policy whereby the
order was to be placed. The Major had allayed
the SOC's concerns regarding the capability and suitability of the equipment
and by that time, IGG were already in place.
[105] The
quotation which was prepared by the defenders thereafter related not only to 24
stealth rebreathers but other equipment.
That quotation was prepared under reference to 7/13 of process. The price structure contained in that
document was clearly different from what was obtained in 1998. Moreover, Mr Godsman, in his evidence,
had made it clear that the rebreather sold in 2003 was different in character
to which different pricing applied and the quotation was made in different
market conditions. The quotation went,
in the first place, to IGG and then was transmitted to the SOC (6/98 of process). Mr Godsman subsequently went to
[106] The
invoice intimated by Dr Aoudi, and on which he relied in these proceedings,
showed no knowledge of how the contract price was calculated. He or those advising him had taken what he
claimed was the basis of calculating prices for 1998 and applied that basis to
the quotation sent in 2001 to obtain a base price and then compared that with
the price which was apparently paid in 2003.
This was entirely contrived.
Whatever had been the effect of any dealings between the parties in 1998
had to be considered in the context of all that had transpired since then.
[107] Counsel
for the defenders then turned to address the law on the matter. In the first place he contended that the
effect of the Agreement between the defenders and Neibal was to terminate any
entitlement on the part of the pursuers to obtain commission.
[108] Secondly,
the pursuers did not meet the appropriate causative test. Looking at the whole process from beginning
to end there had been a clean break.
Reference was made to a speech of Lord Shaw in the case of Brett at p. 21 and Devlin J. in Allan at p. 132.
[109] Thirdly,
the standard test, it was submitted, in determining whether an agent had earned
remuneration was whether he had been the effective cause of bringing about the
transaction with his principal. Counsel
referred me to certain passages in Bowstead
on Agency. At page 277, para.
7-027 the following principle is stated:
"Subject to any special
terms or other indications in the contract of agency, where the remuneration of
an agent is a commission on a transaction to be brought about, he is not
entitled to such commission unless his services were the effective cause of a
transaction being brought about."
At page 280, para. 7-029 the following explanation is
given:
"In some cases the
introduction is crucial (see Allan v Leo Lines Ltd).... But it is submitted
that it is the word 'effective' which is the most significant. 'Effective cause' means more than simply
'cause'. The enquiry is whether the
actions of the agent really brought about the relation of buyer and seller, and
it is seldom conclusive that there were other events which could each be
described as a cause of the ensuing sale.
The factual enquiry is whether a sale is really brought about by the act
of the agent."
[110] Reference
was then made by counsel to Chitty on Contracts at para. 31-142 where it is
stated:
"Subject to clear
indications to the contrary, where the agency contract provides that the agent
earns his remuneration upon bringing about a certain transaction, he is not
entitled to such remuneration until he is the effective cause of the
transaction being brought about."
I was then referred to two recent English cases in
which the "effective cause" test was applied, namely Egan Lawson Limited v Standard
Life Assurance Company (2001) EGLR 27 and HMH v CECAR (2000) 1 Lloyd's
Law Reports 316. Applying that test to
the facts and circumstances of the present case, counsel submitted that the
pursuers had not met it. They were not
the causa causans of the order being
placed with the defenders.
[111] Counsel
went on to say that if he was wrong in the submissions he had made, thus far,
then the question would still arise as to what the pursuers were entitled
to. The Court should not hold that there
was any concluded agreement regarding an uplift payment to which the pursuers
were entitled. The pursuers had failed
to establish that any such agreement as they contended for was concluded on
[112] If the
Court, for any reason, were to accept Dr Aoudi's evidence that 6/22 was
Mr Smith putting into effect a provisional agreement regarding an uplift
then any such payment was premised on the order being placed by the SOC
directly with the defenders which, in the event, did not occur. In any event, the Court should accept Mr Godsman's
evidence that the references in 6/22 would have been treated, and should only
have been treated, by the defenders as references to expenses actually
incurred. They were not incurred by the
pursuers in relation to the 2003 order.
Counsel accepted that the pursuers, in principle, would have been
entitled to a 10% commission but if, and, only if, they had been the effective
cause of the actual order and only if any such entitlement had not been brought
to an end by virtue of the agreement between the defenders and Neibal. Neither of the preconditions was met by the
pursuers.
[113] In a
short reply, counsel for the pursuers referred me to the case of Nahum v Royal Holloway & Bedford New College (1998) TLR 715 as an
example of the Court re-emphasising the significance of an introduction by the
agent. Counsel also objected to counsel
for the defenders seeking to argue that the Neibal Agreement had terminated any
subsisting entitlement on the part of the pursuers to payment of
commission. No notice of any such line
of defence had ever been given before the submission was made. The Neibal contract did not break the chain
of causation between the pursuers' activities on behalf the defenders and the
concluded sale. Counsel for the pursuers
was prepared, however, to accept that it might be argued that the terms of the Neibal
Agreement may have affected the pursuers' right to continue to claim any uplift
payment. It did not however affect any
claim in respect of 10% commission.
Decision
[114] The first issue that I have to decide is
what the contract was between the parties and, in particular, have the pursuers
established the contract upon which they sue?
The first question can be sub-divided into two further questions - have
the pursuers established the contract which they sue upon in all its material
terms in relation to conclusion 1.
If not, have they established it in relation to support their
alternative claim under conclusion 2.
[115] Before
endeavouring to deal with those questions it is appropriate, I think, that I
make some preliminary observations about this case. As the evidence emerged it seemed abundantly
clear to me that the circumstances in which orders for military equipment are
placed by the military authorities in the UAE are considerably different from
where an agent, in a domestic context, may be employed to obtain a purchaser
for a property or business. As counsel
for the defenders pointed out, from the outset of the parties' dealings, there
was to be only one purchaser who was identified. That factor in itself invests the
circumstances of the present case with a character somewhat different from, for
example, the estate agent cases relied upon by the pursuers' counsel in his
submissions. Dr Aoudi of the
pursuers, in his evidence, appeared to me to accept that his understanding was
that the pursuers' task was, through their efforts, to bring to actual
completion a sale of the defenders' stealth rebreathers to the SOC. That that was the position is, to some extent,
reflected in the fact that the contract between the parties for the extension
of the agreement between them, in geographical location, and in range of
equipment, in its draft and final forms was made conditional on the order
actually being placed.
[116] The
proof, furthermore, revealed that the military authorities of the UAE do not
normally, if at all, choose to contract directly with foreign manufacturers of
military equipment. The normal and
preferable procedure is that the purchase is made from a "representative" of
the manufacturer who is based in the UAE and with whom the forces will have
direct contractual relations. There may
also be situations where the representative will operate as an agent, but he
will still require to be based in the UAE and the military forces, in both
situations, will exercise a keen interest and concern in the status and nature
of "the representative" or agent. Given
the potential significance of the role of the representative or agent in such
transactions, and the importance, in particular, of "influence" being exercised
for the purpose of obtaining such contracts, the agent or representative may,
on occasion, seek to suggest a rate of remuneration far in excess of any
consideration that would be regarded as commercially appropriate or sensible in
ordinary domestic business transactions.
That such remuneration, if agreed to, may to a considerable extent, if
not entirely, come from the purchaser, by virtue of what he pays for the goods,
in excess of the manufacturer's price, makes any such practice all the more
different from what I think would be regarded as normal in ordinary domestic
agency relationships. So far as the
evidence in this case went as to how such income may be distributed and applied,
I was left with some question as to whether it might mark the crossing of the
line between properly earned remuneration and what might otherwise be described
as "bribes", if looked at by persons not operating in such exotic commerce.
[117] As
regards the evidence led in this case, I found, on the whole, the witnesses led
on behalf of the defenders to be more satisfactory, both in the evidence they
gave and in the giving of it. Where
there was any material conflict of fact as between the pursuers' witnesses'
position and that of the defenders' witnesses, I preferred the position of the
defenders' witnesses. All of the
defenders' witnesses, on the whole, gave their evidence in a straightforward
way and sought to answer the questions put to them. On the whole, I did not consider that any of
them was in any respect seeking to mislead the court or to avoid facing up to a
position being put to them. They did not
seek to address matters not put to them.
They did not prevaricate. They
did not appear to exaggerate. They faced
up to any apparent difficulties in their position which emerged from the case
made against them.
[118] To be
contrasted with how I have just described the defenders' witnesses is how the
pursuers' principal witness, Dr Aoudi, presented himself in the witness
box. There is absolutely no doubt in my
mind, having heard and seen him give evidence over a number of days, that he
had become totally convinced by the rightness of his own cause, to the extent
that accuracy, truthfulness, and proper recall of evidence, fell to be
sacrificed if they were thought to be getting in the way of his advancing his
own position. He, in my judgment, on a
number of occasions, grossly exaggerated the amount of work, effort and expense
incurred by him and others in attempting to secure the order. His various written communications to the
defenders from late 1998 onwards, in which in various ways, he asserted that an
order was waiting to be finalised, was imminent or was waiting for signature,
were far from the truth as at the time they were written. His attempts, in his evidence, to justify
writing in these terms simply, in my judgment, compounded his lack of
credibility. I should also make it
clear, at this stage, that standing what will be seen to be the significance of
his evidence for the case as a whole, that I accepted the evidence of Major
Ashehi in its entirety. He was a truly
independent witness who gave his evidence clearly and carefully and who had a
unique insight into the working of the SOC, in general in relation to its
procedures, and specifically unique knowledge as to how they had, in the event,
decided to purchase equipment from the defenders.
[119] The
pursuers' case, as pled, as to the highly lucrative basis upon which they sue,
as has been seen, is succinctly put in Article 2 of Condescendence. It will be seen from those averments that the
pursuers' case is that all that required to be agreed and upon which they sue,
was agreed between Dr Aoudi and Mr Jamieson at the meeting in the Novotel
Hotel on
[120] Even if I am wrong about the foregoing, and a more generous
approach to the pursuers' position is allowable or appropriate, so that
averments regarding when, and in what circumstances, and with whom, a contract
has been concluded may not need to be averred with any degree of exactness
then, I am of the opinion, that for a number of other reasons the pursuers
could not, in any event, succeed in this case.
I have already accepted that the pursuers were appointed the defenders'
agents (though not exclusive agents) for the sale of rebreathers to the UAE
military authorities initially for a period of six months, which was extended
thereafter for periods beyond the six months.
But as already alluded to, it was the purpose of that appointment that
the pursuers should, to use the words of Mr Jamieson, "close a sale". This was an agency agreement whereby to
employ the words of Chitty on Contract,
cited above, the agreement provided that the agent "earns his commission upon
bringing about a certain transaction." This
is entirely consistent with Dr Aoudi's own evidence and is consistent with
the context in which both parties were operating, namely that the military
authorities would only deal with a representative or an agent. While I accept that, on the evidence, the
pursuers, and in particular Dr Aoudi, did carry out certain work, and did
incur certain expense, in the hope of concluding such a deal, at least in the
early years of the five year period, with which the dispute is concerned, I am
entirely satisfied that on the evidence, the actual sale of the equipment in
2003, upon which the pursuers based their claim was not brought about by the
pursuers. They were not the effective
cause of it. That that is so, is most
clearly established by the evidence of Major Ashehi. He was quite unequivocal that the SOC would
not have considered the pursuers to be a suitable body with whom to place the
order, or through whom the order might be placed. It was clear that he was the person whose
interest in acquiring the equipment was lit when he came to be in charge of the
diving unit. He had no dealings with the
pursuers, nor Al Badia nor Neibal. He
had never heard of the pursuers until recently and then only in connection with
these proceedings. He had heard of
Al Badia before, but had no dealings with them. He had no knowledge of Neibal. It was he who set out to persuade the SOC
that the technical problems they had been previously concerned about were
unjustified. He went, for example, to
[121] Mr Godsman's evidence, in cross-examination, was that he was absolutely certain that the involvement of Major Ashehi, particularly his setting up of the new diving unit, and the requirement at that stage for that unit to have a non-magnetic rebreather, was the reason for the order being placed with the defenders. Prior to that, he did not consider that there was any sufficient interest to make the SOC place an order. Also, as he put it, it was "the selling job we did on the Major and his troops which produced the order". I accept that evidence which is totally in line with the Major's and is supported by the history of events. Never forgetting that, in this case, the customer for the goods was already identified, it was for the pursuers, through their efforts, to persuade that customer to place the order. On the evidence, which I have just referred to, the pursuers played no such persuasive role. Their initial steps bringing about the introduction of the defenders to the SOC may have been the causa sine qua non by which the following chain of events occurred, but it was not ultimately the causa causans of the transaction. Using the language of the Court of Appeal in Egan Lawson and Bowstead on Agency referred to above, the question is whether, on the facts, the pursuers are to be seen as having been the effective cause of the contract, or putting matters another way, can it be said that the actings of the agent really brought about the relationship or buyer and seller. These are jury questions to be answered by reference solely to the facts of the case. I am left in no doubt that on the facts in this case the pursuers were not the effective cause of the sale, nor can it be said that they really brought about the particular relationship of buyer and seller. I was left with the distinct impression indeed that the pursuers, and in particular Dr Aoudi, after the initial introduction had been made, were seen by the SOC, if anything, as being an obstacle to the completion of the transaction. I am satisfied that the evidence established that neither the pursuers nor Dr Aoudi had had any contacts within the SOC before being involved with the defenders. His engagement of Al Badia and, in turn, Neibal to assist him in his efforts demonstrated, to my mind, that his company, on their own, would have been unable to bring about the transaction. Neither Al Badia nor Neibal's efforts in the event were fruitful. When their efforts, such as they may have been, proved to be fruitless, there is no evidence that the pursuers themselves did anything which contributed to the ultimate sale to IGG. On the facts of this case, to use the words of Mummery L.J. in Egan Lawson at p.30, the pursuers were "off the scene" from at the latest late 2001/early 2002.
[122] In submissions, as has been noted, counsel for the defenders took the point that, in law, the effect of the defenders' contract with Neibal, which was known to and accepted by Dr Aoudi on behalf of the pursuers, ended any previous relationship between the pursuers and the defenders and this was objected to by counsel for the pursuers because of lack of prior notice. The fact of the matter, however, is that it was the pursuers who chose to set out the whole history of matters in the way they did, including the introduction of Neibal into the history and the contractual arrangements that were put in place as a result. It does not seem to me that it is for the pursuers then to complain of the legal consequences of such facts if those matters are then pointed out by the defenders. It seems to me that there was some force in the point being made on behalf of the defenders and that as it was a matter of legal submission emerging from evidence, led on behalf of the pursuers, the objection taken was nothing to the point.
[123] The initial agreement between the parties was to endure for six months. On the evidence the parties acted on the basis that it continued after the expiry of six months. It is difficult, in my judgment, to see it continuing after the pursuers agreed that Neibal should be the representatives of the pursuers and their agreement in 6/77 as to how commission should be dealt with thereafter. In any event, it is not necessary for my decision to hold that any previous agreement between the parties upon which the pursuers now found was extinguished by those events. It is sufficient that the communings in question emphasise in a vivid manner that the pursuers by that stage were, in effect, accepting that they themselves could not achieve a concluded contract and that their bringing in of Neibal did not bear fruit.
[124] Even if the pursuers had not been faced with the difficulties just discussed then, in my judgment, they would still, in my view, have faced unresolved difficulties in relation to establishing the amount of any claim they had. As has been seen, Dr Aoudi's position throughout was that, from his first meeting with Scott Jamieson, there had been agreement that the pursuers could recover anything which they chose to add to the base price of the equipment sold. The amended first conclusion is apparently seeking to follow that approach. It is to be noted that Dr Aoudi did not himself accept that there was any limit to be placed on that figure. Nor was there any requirement that it should be accounted for by reference to any actual expenses incurred. Mr Smith's document, 6/22 of process, upon which considerable reliance was placed by counsel for the pursuers does not reflect such an approach. In that document what appears to be being put forward is the addition by the defenders of 30% to the prices charged, the 30% being broken into three classes. None of the witnesses, including Dr Aoudi, could understand the calculations brought about in that document. In any event, what is certainly clear is that Mr Smith, in contemplating an uplift payment, was doing so on a basis not consistent with the basis upon which Dr Aoudi maintained the agreement was reached. Moreover, and in the addition, I agree with the defenders' argument that the calculation was made in respect of a quotation which was in the event never accepted and was superseded by events.
[125] There is not a scrap of paper thereafter, before the Court, indicating that any commission to be paid to the pursuers would be anything more than 10%. It is a matter for comment at least that having regard to the number of times in which commission was referred to in correspondence between Dr Aoudi and the defenders' representatives thereafter, Dr Aoudi never thought it appropriate to mind the defenders that not only would the pursuers be entitled to 10% commission, but that they would be entitled also to any uplift they chose to place upon the base price of the products.
[126] The pursuers' approach, in any event and, ultimately, runs into difficulties with regard to their computation of their claim simply on the footing that it sought to apply what they claimed to be the 1998 agreement to the quotations of 1998 and of 2001 and then to interpolate results of that to the invoice presented by the defenders to IGG in 2003. Dr Aoudi, even after consulting with his accountants overnight, during the giving of his evidence, could not assist the court in showing how that exercise was in fact carried out and how it produced the sum now being sued for. In a way that was not surprising because his own personal approach, as I understood it, was simply to claim what appeared to be the addition to the base price of the goods in 2001. In any event, as both Major Ashehi and Mr Godsman made clear the 2003 invoice and the transaction to which it related, dealt with a different version of the equipment from that which was available in 1998 and 2001. The pricing structure was different. The market conditions were different. The transaction was effected not on the basis upon which the pursuers' uplift claim was designed to operate, namely that they would be in a position to add a sum to the price. The transaction in question was made not directly with the SOC but with IGG as the purchasers. As noted above, counsel for the pursuers himself attempted to give evidence by suggesting that the effect of Mr Smith's document, 6/22 of process, was to provide for an uplift of 37.99% and to apply this to the prices set out in 7/13 of process. But this was not spoken to at all by anybody in evidence and it is, in my judgment, in any event, an exercise which proceeds on a basis far from the realities of the situation as revealed in the proof. The fall-back position advanced on behalf of the pursuers was to seek the figure of г81,890 as representing 10% of the commission in the event of the court holding that no agreement had been established in relation to uplift payment. I think here the defenders' agreement with Neibal, 6/82 of process, and the pursuers' acceptance of Neibal thereafter being the representative for the sale of the stealth rebreathers, with an adjustment of the commission payable on a deal being closed, presents a difficulty. The agreement with Neibal, by clause 6, provided that the rate of commission was to be "agreed between principal and agents on a case by case basis". No such agreement ever came about. How the proposal contained in Dr Aoudi's letter, 6/77 of process, as to how the commission of 10% was to be divided or how it was intended to operate, in the events that have arisen, was never resolved in evidence or explained to me satisfactorily in submission by counsel for the pursuers. I am left accordingly reaching the conclusion that the pursuers have not established that any agreement to pay the pursuers 10% commission continued at least beyond the conclusion of the agreement with Neibal.
[127] On the hypothesis that the pursuers were the effective cause of the order and had there been Nos. 6/77 and 6/87 of process, my conclusion would have been that, in principle, the pursuers were entitled to 10% commission.
[128] For all the foregoing reasons, I shall sustain the defenders' second and third pleas-in-law and assoilzie the defenders.