MarIus

6.3.1. Non-professional conduct by broker A?

The facts were complicated and contested; thus the Court had to rule on a number of evidentiary points. It found that even though the seller did not anticipate a public sale, it was nonetheless not correct of A to make an exclusive offer to a group of interested companies – without informing the seller:

“The Court of Appeal finds it surprising that such an e-mail was not presented to the principal for acceptance … Furthermore, it is not confidence inspiring (Norw.: “lite tillitvekkende”) that A did not pass on the e-mail he received from [the person representing the group of buyers] containing the view of the industry committee on the quota- recommendation”.

The conclusion emerges from the following:

“According to the view of the Court A did not act in the best interest of the instructing party when A exclusively offered a group of buyers a fixed price [MNOK 320] that had not been clarified with the seller … The Court is of the opinion that A only made sure to a very limited degree made that the seller understood the value of the object offered and the optimal outcome for the company … The Court finds, based on a total evaluation of the evidence, that it is clear that A has not taken care of the interests of the instructing party in a satisfactory way and has acted negligently.”

6.3.2. Is economic damage caused?

In this respect the Court was split (2-1). The majority found that the market price per quota-ton was higher than the NOK 100 million stated in the contract, being probably NOK 120 million per ton.

“Based upon a total evaluation the majority finds that it is likely that Stormfuglen could have been sold at a higher price if the broker had carried out the undertaking according to the professional standard applicable to shipbrokers … Stormfuglen´s quota was sold for NOK 100 million per 100 basis-ton. This results in an economic loss by sale of quotas of NOK 31.7 million.”

In addition, the seller claimed for a loss arising from the sale of shares that was based on the June contract:

“The majority finds it … likely that the seller could have obtained a better agreement, that is a lower share share-rebate, if A in drawing up the contract had not bound the seller to a sale of the vessel with its quota.”

An estimate presented to the Court, which the majority found acceptable, was that the total rebate was NOK 10.6 million, and the Court stated that this rebate would have been divided, giving the seller an additional loss of NOK 3.7 million.

The total damage was consequently NOK 35 million, and the next question was whether there was a sufficient causation between the criticised behaviour and the loss. The majority found that the broker´s action had influenced the sale: the seller would not have accepted NOK 320 million, if A had informed the seller of the 15^th May 2020 exclusive offer presented by A to the potential buyers. Furthermore, it was clear, the majority continued, that the seller would never have accepted an obligation to sell the vessel with its quota, if they had been informed of the benefits that might be obtained in the negotiations for a sale of shares.

The dissenting judge found that it was not “sufficiently documented that Stormfuglen had suffered an economic loss as a consequence of the faulty behaviour of the broker in carrying out the task undertaken”. In his opinion the market was not as described by the majority, referring both to a witness and also to the seller´s knowledge and lack of criticism of the price obtained.

“The minority agrees with the majority that the broker acted negligently in the performance of the job undertaken, by wrongfully stating that he had received an offer from the buyer-group, without informing the seller that in reality he had sent an exclusive offer to the buyers with a fixed price. This has an impact on his commission claim, but does not, according to the minority, imply that the price was wrong … The minority does not find it likely that the broker has caused a loss for the seller by the later negotiations on the choice between sale of the vessel with its quota or sale of shares.”

6.3.4. Reduction of the damages because of the seller´s contribution and general rules on abatement of liability

The Court found that the behaviour of the broker was grossly negligent, and accordingly that it was not necessary to determine whether the claim was presented in time. Furthermore, the Court stated that neither passivity nor confirming behaviour had the effect of rendering the damages claim invalid.

The attitude of the seller may, however, be relevant, according to general rules addressing the claimant´s contribution to the damage, cf. Act on Damages Section 5-1. In this case, the seller knew that the broker had not contacted other potential buyers, despite the instructions given. The Court stated that the general approach should be one of some reluctance to apply the section, particularly where the party causing the damage has acted with gross negligence. However, the Court noted that this is different in commercial relations. The conclusion was:

“Even though the broker is most to blame for the damage, the Court finds that it is reasonable to take into consideration the fact that the seller consciously failed to ascertain what the market might offer, and also failed to follow up on his own account with regard to the fact that the company was being proposed for share sale, with the implications that this presented. The seller could easily have obtained information on both aspects and thus have been better prepared for the decisions made. Against this background, the Court finds that the scale of damages shall be reduced by around one third to NOK 24 million, with this also taking into account the fact that part of the commission has already been paid.”

The Act on Damages also has, in Section 5-2, a general, very flexible rule on abatement of damages, in this case concerning the liability arising from non-contractual behaviour. The section was not considered applicable: When the negligence is gross, as in the present case, “the Court finds that there is no basis for reducing the liability.”