Axa Sun Life Services Plc v Campbell Martin Ltd & Ors

Factual and Procedural Background

This appeal concerns AXA Sun Life Services Plc ("AXA") challenging orders made by HH Judge Graham Jones in the Mercantile Court in Bristol on 24 March 2010. The orders arose from five claims involving standard form agreements between AXA and its appointed representatives, which included several defendant companies and their personal guarantors. The preliminary issues related to the interpretation of contractual provisions and their interaction with the Unfair Contract Terms Act 1977 ("UCTA"). The defendant companies included Campbell Martin Ltd, Harry Bennett and Associates Ltd, Ideal Financial Planning Ltd, Kymin Mortgage Services Ltd, and Mortgage UK Financial Services Ltd (the latter dissolved prior to the proceedings). The claims involved disputes over termination of agreements, repayment of allowances, commission clawbacks, and allegations of misrepresentations and implied terms.

The agreements in question were detailed, standard form contracts appointing the defendant companies as AXA's appointed representatives and agents to provide financial services within specified limits and subject to regulatory approvals. Key clauses under dispute included the Entire Agreement clause (clause 24), the Set Off clause (clause 15.2), conclusive evidence clauses (clause 1.6 of Schedule 4 and clause 5.5), and termination provisions. The defendants alleged that AXA had made negligent and fraudulent misrepresentations, breached implied terms, and failed to honor collateral warranties, claims which AXA denied, relying on the contractual clauses to exclude such liabilities.

Case management orders consolidated the claims for the trial of preliminary issues focusing on the construction and enforceability of the contractual clauses, particularly their interaction with UCTA. The preliminary issues were framed to determine whether the contractual clauses precluded the defendants from relying on alleged misrepresentations, breaches of warranty, or implied terms, and whether such clauses were reasonable and enforceable under UCTA.

Legal Issues Presented

1. Whether clause 24 (Entire Agreement) of the Adviser Agreement precludes the defendants from relying on alleged misrepresentations, breaches of warranty, and implied terms.
2. Whether clause 15.2 (Exclusion of Set-Off) precludes defendants from relying on counterclaims or withholding payment as a defense.
3. Whether clause 1.6 of Schedule 4 prevents the court from determining the true amount of monies due absent manifest error.
4. Whether the clauses in issue are enforceable against the defendants having regard to the provisions of sections 3, 8, and 11 of the Unfair Contract Terms Act 1977.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analyzed the construction of the key contractual clauses in the context of the allegations and applicable law, particularly UCTA and the Misrepresentation Act 1967. The court held that clause 24, the Entire Agreement clause, effectively excludes collateral warranties but does not exclude liability for misrepresentations, whether relating to the terms of the contract or otherwise. This conclusion was supported by detailed analysis of the clause's language, contextual interpretation, and relevant case law, including the binding authority of Springwell Navigation Corp and the persuasive reasoning of Ramsey J in BSkyB v HP Enterprise Services.

The court emphasized the distinction between representations of fact (which may give rise to misrepresentation claims) and collateral warranties (which are contractual promises collateral to the main agreement). Clause 24 was found to exclude the latter but not the former, as the clause’s language did not clearly and unequivocally exclude misrepresentation liability.

Regarding clause 15.2, the Set Off clause, the court acknowledged that while such clauses are common in commercial contracts, they are subject to the reasonableness test under UCTA. The court found that AXA had not demonstrated that clause 15.2 was reasonable, particularly given its one-sided effect preventing defendants from setting off claims, including damages for misrepresentation.

The conclusive evidence clauses (clause 1.6 of Schedule 4 and clause 5.5) were held to be reasonable, subject to the exception for manifest error. The court reasoned that the Appointed Representatives should be able to detect manifest errors in commission calculations or certificates, and such clauses promote certainty and limit disputes.

The court noted procedural difficulties and evidential gaps in assessing reasonableness under UCTA but proceeded to make findings based on the commercial context, the parties’ knowledge, and standard industry practice. The short notice period for termination was also a factor supporting the reasonableness of clause 24.

The court critically reviewed the lower judge’s reasoning, particularly his conflation of misrepresentations with collateral warranties and his failure to address the construction of clause 15.2 properly. The court also clarified the limited application of the rule in Curtis v Chemical and Dyeing Co, rejecting the lower judge’s broader application of that case.

Holding and Implications

The court held:

• Clause 24 (Entire Agreement) excludes collateral warranties but does not exclude liability for misrepresentations.
• Clause 15.2 (Exclusion of Set-Off) does not pass the reasonableness test under UCTA and is therefore unenforceable to that extent.
• Clause 1.6 of Schedule 4 and clause 5.5 (conclusive evidence clauses) are reasonable and enforceable subject to manifest error.
• Implied terms intrinsic to the agreement are not excluded by clause 24, but extrinsic implied terms are excluded.

Implications: The decision clarifies the interpretation of entire agreement clauses in financial services contracts, reaffirming that such clauses do not automatically exclude liability for misrepresentation. It confirms the applicability of UCTA’s reasonableness test to exclusion clauses such as set-off provisions. The ruling limits the scope of exclusion clauses, thereby protecting appointed representatives from unfair contractual terms while upholding commercially reasonable provisions. No new precedent was established beyond the application of existing principles, but the judgment provides detailed guidance on the construction and enforceability of standard form agreements in this context.