NEW YORK LIFE INSURANCE WORLDWIDE LTD. v. WOO CHOR WAH

1996, No.A13229

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. This case concerns the employment of an insurance agent and the terms under which she was employed.

2. The plaintiff is a company incorporated in Bermuda and it carries on insurance business in Hong Kong. The defendant is a Hong Kong resident and an experienced insurance agent. In 1995, her employment with an insurance company came to an end and she entered upon negotiations with the plaintiff company by which it was envisaged that she would, for remuneration, sell policies issued by the plaintiff. The facts underlying those negotiations and their result is in dispute, and forms the basis of claim and counterclaim in this action.

The Plaintiff's Claim

3. The plaintiff company says that on 11th May 1995 a series of agreements was signed by the defendant, and although there were a number of distinct documents signed, they formed part of an overall package. The main agreement was an agent's agreement; the others were supplemental to it. The company's claim is straightforward. One of the terms of the agreements required the company to advance to the defendant the sum of $50,000 per month. This was to enable her to cover the cost of establishing an office and of engaging agents to work under her, and other running costs, whilst she accumulated insurance business for the company which would entitle her to a commission on policies or premiums secured. The amount thus advanced was to be repaid by the defendant, and the company kept a tally of the amounts advanced and the amounts of commission due, the one to be set off against the other.

4. The agent's agreement was determinable at the option of either party upon seven days' notice. Notice to terminate the agreement was given by the plaintiff to the defendant on 9th May 1996, which meant that the agreement came to an end on 16th May 1996. There is dispute about the circumstances of the agreement's termination.

5. The plaintiff says that there remain sums due from the defendant, namely, $131,647.53, which sum is constituted by the total advances made, less repayments by the defendant. There is also a claim in the sum of $9,375 for legal expenses incurred before the institution of this proceedings, an item for which one of the agreements made provision.

The Counterclaim

6. Although the Defence filed constitutes a denial of the plaintiff's claim, that denial was not pursued at trial, and I am left with the counterclaim, which is for the sum of $360,000, as well as for an account stated for commissions due from the plaintiff to the defendant.

7. The basis of the counterclaim is two fold :

(1) The defendant asserts that the plaintiff agreed, by a quite separate and additional agreement on 4th May 1995, to pay her an allowance of $30,000 per month for 12 months, none of which has been paid. The allowance is said to be additional to the advance agreed by the 11th May agreement.

8. The plaintiff's answer is that there was indeed a proposal in early May 1995 that the defendant should receive an allowance of $30,000 per month which did not depend upon premiums secured by the defendant, and which did not envisage that commission would also be earned by her. The plaintiff agreed to this proposal, but in the event - according to the plaintiff - the defendant said that this was not acceptable, and the agreement of 11th May superseded the (proposed) agreement of 4th May. The plaintiff further says that there were, in any event, conditions precedent for the payment of this allowance which were not fulfilled by the defendant.

(2) The second part of the counterclaim relates to commission on policies written during the currency of the agency agreement, but allegedly payable on a continuing basis after the termination of that agreement. As pleaded, the contention is that in May 1995 it was simply agreed that "the Defendant would be paid all the commissions received from policies procured by the Defendant as an agent even if the agent's agreement was terminated." That is not, however, quite how the defendant's case developed. What the defendant is really saying is that it was part of the 11th May agreement that upon termination of the agent's agreement, there would fall into place a further agreement - referred to in these proceedings and in contemporaneous documents as "the broker's agreement" - by virtue of which she would, after determination of the agency agreement, continue to receive commission on premiums under policies which had been procured by her as an agent during the currency of the agency. The defendant complains that no such broker's agreement was provided and that the continuing commission has never been paid. The second limb of her claim therefore is for an account of the commission thus allegedly due.

9. The plaintiff, in response, argues that there was certainly no agreement in a vacuum to pay continuing commission - indeed, the agent's agreement contains an express contrary provision; but rather that a broker's agreement was envisaged in which continuing commission would form but one term, but that it is clear from the words used in the document signed in May 1995 that in this particular regard nothing more was constituted than an agreement to agree and, that in any event a broker's agreement containing such a term was offered by the plaintiff to the defendant in May 1996 but was never accepted by the defendant.

Judgment on the Claim

10. At a very early stage of the hearing, it was conceded by Mr Kwong on behalf of the defendant that the monies claimed by the plaintiff, namely, $141,022.53 were in fact due. I am satisfied on the evidence which has been adduced that the plaintiff has proved its claim in this regard. There must therefore be judgment for the plaintiff on its claim, and the question left for me to decide is the counterclaim.

The (Suggested) Agreements

i) The 4th May Letter

11. The agreement for the allowance of $30,000 per month is said to be evidenced or constituted by a letter dated 4th May 1995 addressed to the defendant. The court has only been presented with a copy of it. The evidence of the plaintiff, through Mr Hamilton Lee, a Vice-President of the plaintiff company in Hong Kong, is that no original was ever given to the defendant; that although he, Mr Lee, signed the document in her presence, she asked only if she could take a copy home for further consideration. A copy was duly given to her. His evidence is that she had not signed either of the originals. The originals were retained in the plaintiff's file and destroyed, so says Mr Lee, after the 4th May proposed agreement fell away. The defendant, on the other hand, asserts that the agreement was signed both by Mr Lee and herself on 4th May in each other's presence and witnessed. She says, however, that she no longer has the original.

12. In its material part, the letter, addressed to Ms Woo and signed by Mr Lee and a witness, states as follows :

"Re Special Allowance

We have pleasure in offering a special allowance of HK$30,000 per month to you for 12 months as from the date of your contract with the company under the following conditions ......"

There then follow certain conditions which the defendant was expected to fulfil, related to the minimum commission to be procured by her.

ii) The 11th May Agreement(s)

13. Five documents were signed by the parties beginning 11th May. I say "beginning 11th May" because all five were signed on 11th May 1995 by the defendant, and by the plaintiff on 22nd May 1995. But it is convenient to refer to them as "the 11th May agreements". They were :

1. The Agent's Agreement said to be effective as from 1st May 1995, by which agreement the defendant was appointed as the plaintiff's agent to solicit applications on a full time basis for insurance policies. The agreement made provision for commission. There were further provisions for production bonus; provisions which stipulated certain ethical standards to be observed; and a list of circumstances in which the agreement could be terminated immediately. There were also provisions for the termination of commission upon termination of the agency.

2. The Addendum to the Agent's Agreement. It reads as follows :

"It is further agreed that if the Agent's Agreement signed between Ms Woo Chor Wah and New York Life Insurance Worldwide Limited .... was terminated, a Broker Agreement between Ms Woo Cho Wah and New York Life Insurance Worldwide Limited ..... will come into effect and all the commissions from premiums received thereafter from policies solicited and written by Ms Woo Cho Wah while her agent's agreement is still in-force will be payable under the said Broker Agreement."

3. The Agent's Advance Agreement. Its intention was expressed to "provide temporary financial assistance for the successful establishment of the agent's business." It provided for a monthly repayable advance of $50,000.

4. A Repayment of Advance Agreement, by which the defendant agreed to repay all legal costs incurred by the company for the recovery of her indebtedness should she fail to repay the advance.

5. A Manager's Agreement, expressed to be supplemental to the Agent's Agreement, by which the defendant was appointed a manager for the plaintiff company, and her duties and remuneration set out.

The 12th May Letter

14. On 12th May 1995, Mr Lee wrote to the defendant in the following terms :

" I have pleasure in advising you that, subject to completion of recruiting documentation, our Company is pleased to offer you a General Manager Agreement with effect from 1st May 1995. The terms and conditions of your appointment are governed by the said General Managers Agreement and your appointment shall be confirmed after your registration with the Insurance Agents Registration Board is confirmed. You will have to observe the rules and regulations of the Company relating to standards of Business Conduct for Agents, office discipline, procedures, production requirements and group benefits requirements set by the company from time to time. You will also have to observe the Code of Ethics for an Agent or Life Underwriter issued by the Life Underwriters Association of Hong Kong Limited and Code of Practice for Administration of Insurance Agents issued by the Hong Kong Federation of Insurers.

To help you establish your career as a General Manager with the company we are pleased to advance to you $50,000 a month. This advance is a loan made by the Company to you and the condition of such loan is laid down in the Loan Agreement or Agent's Advance Agreement signed between you and the Company.

Notwithstanding the Loan Agreement or Agent's Advance Agreement, it is hereby clearly expressed that the monthly advance can be withdrawn or reduced by the Company at any time if you fail to meet production and persistency requirements or observe the Company's regulations and discipline.

With your enthusiasm to become a good General Manager and with the support of the Company, we are confident that you will be very successful in your career."

The Counterclaim for a Special Allowance

15. There is a conflict of evidence between the defendant on the one hand, and witnesses for the plaintiff on the other, about the special allowance agreement, that is, the suggested agreement of 4th May. The evidence on behalf of the plaintiff bears greater examination than does that of the defendant in this regard. The following matters are particularly noteworthy :

1. The defendant's case is that there was but one meeting, namely, that of 4th May at which her employment was discussed, and that the letter of 4th May resulted, with the standard form documents (the 11th May documents) emerging later that month. She says that she insisted or particularly wanted the letter of 4th May because this allowance was of special importance to her, and she was afraid that Mr Lee of the plaintiff company, in whom she had trust and faith, might not always be there. Yet she was equally concerned about the term of the agreement, allegedly also reached on 4th May, that she should, in respect of policies written by her during her agency, obtain commission after termination of her employment as an agent as and when that occurred. If that is so or if other terms were agreed on 4th May, one might expect to have seen another written document of that date, which included all material terms or at least all those vital to the defendant; or the inclusion in the 4th May letter of such terms.

2. Of considerable significance is the letter which the plaintiff wrote to the defendant on 12th May 1995. It makes no reference at all to any special allowance, and there was no riposte from the defendant which took issue with that omission. Indeed, when the defendant was shown this letter in cross-examination she was minded to say that she could not be sure that she ever received the letter, an intimation which I do not accept. The omission from that letter of any reference to the allowance supports the suggestion that the allowance had by then fallen away.

3. The very fact that there were documents of a formal kind signed on 11th May and the letter of welcome and offer dated 12th May, tends to support the contention of the plaintiff that between 4th May and 12th May there were further discussions about the terms of the defendant's employment with the plaintiff company.

4. It is noteworthy that there is nothing in writing from the defendant to the plaintiff company or to any of its employees after May 1995 and until November 1996 by which she sought payment of her special allowance or complained about the failure to pay. She says that that was because she trusted the company and that she was told the money was coming. Mr Lee is supposed to have told her that, as is Mr Calvin Wong. I accept that in January 1996 or at about that time, she flourished the letter of 4th May and asked for the special allowance, but I also accept the evidence of the plaintiff's witnesses and find that she was informed that that special allowance had, as far as the plaintiff was concerned, been superseded by the 11th May agreement and that she did not take issue with that. One would surely have expected by that time an efficient lady, as clearly Ms Woo is, a lady well attuned, one might have thought, to the need to reduce matters to writing, to have taken up this suggested breach in some manner more formal than merely orally had she felt that there was real merit to her suggestion that this was part of the package that had been agreed; the more so after her employment with the plaintiff company had been terminated.

5. I note too that when eventually a written letter was sent by her solicitors she claimed the full $360,000 due under the agreement if all quotas were met. It is clear that if the special allowance agreement survived, she would be due nothing like that sum. She explains her willingness to assert that she was entitled to the full sum by saying that she had not to hand the full figures and assumed that she had fulfilled the quota. One might have expected a request by her much earlier for the figures of her sales and of commission earned.

16. It is evident that even were the defendant's claim true that the special allowance was an agreement not replaced by the agreement of 11th May or the documents signed by her that day, but was in addition to the terms then signed, her claim would be worth only two months special allowance, namely HK$60,000 since the accuracy of the figures provided by the plaintiff as to the quotas met by her are not in real dispute, and I am satisfied that they are accurate. But that in the event is by the by, because the probabilities of the matter in the light of the factors which I have specified and the view which I take of the evidence which I have heard, are against the defendant, and I find that the special allowance was either never the subject of a concluded agreement or if it was, that the defendant and plaintiff agreed when they entered upon the agreements of 11th May that the terms of the 11th May agreements were substituted for and not in addition to the agreement of 4th May. Accordingly, the counterclaim, in so far as it relates to the claim for a special allowance, fails.

The Offer of a Broker's Agreement

17. It is common ground that the defendant had had, or asserted when she approached the plaintiff in or about May 1995 that she had had, an unhappy experience with the insurance company with whom she had previously had an agent's agreement, and there were a number of matters about which she wished to be secure. One was that after termination of her agent's agreement, she should continue to receive commission in respect of policies which she had written whilst she had been an agent for the company. That, it is said, is why there came into existence the document headed "Addendum to the Agent's Agreement".

18. The Agent's Agreement was in due course terminated. The plaintiff says that the defendant had engaged upon some unauthorised selling practice, an allegation disputed by the defendant, and it is unnecessary for me to decide that issue. Whatever may be the case, by letter dated 9th May 1996 the defendant was given seven days' notice of termination of the agreement.

19. Then there was a letter sent to her dated 24th May 1996. It advised her of the sums she allegedly owed in respect of monies advanced, and also contained an offer of a broker's agreement :

"The Company agrees to offer you a Broker's Agreement subject to your setting up a broker firm which is registered with one of the two recognized Brokers Associations in Hong Kong. This offer will be valid until November 15, 1996."

Terms were also proposed for the method by which continuing commission would be off set against the debt due, the remainder to be paid to the broker firm which the defendant was expected, by the plaintiff, to establish.

20. There was no reply to this letter - at least none in writing.

21. It is also common ground that after the termination of the agent's agreement, the defendant did not receive any commission on policies written during the currency of the Agent's Agreement, and that there was never put into effect any fresh written agreement under which Ms Woo continued to work in any particular capacity procuring policies for the plaintiff, or referring business to it.

22. Indeed, nothing in writing was heard from the defendant until 5th November 1996, which is the date of a letter written by her solicitors to the plaintiff, some two weeks or so before the expiry of the six month period for acceptance of the offer to enter into a broker's agreement. That letter asked for two things : first, the special allowance of $30,000 per month, a total of $360,000; and, secondly, reference was made to the Addendum, followed by this assertion, the terms of which are not without significance :

"Your company for no valid reason which our client could see except a wrongful desire on the part of your company and/or staff to take over the benefit of our client, terminated our client's on 30th May 1996. As yet your company has failed to provide our client with a Broker Agreement and above all failed and/or refused to pay our client the said premium commissions which should be due to [her]."

The letter threatens the institution of proceedings. But the plaintiff was quicker off the mark, and commenced proceedings later in November of the same year.

The Defendant's Case

23. The defendant articulates her case thus. She says that she agreed to work as an agent for the plaintiff company not only because she was promised the monthly allowance, but also because :

" ... more importantly, if I should cease to be an agent, for whatever reason, I would still be paid my earned commission and override by [the plaintiff] which would retain me as a broker at the Hong Kong Federation of Insurance."

24. The Counterclaim did not by its terms suggest that a broker's agreement, or for that matter any replacement agreement, was a condition precedent to the receipt of commission after determination of the agency agreement, in respect of policies written during the agency. The letter of 5th November, on the other hand, suggested that the defendant expected to be provided with a Broker's Agreement, but was failed by the plaintiff in this regard. It was not always clear how the defendant had herself interpreted this reference to a Broker's Agreement in the Addendum, but, put broadly, the effect of her testimony appeared to be this : that there were at the material time two capacities in which one might work for an insurance company, namely, either as an inhouse agent or as an outhouse agent. As an outhouse agent, one bore one's own overheads. It was in the latter capacity that she understood the term 'broker' when she signed the Addendum. In that capacity, the client was still the insurance company and not the insured. The idea, the intention, was that she would continue to receive commissions from policies previously written by her and, possibly, that she would continue to service earlier policies, in the sense of providing follow-up procedures with those insured under them. That was all that was envisaged. There was no question, she said, of becoming an independent or professional broker. And her complaint is that it was the latter form of brokerage agreement which, by their letter of 24th May 1996, the plaintiff offered her, and that is not what had been agreed. The problem, she said, about the plaintiff's requirement to set up a broker firm registered with Brokers Associations is that that presupposed acceptance of her by the Associations which she thought would be difficult to attain, and that she would not be able to afford the professional indemnity insurance premium which she would have to pay. (The plaintiff's case is that the law then required all brokers to be recognised or authorised in this way, and they could not lawfully offer her anything else.)

25. In answer to questions which I posed, she conceded - as she was bound to do (which is not, however, to suggest that she had been trying to hide the fact) - that there was at the material time a third category (that is, apart from inhouse and outhouse agent) in which one might act in bringing business to an insurance company, and in which commission could be earned, namely, a broker properly so called, that is, one who acted on behalf of prospective insured persons or, as she preferred to call the role, that of a professional broker. This was not what was envisaged by her at the time she signed the Addendum and it is her case that it was not envisaged either by the plaintiff. The "outhouse agency" which she had in mind would result in a commission which was higher than that for an inhouse agent, namely, 60 to 70% as a basic rate.

Construction of the Addendum

i) The law

26. It may very well be that when the defendant tells me that she did not have in mind a brokerage agreement in the sense of the third type of agreement or capacity to which I have referred, that she is telling me the truth; and if so, her sense of injustice is understandable. But it is not my function to ascertain what was her understanding of the import of the Addendum. Whilst the construction of the Addendum requires the court to ascertain the mutual intention of the parties to it, as that is presumed to be from the words actually used :

"When one speaks of the intention of the parties to the contract one speaks objectively - the parties cannot themselves give direct evidence of what their intention was - and what must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties."

(per Lord Wilberforce in Reardon-Smith Line Limited v. Hansen-Tangen [1976] 1 WLR 989).

27. For this purpose, one looks to the "objective framework of facts within which the contract came into existence, and to the parties presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but would also be unrewarding as it would tend to give too much weight to those factors at the expense of the actual language of the contract" (per Mason J, as he then was, in Codelfa Construction Pty. Ltd. v. State Rail Authority of New South Wales [1982] 149 CLR 337).

28. The rationale for the rule which requires this objective approach - an approach which can sometimes work hardship - is the promotion of certainty. The intention which counts is that which is conveyed by the words actually employed. That is the intention which it is presumed the parties had; and 'intention' is used in the sense of 'meaning'; in other words : "How is the thing to be understood in the factual context in which the word or words were used; what is the meaning of what the parties have said, and not, what did the parties mean to say?" (see Lord Simon of Glaisdale in Shuler (L.) AG v. Wickman Machine Tool Sales Ltd. [1974] AC 235.)

"The court's task is simply to determine the meaning of the provision against its contractual and contextual scene." (Per Steyn J., (as he then was) in Pagnan S.p.A. v. Tradax Ocean Transportation [1987] 1 All ER 81.)

29. Particularly apposite to this case is that summary of the principles which is provided by Saville J. in Vitol BV v. Compagnie Europeene des Petroles [1988] 1 Lloyd's Rep 574 at 576 :

"The approach of the English law to questions of the true construction of contracts of this kind is to seek objectively to ascertain the intentions of the parties from the words which they have chosen to use. If those words are clear and admit of only one sensible meaning, then that is the meaning to be ascribed to them - and that meaning is taken to represent what the parties intended. If the words are not so clear and admit of more than one sensible meaning, then the ambiguity must be resolved by looking at the aim and genesis of the agreement, choosing the meaning which seems to make the most sense in the context of the contract and its surrounding circumstances as a whole. In some cases of course, having attempted this exercise, it may simply remain impossible to give the words any sensible meaning at all in which case they (or some of them) are either ignored, that is to say, treated as not forming part of the contract at all, or (if of apparent central importance) treated as demonstrating that the parties never made an agreement at all, that is to say, had never truly agreed upon the vital terms of their bargain."

30. A corollary of the objectivity which is required by the rules of interpretation and of the certainty rationale behind them, is that parol evidence is not permitted to contradict or add to or vary the written agreement, assuming that the written agreement constitutes the whole agreement. In the case before me, there is no suggestion that the writing was supplemented by anything oral.

ii) In this particular case

31. A significant proportion of the evidence and cross-examination seems to me to have been devoted to ascertaining and placing before the court the actual intention of the contracting parties. In so far as the evidence of Ms Wo was adduced for that purpose, it is inadmissible. But that is not the long and the short of the matter, for Mr Kwong on behalf of the defendant invited me to find that to the words "Broker's Agreement" in the Addendum, I should attribute a particular meaning, a meaning which he suggests was the sense in which the phrase was understood in the insurance industry in Hong Kong in 1995. And the sense in which he says it was understood by those in the industry was the second or middle type of representative capacity to which Ms Woo referred in her evidence, namely, that of the "outhouse agent" engaged by an insurance company, rather than a professional broker not so engaged but acting on behalf of those who seek or obtain insurance.

32. The rule is that "the words of a contract should be construed in their grammatical and ordinary sense, except to the extent that some modification is necessary in order to avoid absurdity, inconsistency or repugnancy;" and that "the ordinary meaning of a word is its plain, ordinary and popular sense although that sense may be a sense among a particular group of persons" (see Lewison "Interpretation of Contracts" 2nd Ed., paras 4.01 and 4.02).

33. I have to say that the natural meaning of the word 'broker' in an insurance context seems plain enough to me, namely, a person who acts as an adviser and procurer of policies for the insured, who is the agent of the customer and not the agent of the insurance company. The fact that this is the natural meaning was illustrated (in so far as illustration is necessary) by the fact that Mr Kwong was constrained to refer to the special category to which his client referred as either an 'inhouse agent' or as an 'agent/broker' and, further that current legislation defines the word 'broker' in the sense which I have called as its natural sense (though in so saying I bear in mind that the phrase actually defined is 'authorised broker').

34. In the event, the defendant's case is forced to concentrate on a special meaning, a peculiar sense in which she contends the phrase to have been used in the industry at the material time, namely, an insurance company's representative operating, however, from premises of her own.

35. I am not persuaded that this was the prevailing meaning, still less that it was the exclusive meaning attributed by the trade. No evidence was adduced from anyone in the insurance industry other than the parties themselves, and although there was a stage in the course of the evidence of Mr Lee in which I understood him to be saying that this was a meaning understood by the industry, that was not an apparent concession which he maintained. That there was in any event at least another or additional or alternative meaning to be attributed to the word at the material time - that of the professional broker - was conceded by the defendant herself. Mr Lee pointed to the fact that the 1995 agreement was concluded weeks before the coming into force of the Insurance Companies (Amendment) Ordinance. That is an Ordinance the enactment of which, I am told, had as one of its objectives the regulation of brokers. It had been enacted as far back as July 1994, and its thrust must after that date be presumed to have been known to the insurance industry, even though it did not come into force until 30th June 1995. It referred to "appointed insurance agents" and to "authorised insurance brokers". Under the legislation, no one was permitted to hold himself out as an insurance agent unless he was an appointed insurance agent; and no one was permitted to hold himself out as an insurance broker unless he was an authorised insurance broker. One was not to be an appointed agent and an authorised broker at the same time. An insurance agent was defined by the new Ordinance as a person :

"... who carries on the business of negotiating or arranging contracts of insurance in or from Hong Kong as an agent or subagent of one or more insurers."

An insurance broker was defined as :

"... a person who carries on the business of negotiating or arranging contracts of insurance in or from Hong Kong as the agent of the policyholder or advising on matters relating to insurance."

36. In seems quite impossible to conclude, on the evidence with which I have been presented, that in May 1995, in the contractual and contextual setting of the agreements drawn, including the Addendum of 11th May 1995, that the phrase "Broker Agreement" in that Addendum carried the meaning for which the plaintiff contends, or carried only that meaning. Even assuming that it was capable of bearing that interpretation, it was clearly not the only interpretation which it was capable of bearing. In so far as it might be said to have carried more than one meaning, and given the central role which the phrase plays in the Addendum, the Addendum would be ambiguous and if that is so, it gives rise to no agreement. On the other hand, if it bears the meaning attributed by the new Ordinance, which I believe to reflect its natural meaning, then it cannot be argued that the plaintiff has offered the defendant anything other than that which was agreed. It was certainly not open to the plaintiff to offer the defendant a broker's agreement which did not require her to be an authorised broker, for the new law would not enable her lawfully to do otherwise.

An agreement to agree

37. But all that aside, there exists in my judgment another reason why the Addendum does not avail the defendant. It constitutes in my view, and in any event, no more than an agreement to agree. It provides that a broker's agreement will come into effect. Only one term of that agreement is specified, namely, that the defendant will receive commission from past policies. In so far as it might be suggested (and is in the Counterclaim suggested) that the Addendum constituted nothing more than an agreement that after the termination of the agency the defendant would continue to receive commission from policies previously written by her, it is a suggestion which I reject. Not only would it have been a simple matter to have a clause to that effect in the main body of the Agent's Agreement itself, but the provision in the Addendum for continuing commission, if it is said to constitute the entire effect of the Addendum, contradicts express terms of the Agent's Agreement, in particular clauses 6 and 26. Clause 26 of the Agent's Agreement provides that :

"If this Agreement terminates for any reason other than the death of the Agent, no further remuneration of any kind shall become payable to the Agent except commissions on premiums received by the Company prior to the termination of this Agreement."

Furthermore, the Addendum itself provides that the past earned commission will be paid "under the said Broker Agreement". It is clear to me, therefore, that provisions beyond the mere payment of such commission were envisaged. But what further matter was envisaged is omitted. What precisely was the role of the defendant to be? What was her commission to be in relation to new business referred to the company? Was it to be the same as hitherto, or, as the defendant contended in her evidence, more? Was she to service earlier policies in order to be entitled to the commission on them? In what circumstances could the agreement be terminated? The Agent's Agreement to which the Addendum, by definition, was but an adjunct, specifies circumstances in which the Agent's Agreement could immediately be terminated, including dishonesty, for example, by the agent. The Addendum says nothing at all about such circumstances. To read the words in the Addendum "shall come into existence" as signifying the automatic birth of a broker's agreement, without more, upon the determination of the Agent's Agreement does not in this context make sense. The Addendum in the form in which it was signed, and in the context in which it was placed, and looked at objectively, makes sense only as a statement of intention to enter upon a further agreement, the full or essential terms of which would be negotiated upon the determination of the Agent's Agreement, and in the circumstances which would then prevail. This gives rise to no binding contract, and in my judgment the defendant cannot, with justification, complain that the plaintiff is in breach of contract.

Result

38. For these reasons, the claim which is directed at the Addendum is not proved and must also be dismissed.

39. It follows that the Counterclaim is dismissed.

40. Accordingly, it is ordered that the defendant shall pay the plaintiff the sum of $141,022.53 on the claim, and that the counterclaim be dismissed. There will be a costs order nisi that the defendant shall pay the plaintiff's costs of the claim and counterclaim, to be taxed if not agreed.

41. No submissions were advanced as to the appropriate rate of interest to be awarded in respect of the two sums claimed by the plaintiff. I shall hear the parties orally on a date to be fixed if they wish to address me or, if they can agree the appropriate rate, the court should be so notified in writing and I will then make the appropriate order.