Aston Martin Mena Ltd v Aston Martin Lagonda Ltd
| Jurisdiction | England & Wales |
| Judge | Dame Clare Moulder DBE |
| Judgment Date | 20 December 2023 |
| Neutral Citation | [2023] EWHC 3285 (Comm) |
| Year | 2023 |
| Court | King's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2021-000393 |
[2023] EWHC 3285 (Comm)
Dame Clare Moulder DBE
Sitting as a Judge of the High Court
Case No: CL-2021-000393
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Jeff Chapman KC and Samuel Ritchie (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Claimant
Iain Quirk KC, Sophie Weber and Robert Harris (instructed by Slaughter and May) for the Defendant
Hearing dates: 14–16, 20 and 23 November 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 20 December 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
The Defendant, Aston Martin Lagonda Limited (“AML” or the “Defendant”) is the manufacturer of luxury cars under ( inter alia) the Aston Martin brand names.
These proceedings arise out of the termination by the Claimant, Aston Martin MENA Limited (“AMMENA” or the “Claimant”) of an agency agreement dated 19 April 2018 (the “Agency Agreement”) between AMMENA and AML. Pursuant to the Agency Agreement AMMENA had appointed AML as its agent in respect of all AMMENA's operations as Distributor of Aston Martin vehicles, parts and services in the Middle East, North Africa and Turkish region (referred to as the “MENA” region) under a distribution agreement dated 19 April 2018 (the “Distribution Agreement”).
Chronology of termination of the Agency Agreement
On 25 January 2021 Bird & Bird (on behalf of AMMENA) wrote to Eversheds (on behalf of AML) (the “25 January letter”) stating that:
“ AML [is] in material breach of its payment obligations [under clauses 4.3 and 4.5 of the Agency Agreement]” and “demanding payment of the full amount [of MCMP] due to [AMMENA] of GBP 6,050,176.40 within no more than 15 days”.
The letter also stated that:
“ 7. Our client has recently been informed that AML is withholding the money due to our client, purportedly relying on the indemnity given by AMMENA to AML in clauses 5.1 and 5.2. AML claims that it has incurred significant costs resulting from disputes with Aston Martin franchisees following decisions by AMMENA to terminate the franchise arrangements in Bahrain and Saudi Arabia. AML has unilaterally decided to cease paying all the sums due to our client and now proposes to offset the total amount it claims it has incurred of GBP5,247,908 (the “Offset Sum”) from the sums due to our client.
8. We note the indemnity given in clause 5.1 but deny that it is liable to reimburse AML for the Offset Sum for the reasons explained in more detail below. We therefore consider that AML is currently in breach of its payment obligations under clauses 4.3 and 4.5.”
On 15 February 2021 Eversheds sent a letter to Bird & Bird stating that:
“ [AML] is not in breach of the Agency Deed for non-payment or in relation to the HHA termination … [i]t is in fact [AMMENA] that is in breach for not honouring the indemnity under the Agency Deed…”.
On 19 April 2021 (the “19 April letter”) Bird & Bird wrote to Eversheds stating that the outstanding sum had not been paid and AML had not therefore remedied the breach. The letter stated:
“ …We are therefore instructed to give notice to you on behalf of your client that the Agency Deed will come to an end with immediate effect…”.
On 3 June 2021 Slaughter and May (on behalf of AML) sent a letter to Bird & Bird (on behalf of AMMENA) stating that:
“ [AMMENA] did not have the right to rely on clause 6.1 to terminate the Agency Deed with immediate effect and its purported termination of the Agency Deed on 19 April 2021 is invalid. As a result of this wrongful termination, [AMMENA] is in repudiatory breach of the Agency Deed. Such repudiatory breach gives [AML] the right — at common law and pursuant to clause 6.1 of the Agency Deed — to terminate the Agency Deed, which [AML] intends to exercise. Accordingly, this letter constitutes [AML's] notice to terminate the Agency Deed with immediate effect.”
A transitional period (the “Transition Period”) was agreed between the parties from the date of termination of the Agency Agreement until 30 September 2021 for AMMENA to resume the obligations under the Distribution Agreement. However, the nature and basis of the parties' obligations during the Transition Period remain in issue.
AMMENA resumed those obligations on 1 October 2021 although as described below, AML continued to perform some operational functions until 1 July 2022.
Scope of Judgment and Submissions
The Court received combined written closing submissions from the parties of some 250 pages which are extensively footnoted in respect of what was in substance a 5 day trial. The Court has sought to determine only those issues which remained live between the parties at the time of trial as reflected in oral submissions and except where indicated, only those issues which were necessary for the resolution of these proceedings. Where an issue was not referred to in the written closing submissions or pursued in oral submissions the Court has not addressed that issue even if it was in the List of Agreed Issues. This includes AMMENA's claim for an account in respect of its activities and dealings under the Agency Agreement and the allegation that AML failed to comply with such duty by not providing certain information and/or confirmations requested in relation to the period following termination of the Agency Agreement.
Even if an issue was referred to in the submissions, it is not practicable or necessary to determine the proceedings to address in the judgment every submission (oral or written) or to deal with every document referred to in the submissions. The Court has however reviewed the written submissions and the transcript of the oral hearing. It should not therefore be inferred that the Court has overlooked submissions merely because they are not referred to expressly in this judgment.
Issues for determination
In light of the foregoing, in summary (and as more particularly described in the relevant section of the judgment) the following issues fall to be addressed:
12.1 Whether the Defendant owes the Claimant sums in respect of Manager Committed Minimum Profit (as defined in the Agency Agreement) (“MCMP”) for the period 1 January until 30 September 2021 under the Agency Agreement or alternatively as damages for breach of contract.
12.2 Whether the Claimant validly terminated the Agency Agreement on 19 April 2021.
12.3 Whether during the Transition Period AML acted in breach of the express duties of good faith in Clauses 2.3 and 3.2 of the Agency Agreement and/or an implied duty of good faith.
12.4 The Defendant's counterclaim under the indemnity in Clause 5 of the Agency Agreement.
The Defendant has made a counterclaim for sums it alleged the Claimant must indemnify the Defendant in connection with the termination of the appointment of two Dealers either pursuant to the terms of the Agency Agreement and/or pursuant to its duty under common law (the latter was not pursued by AML at trial). One of those claims related to a dispute with the former retail dealer in Bahrain, Montana Motors. AMMENA has now accepted that the sums claimed of £38,725.50 under the indemnity together with £121,452.58 which are costs associated with litigation between AML and Montana Motors are payable. It is not therefore necessary for the Court to consider the counterclaim in that regard.
The second aspect of the counterclaim arises following the sending of a letter of termination on 24 August 2017 advising Haji Husein Alireza & Co. Ltd (“HHA”), that an agreement dated 19 August 2008 between AML and HHA (the “HHA Dealer Agreement”) would not be renewed and would thus expire on 19 August 2018 (the “HHA Termination Letter”).
Witnesses
The Court heard evidence from the following witnesses for the Claimant:
15.1 Mr Abdullah Zidan, a director of AMMENA and the President of Al Roumi Capital Holding Co, a shareholder in AMMENA's parent company and responsible for AMMENA's day to day operations.
15.2 Mr Richard Quinlan who left AMMENA in 2022 but remains a director of AMMENA. He was being paid to give assistance in the proceedings and stated that he wanted to support the Al Roumi family. During the Transition Period he gave instructions to CMS Cameron McKenna Nabarro Olswang LLP (“CMS”), the firm of solicitors now acting for AMMENA.
15.3 Mr Larbi Bensouda, currently the Executive Manager of AMMENA and responsible for the relationship between AMMENA and the retail dealers under the Distribution Agreement. He joined AMMENA in December 2016, and when the Agency Agreement and Distribution Agreements were signed he went to work for AML. After the Transition Period, during which his employment was terminated by AML as described below, he returned to working for AMMENA.
For the Defendant the Court heard from the following witnesses:
16.1 Mr Arthur Kipferler, a Partner and Managing Director UK at Berylls Strategy Advisors Limited, a firm of management consultants who were brought in to assist AML's management on strategic issues.
16.2 Mr Balmer, Regional President for the MENA region for AML from May 2018. In mid-2020, the MENA region was consolidated with the UK and Mr Balmer became Regional President for the UK and the MENA region. He resigned from AML in March 2021.
16.3 Mr David Robinson. He joined AML in September 2018 as the Global Pricing Lead and was promoted to Head of Pricing and Cross Carline Planning in January 2021.
MCMP
I understand it to be common ground that MCMP is prima facie owed under the Agency Agreement for the years 2019 and 2020. This amounts to £5,734,006.70. The issue in relation to...
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