Benford Ltd and Another v Lopecan SL
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morison |
| Judgment Date | 30 July 2004 |
| Neutral Citation | [2004] EWHC 1897 (Comm) |
| Date | 30 July 2004 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2003F1067 |
[2004] EWHC 1897 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Honourable Mr Justice Morison
Case No: 2003F1067
Mr B Eder QC & Mr V Flynn (instructed by Howes Percival) for the Claimant
Mr B Dye (instructed by Brown Cooper Monier-Williams) for the Defendant
Hearing dates: 9 th & 19 th July 2004
Approved Judgment
Mr Justice Morison :
There are various applications before me, which I will turn to in a moment. The background to them is as follows. The parties entered into a distributorship agreement under which the Spanish defendant company was appointed as sole distributor with respect to a number of different regions within Spain of the claimants' products sold to Spain. There is a dispute between the parties as to the extent of the territory. The Spanish company say that their territory was extended as the result of an oral agreement; the agreement is denied, and the claimants say that the documents which support it are not genuine; and they also say that the person from their group who was alleged to have made the agreement was not authorised or held out as having authority to do so. There is a further dispute about territory, namely whether the claimants were entitled to deprive the Spanish company of one of the regions, namely Cordoba.
The distribution agreement has been terminated in circumstances which have given rise to a great deal of unpleasantness. In Spain there has been a complaint by the defendant against the claimants alleging criminal conduct, although fraud is not pleaded in the action brought within this country.
The action within this jurisdiction is brought by the claimants, who say that they sold and delivered to the defendants a number of trucks which were ordered by them in their capacity as distributor under the umbrella of the distribution agreement. The claimants say that the terms and conditions which specifically cover this transaction are contained on the reverse side of an invoice. The defendants deny that these terms apply. They say the terms which do apply are those attached to and annexed to the distribution agreement and not on the back of the invoices. They also refer to the evidence and say that the invoices were created after the order had been placed and accepted, and do not evidence the terms of the contract itself.
On the invoice terms there is a retention of title clause and a no set-off clause:
"5.5 The Buyer shall not be entitled to exercise any set-off lien or any other similar right or claim."
There is also a clause which deals with disputes, clause 19.2, which reads as follows:
"For the benefit of Fermec, and subject as hereinafter appears, the parties submit to the exclusive jurisdiction of the courts of England and Wales in respect of all matters arising out of or in connection with:
(a) The Contract;
(b) any contract between Fermec and the Buyer for the sale of goods; and
(c) any goods sold or supplied by Fermec to the Buyer, and the Buyer hereby expressly and irrevocably waives its right to rely upon the jurisdiction of any other court which might otherwise be competent to determine the issues between the parties or to argue that the courts of England and Wales are not the appropriate or convenient courts to determine the issues or to rely upon any provision of the laws or procedural rules of any country which would or might if applied have the effect of denying jurisdiction to the courts of England and Wales or of denying recognition or enforcement of any judgment of the courts of England and Wales."
In the terms annexed to the distribution agreement there is no anti set-off clause but there is a retention of title clause, and there is also in the distribution agreement itself an arbitration clause, at para.18, which reads:
"18.1 This Agreement shall be governed by and interpreted in accordance with the laws of England.
"18.2 Any and every dispute or difference between the parties concerning the validity, meaning or effect of this Agreement shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by a single arbitrator appointed in accordance with such Rules, the place of arbitration shall be in London, England and the language in which the arbitration proceedings shall be conducted shall be English.
"18.3 Notwithstanding the provisions of sub-clause 18.2 above, in the event that an action arises out of or in connection with an order from the Distributor and accepted by an MF Supplying Company such action shall be submitted to the jurisdiction of the Courts of the country of domicile of such MF Supplying Company or as otherwise provided in the standard Terms and Conditions of Sale of that MF Supplying Company current at the time of acceptance of such order.
"18.4 Nothing contained in this Clause 18 shall prevent MF from applying to an appropriate court in any part of the Territory or elsewhere for any injunction or other like remedy to restrain the Distributor from committing any breach or any anticipated breach of this Agreement and for consequential relief."
There are essentially four applications with which this court is concerned, and two of them are closely related. The questions before me, as helpfully put by counsel for the claimants, (and I would like to pay tribute to both counsel for the way they have dealt with this case), are:
(1) is there any real possibility that the defendants have a defence to the claim by the claimants for delivery up of the goods the subject-matter of the action?.
(2) "do the defendants have any real prospect of defending the monetary claim, that is for the price of the goods?
(3) should the counterclaim by the defendants for unliquidated damages be stayed pending arbitration?.
(4) should there be a stay of execution of any judgment on the claim pending determination of the counterclaim?
The essence of the defence and counterclaim is to be found in paras.9 and 25 of the defence:
"9. In breach of the agreements contended for in paragraphs 3–7 hereof, Fermec (acting through Atkinson):
"9.1 at a time unknown to Lopecan appointed a company known as Talleres Enpeca SL as distributor for the province of Cordoba and notified this to Lopecan by a letter (mis-dated 9 July 2002 but) received by Lopecan on or about 4 November 2002;
"9.2 sold or agreed to sell products encompassed by the distribution agreements set out in paragraphs 3–7 hereof in respect of the province of Cordoba otherwise than to Lopecan. Lopecan does not know the details of this breach of contract, and Lopecan seeks an inquiry into this matter;
"9.3 at a time unknown to Lopecan appointed a company known as Auto Reparaciones Guadalhorse SL as distributor for the provinces of Granada, Malaga and Jaen and notified this to Lopecan by a letter dated 14 March 2003;
"9.4 sold or agreed to sell products encompassed by the distribution agreements set out in paragraphs 3–7 hereof in respect of the provinces of Granada, Malaga and Jaen otherwise than to Lopecan. Lopecan does not know the details of this breach of contract, and Lopecan seeks an inquiry into this matter.
……….
"25. Further, by reason of the breaches of contract set out in paragraph 9 hereof, Lopecan has suffered loss and damage as follows:
"25.1 Lopecan has lost profits on all the sales which it would have made in the provinces of Cordoba, Granada, Malaga, Jaen. Since Lopecan had already established itself in those provinces, it will say that it would have sold more goods than Fermec's new appointed distributors have been able to sell (details will be supplied after disclosure is given of the sales activity which has been taking place in the provinces of Cordoba, Granada, Malaga, Jaen). Lopecan's gross margin for machinery is 31% and for spare parts is 45%. Lopecan's sales plan was for 33 units in 2003, 47 units in 2004 and 70 units in 2005. Lopecan will say that its margin was worth in excess of Euros 550,000 per annum;
"25.2 Lopecan has been unable to sell goods the subject matter of the claim and has lost the revenues on those goods —the purchase of the goods are wasted expenses and the spare parts and stocks which Lopecan has invested in and bought from Fermec represent a wasted expense occasioned by Lopecan (amount of claim to be detailed, but approximately Euros 600,000);
"25.3 Lopecan has incurred the wasted expense of hiring, training, maintaining, paying and then disposing of its workforce and of their travelling; in particular in relation to in the provinces of Granada, Malaga, Jean; and employment costs of employees in relation to Cordoba (amount of claim to be detailed, but approximately Euros 215,000);
"25.4 Lopecan has incurred expenses in relation to premises and overheads in relation to the provinces of Cordoba, Granada, Malaga and Jaen, which are wasted expenses;
"25.5 Lopecan has incurred costs in providing after sales service and sorting out customer problems in Cordoba, Granada, Malaga, Jaen which are wasted expenses;
"25.6 Lopecan has forgone the profit it would have earned on its business with Takbuchi Corp which it was not able to pursue because of its agreement not to deal in goods competing with those of Terex."
These applications are brought at an interlocutory stage, and it follows therefore that I must be careful that I say nothing which will affect the case, if it is to continue, because there may well be issues of fact, and certainly on law, which will arise for consideration; but I am bound to deal with the arguments that have been presented to...
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