Adam Opei Gmbh and Another v Mitras Automotive Uk Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 18 December 2007 |
| Neutral Citation | [2007] EWHC 3481 (QB),[2008] EWHC 3205 (QB) |
| Docket Number | HQ06X03911,Case No: TLQ/07/0367 |
| Court | Queen's Bench Division |
| Date | 18 December 2007 |
[2007] EWHC 3481 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
David Donaldson Q.c.sitting as a Deputy High Court Judge
HQ06X03911
Introduction
The First Claimant (“Opel”) is a wholly owned subsidiary company within the General Motors group (“GM”) based at Russelsheim in Germany. In the late 1990s GM and the Second Claimant (“Renault”) entered into a joint venture to produce a van, badged and sold variously as an Opel/Vauxhall “Vivaro”, a Renault “Trafic” and a Nissan “Primastar”, which went into production in 200The van, code-named W83 or X83, was manufactured as the Vivaro and Trafic in Luton by IBC Vehicles Limited (“IBC”). The Trafic was also manufactured along with the Primastar in Barcelona by NMISA, a Spanish company owned jointly by Renault and Nissan. This case concerns the UK production of the van.
The Defendant (“Mitras”), originally a subsidiary of a German company, manufactured and supplied components to the automotive industry from a factory in Winsford, Cheshire. It was from the inception of the X83 project the sole supplier to the Luton plant of the technical front end, in layman's language the moulded plastic unit upon which the front bumper was mounted, under a highly developed system known as single source supply, used widely throughout the motor industry for many years. The Barcelona plant was by served by a different sole supplier, Peguform, based in Catalonia. In 2006, when the Claimants sought to refresh the look of the van by a “face-lift” which included a change to the front bumper, Mitras lost its role as supplier of the bumper mount. It is the circumstances surrounding that event which have led to the claim in the present case.
The contractual background
In 1997/8 the Claimants (“GM/Renault” or “GMR”) issued a Request for Quotation (“RFQ”) which together with Mitras' response in May 1998 revised in June 2001 formed the basis of the arrangements between the parties. Attached to the RFQ were technical drawings and specifications for the bumper mount together with a timetable moving up to the commencement of production in February 2001. The running production, totalling 863,257 units, was projected for each of the following twelve years, headed by the caveat
“The following projections cannot be considered as an undertaking on the part of the car makers”.
The general conditions of the RFQ provided under the heading “Orders”:
“Opel and Renault reserve the right to nominate third-party vehicle manufacturers to place orders with the supplier for purchasing prototypes, piece parts, specific tooling, and special containers. Where the third-party vehicle manufacturer is so nominated and places an order with the supplier, it shall be wholly responsible to the supplier in connection with that order.
Note: it is intended that IBC Vehicles Limited will order all series piece parts.”
A further attachment to the RFQ contained the Terms and Conditions which were to be applicable to Purchase Orders. The preamble specified that (subject to exceptions not relevant in the case of piece parts) the Buyer meant IBC. Clause 1 of these Terms and Conditions provided that:
“The Purchase Order issued by the Buyer shall be deemed to incorporate the Request for Quotation (RFQ) issued by Adam Opel AG and/or Renault in respect of or relating to the goods, all documents referred to therein and all subsequent correspondence between the Supplier, the Buyer and/or Adam Opel AG and/or Renault and together with these terms and conditions shall constitute the complete agreement between Supplier and Buyer.”
Clause 20 provided that:
“The Buyer may at any time give written notice to the Supplier to terminate the Purchase Order forthwith and in such event the Buyer shall unless otherwise agreed, pay, and the Supplier shall accept, in settlement of all claims under the Purchase Order such sum as shall compensate the Supplier for all work reasonably done and obligations reasonably assumed by it in performance of the Purchase Order prior to its termination and for all work reasonably done by it in giving effect to such termination …”
The RFQ contemplated that specific tooling would be paid for by GMR and ownership transferred to them. This covered “tooling specially produced for obtaining different bare parts specific to the W83 program” and “specific tooling works in direct contact with the part during the manufacturing process” but excluded “assembly equipment and machines” which were to be regarded as the supplier's own investments. Special conditions applicable to the tooling stipulated that
“1.1 The Equipment is the exclusive property of Renault and Opel and it is lent, without charge, to the User to enable the User to manufacture/deliver parts for incorporation into vehicles which are to be produced for sale by Renault, Opel or their respective affiliates. Unless Renault and Opel agree in writing to something else, the User shall not use the Equipment except to fulfill orders placed on the User by any of
Renault, Opel and their jointly nominated vehicle manufacturers. …
1.2 By virtue of these terms, ownership of the Equipment does not pass to the User and nor shall the User have any rights to or interest in the Equipment. The User undertakes to return the equipment to Renault and Opel upon their request or demand and acknowledges that Renault and Opel have the right to take possession of all or part of the Equipment for any reason whatsoever at any time ……
2.2 Upon the request of Renault and/or Opel the User shall immediately cease to use the relevant item of Equipment and make arrangements for its safe storage and subsequent delivery to such place and at such time as Renault and/or Opel shall reasonably direct …”
In response to the RFQ Mitras quoted a piece price of £12.10, subject to a cumulative reduction of 3% per annum in years 2 to 4. The breakdown required by the RFQ showed that this figure included £0.40 as amortization over 12 years of development costs of £188,175 borne by Mitras. The specific tooling costs, to be paid by GMR, were shown as £743,925.
Eventually, a letter was sent to Mitras by GMR confirming that Mitras had been “selected as a supplier for the development and production of components for the W83 Program.”
The parties had thus at this stage agreed the price and other terms governing Purchase Orders which would be placed with Mitras by IBC. Somewhat surprisingly in the light of the RFQ provisions, no Purchase Orders were ever produced. Instead, Mitras received each week a rolling schedule of requirements for the following 40 weeks, generated by GM's computer in Germany. Of these the last 37 weeks might be changed in subsequent weekly schedules, but the first 3 weeks remained unaltered. The precise quantities required each day were determined and notified by IBC to Mitras according to variations in production. There was a daily collection by GMR's haulier in a large articulated lorry. This was divided at the haulier's regional distribution centre into 3 separate loads, which were then delivered to Luton at eight hour intervals. The system was designed to minimise the amount of stock held by IBC. At any time there would be a maximum of 432 units in store with a further 48 lineside, to meet a production rate of 18 to 19 vans per hour. The functioning of this “lean material” or “just-in-time” system, if not the precise figures, was explained to all suppliers, including Mitras, at formal training sessions in 2000 and 2002 and in a handbook, provided in hardback and updated on line at a GM website.
The absence of Purchase Orders would seem to render problematical the precise analysis of the contractual structure as between the three actors. Two important agreements by the parties before me made it however unnecessary to explore this matter.
(a) It was or became common ground that Mitras was under a contractual obligation to GMR to deliver units in response to the weekly schedules and daily call-offs (exactly which does not matter to the resolution of the issues in this case).
(b) Though Clause 20 in terms refers to a Purchase Order placed by IBC, the parties agreed that it should be treated as applicable mutatis mutandis to a termination by GMR of the sole supply arrangements with Mitras.
Events leading up to the end of the sole supply arrangements in 2006
In 2004 GMR began to plan a refreshment to the look of the van, known as Phase 2. For this purpose they envisaged a change to the bumper mount to support an altered front bumper. On 14 June 2004 Mitras was asked to quote for the change, and did so by letter dated 29 September 2004, proposing a unit price increase of £0.90 and tooling modification costs of £195,640, with a lead time of 12 weeks. The letter added that Mitras would need to receive the order by 16 May 2005, but no order was received by that date or at all.
By the end of 2005 GMR had apparently decided that the bumper mount for the Phase 2 van should be produced by LFT technology, in essence injection moulding, rather than the GMT compression moulding used by Mitras. In response to an enquiry by Mitras asking for confirmation of a rumour, GMR informed Mitras orally on 24 January 2006 that it was not intending to use Mitras on Phase 2, and GMR confirmed in a letter sent on 24 February 2006 that
“ due to an engineering change, which we are obliged to carry out, MITRAS capabilities of compression molding would no longer apply for our facelift in phase II starting this year after the summer shut down.”
That gave Mitras notice that it would cease to be the supplier of the...
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