AAG Investments Ltd v BAA Airports Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE WALKER,Mr Justice Walker |
| Judgment Date | 09 November 2010 |
| Neutral Citation | [2010] EWHC 2844 (Comm) |
| Docket Number | Case No: 2010 Folio 78 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 09 November 2010 |
[2010] EWHC 2844 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Before: Mr Justice Walker
Case No: 2010 Folio 78
Mr Simon Perhar (instructed by Hill Dickinson LLP) for the Claimant
Michael Edenborough QC (instructed by Catherine Ledger of BAA Airports Limited) for the Defendant
Hearing date: 23 September 2010
Approved Judgment
Mr Justice Walker:
Introduction
This action was begun by the claimant, AAG Investments Limited (“AAG”), against the defendant, BAA Airports Limited (“BAA”), by claim form issued on 25 January 2010. Statements of case have been served by each side. The court is now asked by BAA to strike out the whole, or at least parts, of the particulars of claim and the reply pursuant to CPR part 3.4(2)(a). Further or alternatively BAA asks for summary judgment in its favour pursuant to CPR part 24.
The case concerns a contract which was admitted in the Defence, but not earlier, to have been made between the parties in November 2007. The contract concerned what it described as “Zetaform”. This term was defined in the contract. The background to the contract was that BAA had used a specially designed construction system of this name in the past and in particular when building the Terminal 5 car park at Heathrow Airport, London. AAG was involved in a number of contracts or potential contracts relating to the sale of assets from the Terminal 5 site. These concerned, among other things, the sale of redundant electrical cable and scrap metal.
An essential element of the Zetaform system comprised steel moulds. They were used to cast concrete beams that in turn could be used as component parts to form structures such as multi storey car parks. Relevant moulds were at the Terminal 5 site. They had been used a number of times and it had been decided to dispose of them, either as scrap or for use by a third party. A witness statement made by Mr Paul Ross, Chief Executive of AAG, says that he was asked to provide two prices by BAA. One was for clearing the system on a scrap basis, and another was for the purchase of the system on a resale basis. BAA elected the latter as being the more profitable. Mr Ross's statement notes that on this basis AAG would be selling a sophisticated “product”, including not only the moulds but also “the intellectual property rights and design concept” in the Zetaform. At paragraph 15 of his statement he asserts:
For our part we were not experts in the field and were not sure whether there would indeed be a market for the system. Accordingly, it was a risk on our part to enter into a contract with BAA to sell the System. We were however reassured by BAA that should we be successful in marketing the product outside the UK, they would offer technical support as part of the deal.
Under the contract AAG paid BAA an initial sum of £40,000. AAG further agreed that if it sold to a third party BAA would be entitled to a profit share determined by calculating twenty percent of the onward sale price and deducting from it “the associated removal expenses”.
In accordance with the contract AAG removed the moulds from the Terminal 5 site and stored them at Port Talbot. Mr Ross states that he then sought to market the system overseas. He describes discussions with an Omani businessman, Mr Alisyabi, culminating in September 2009 with a formal offer by AAG to establish a joint venture. According to Mr Ross the expected return would have been £675,000, consequently entitling BAA to £135,000 less removal expenses. He says that Mr Alisyabi was satisfied with the terms of the offer and requested copies of the drawings so that his engineer could check its efficiencies and technical capabilities. A request had been made to BAA to supply the drawings in July 2009. They were not supplied.
What then occurred is asserted by AAG to have amounted to a repudiatory breach by BAA of its obligations under the contract. An account of events is given in a witness statement made by Mr David Ferroussat, the Ombudsman for Capital Programmes for Heathrow Airport Limited (“HAL”). I am told that HAL is a separate entity from BAA, but for present purposes references to HAL in accounts of relevant events can be treated as if they were references to BAA. Mr Ferroussat explains that when AAG made contact in July 2009:
… neither Gary Orchard nor Ian Donald worked for BAA. As they had been the main individuals within the company with personal knowledge of the Contract and the circumstances surrounding it, it was unclear initially who would deal with the matter.
Mr Ferroussat states that he agreed with Mr Crowston of AAG that he would meet Mr Crowston and Mr Ross on Monday 22 October 2009 on a without prejudice basis to discuss AAG's request for the drawings and “how we could move this forward”.
Minutes of the meeting prepared by Mr Ferroussat, and expressly stated to have been “made without prejudice”, record him outlining HAL's position in summary as:
a. HAL's view of the sale and purchase agreement was that it was not valid as it has been entered into by “British Airport Authority”. This was not a recognised legal entity at the time the agreement was signed.
b. At no time did Gary Orchard have authority to enter into contractual commitments on behalf of any BAA entity. He was an employee of a supplier to BAA, and was not acting as BAA's agent.
c. It is made clear throughout the Agreement that the Zetaform purchase is on an “as is, where is” basis, and envisages the material being scrapped if it cannot be resold. In HAL's view, this confirms that the purchase was simply for lumps of metal, rather than anything more sophisticated such as an assignment or licence of underlying IP. The value of the transaction (40k) is consistent with this.
d. There is no mention of any drawings being included in the sale.
e. HAL do not have the right to assign or licence the underlying IP rights (either in the drawings or the moulds) given the IP is jointly owned with one of HAL's contracting parties, Laing O'Rourke (LOR). As such, AAG should not be marketing the moulds on the basis that they can be used to construct another car park that looked like the T5 MSCP.
f. HAL are still awaiting confirmation that the sale price of £40,000 had been received.
Mr Ferroussat explains in his statement at paragraph 28:
I did think that we might need the agreement of Laing O'Rourke to hand over the drawings of the moulds and as those were not covered by the Contract, a new agreement may be needed. I do not recall focussing so much on the intellectual property rights in just the Zetaform moulds themselves as my main concern … was to prevent any claim against the overall car park design. I knew that the design of the car park would be jointly owned by HAL, Laing O'Rourke and Ove Arup and so I was anxious to quash any suggestion that AAG had acquired wider rights than to the Zetaform moulds.
Mr Ross in paragraph 49 of his witness statement asserts that following the meeting:
I had to confirm to Mr Alisyabi that I could not proceed with the proposed Joint Venture and as this issue still remains unresolved, I have incurred a substantial loss of profit as a result of BAA's breach of contract, as the Joint Venture had reached the stage whereby a formal offer had been drafted and accepted in principle.
Mr Ross adds in paragraph 50:
In any event, even if this Joint Venture had not proceeded, I had also had discussions with other parties which I could have explored further if the deal with Mr Alisyabi had not been successful. In particular, I had been involved in discussions with Mr Steve Jackman of BAE Systems Plc. During our discussions he confirmed that due to the extensive infrastructure and development projects taking place throughout the Middle East over the next ten years, there were other industrial partners who had shown an interest in System as it was a unique product. Further, as AAG is an industrial offset partner of BAE Systems Plc, this product was seen as an ideal industrial offset opportunity.
As regards its strike out application BAA says that certain passages in the particulars of claim and reply refer to the without prejudice meeting of 22 October 2009 and cannot be allowed to stand. Once they are struck out, BAA says that there would remain no material facts to support AAG's case and so the action ought to be dismissed.
BAA's application for summary judgment assumes that the application to strike out has not resulted in dismissal of the action. In that event BAA contends that, as a matter of Omani law, there can be no loss and damage that flows from the alleged breach of contract, and so for that reason the action ought to be dismissed.
I shall consider the application to strike out and the application for summary judgment in turn.
The Strike Out Application
In order to set the application in context I shall summarise the statements of case. The “without prejudice rule” and cases concerning it are then examined before summarising the arguments of the parties. I then set out my analysis of BAA's complaint in this regard.
AAG's claim form issued on 25 January 2010 included, under the heading “brief details of claim”:
The Claimant claims £777,575.72 plus interest being the amount due and owing following the Defendant's repudiatory breach of contract in respect of its failure to transfer the title to the intellectual property rights of the Zetaform moulds in accordance with a contract entered into between the parties in October 2007.
Accompanying the claim form were particulars of claim. These had been the subject of a statement of truth made by Mr Stuart McQueen on 21 January 2010. At...
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...17 T.f. Speciality Sawmill Inc. v. Obal , 1999 CanLII 5548 (BC SC) 18 [1980] AC 1280 at 1299 19 Quoted with approval in AAG Investments Ltd v BAA Airports Ltd (Rev 1) [2011] 2 All ER (Comm) 1171; Approved of in Unilever v plc v The Proctor and Gamble Co; In Tramountana Armadora S.A. v. Atla......