Bespoke Couture Ltd v Artpower Ltd and another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Lord Justice Waller,Lord Justice Lloyd,Lady Justice Hallett,Lord Justice Sedley,LADY JUSTICE ARDEN,LORD JUSTICE LONGMORE,Lady Justice Arden,LORD JUSTICE SEDLEY |
| Judgment Date | 03 November 2006 |
| Neutral Citation | [2006] EWCA Civ 1425,[2005] EWCA Civ 981,[2006] EWCA Civ 1696 |
| Docket Number | Case No: A3/2005/0732 & A3/2005/0736,Case No: A3/2006/2051,A3/2005/2874 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 November 2006 |
[2005] EWCA Civ 981
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HHJ RAYNOR QC (sitting as a Judge of the High Court)
HC04C0220
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Waller
Lord Justice Laws and
Lord Justice Jacob
Case No: A3/2005/0732 & A3/2005/0736
John Davies QC (instructed by Messrs Field Fisher Waterhouse) for the Appellants
Richard Arnold QC and Brian Nicholson (instructed by Messrs Davenport Lyons) for the Respondents
(Giving the Judgment of the Court at the invitation of Lord Justice Waller)
This is a judgment to which all members of the court have contributed. We have to deal with an appeal and cross-appeal from a decision of HHJ Raynor sitting as a deputy judge of the High Court. The case is about a Menswear Production and Sales Licence Agreement and a supplemental Side Letter
The basic facts
The claimant, Artpower, is subsidiary of a public company called Marchpole Holdings plc. Its largest shareholder is Mr Michael Morris who gave evidence for Artpower along with Mr Tufnell, its acting chief executive at the relevant time. The Judge described Marchpole's business in para. 8:
"Marchpole, by its subsidiaries, is a wholesaler of what are termed 'diffusion ranges' of fashion wear, holding or having held licences for major fashion houses such as Yves St Laurent and Jasper Conran. A diffusion line is a means whereby a fashion designer can expand the market for garments of his design. Suits in a diffusion range will not have the luxury trimmings of mainline ready to wear suits, and will sell for (typically 30–50 per cent) less."
"Mainline" business consists of the core, upmarket, business of goods sold under a famous designer's name. For present purposes the Judge's description of the defendant's mainline business is what matters (see the next paragraphs).
The individual defendant is Mr Ozwald Boateng, a famous and successful designer of fashion menswear. His company, Bespoke, is the other defendant. The Judge set out the nature of Bespoke's business prior to the licence agreement as follows:
"Bespoke was the vehicle by which Mr Boateng exploited his design skills. It had first what it called its Mainline business, comprising:"
(i) Bespoke Tailoring at its Savile Row premises. Bespoke suits typically cost approximately £3,500.
(ii) Made to measure suit tailoring at its Vigo Street, London premises. These suits, which are made on a standard block, now retail for approximately £1,500.
(iii) The sale by retail and wholesale of ready to wear suits and complementary shirts and ties. In October 2002 Bespoke's only retail premises were at Vigo Street. Today such ready to wear suits retail for between about £750 and £1,000.
5. The men's fashion trade is seasonal and in 2002 Bespoke had end of season summer sales (from late June to the end of August) and Winter sales (commencing immediately after Christmas and running through January). Unsold stock was disposed of, at a loss, principally through TK Maxx Discount Stores.
6. As well as the mainline business, Bespoke also (by Mr Boateng) designed a much lower priced range of casual and formal wear known as the O-Z Collection at Debenhams under design agreements made with Debenhams Retail plc and BMB Menswear Ltd. Although the terms of the agreements differed to some extent, following an extension of the BMB agreement dated 7 March 2002, their essential terms, for present purposes, as at August and September 2002 can be summarised as follows:
(a) the agreements were to continue until 31 August 2003, subject to provisions for earlier determination, for example on breach.
(b) Bespoke, having produced designs for earlier seasons, remained obliged to produce designs for the Autumn/Winter 2003 and Spring/Summer 2004 Collections. Had the agreements run their terms, the latter designs would have been produced by 31st August 2003, the collection going into the stores early in 2004 and remaining there through to the end of the Summer Season Sale.
(c) Bespoke was remunerated for its services under the agreements by royalty fees, and the agreements made provision for minimum royalty payments. In evidence Mr Boateng told me that his company earned approximately £220,000 per year in royalties under these agreements.
d) Clause 6(d) of each agreement provided that "during this agreement the Company shall have an exclusive licence and thereafter for a period of 18 months after termination, to use the Trade Mark provided that use of the Trade Mark is in relation to goods produced from the designs".
Clause 7(b) of the BMB agreement provided that notwithstanding termination of the agreement the royalty fees payable should continue in respect of sales of goods by reference to the Trade Mark which had been produced from the designs produced under the agreement. (There was a different provision in the Debenhams agreement.)
7. The normal retail price of a suit in the O-Z Collection was approximately £200–£300.
The Preliminary Issues
The Judge set these out as follows:
1. Whether the side agreement was induced by the representation and/or warranty pleaded in paragraph 7 of the re-amended particulars of claim, which alleges that 'Artpower and Marchpole were induced to enter into the side agreement by and/or only agreed to enter into the same in consideration of the said representation and/or warranty given by Bespoke and/or Mr Boateng that the Debenhams agreement and the BMB agreement terminated and/or concluded on 31 August 2093 and/or that no O-Z label products remains or would remain available for sale in Debenhams or from or by BMB menswear after 21 August 2003.
2. Whether payment of the sum of £150,000 provided for under the side agreement was conditional on 'Debenhams and BMB Menswear ceasing to sell the O-Z label products on or before 31 August 2003, which date was of the essence', as alleged in paragraph 7, or alternatively whether that was a term of the side agreement.
3. Whether, under the side agreement, Mr Boateng and/or Bespoke agreed, as alleged in paragraph 6 of the particulars of claim, to terminate or conclude the Debenhams agreement and the BMB agreement at the earliest possible date (but in any event no later than 31 August 2003) and so that no O-Z label products remained available for sale in Debenhams or from or by BMB menswear after 31 August 2003.
4. Whether the side agreement contained the terms alleged in paragraph 6A of the particulars of claim, whereby it is said that Mr Boateng undertook:
6A.1 to give his full support to the licensed products and brand and to take all reasonable steps to promote and market the same, including without limitation, spending sufficient time and care on the design of the licensed products, personally promoting the licensed products in the press and through personal appearances and making himself available for all reasonable publicity activities which Artpower wished to undertake in order to promote and enhance the licensed products; and
6A.2 to grant additional European territories to Artpower once the Licensed Products and brand were established in the UK.
5. Assuming that the above issues are determined in favour of Bespoke and Mr Boateng, whether Artpower and Marchpole are liable under the side agreement to make the compensation payment as defined in paragraph 6.1 of the particulars of claim. This in turn raises an issue involving the construction of the phrase "on termination or the conclusion of existing agreements" used in the letter dated 28 October 2002 from Marchpole to Mr Boateng and Bespoke ("the side letter").
6. Whether Bespoke and/or Mr Boateng are in breach of contract as alleged in paragraph 9B of the particulars of claim and, if so, whether an injunction should be granted to the claimant to restrain such breach. The alleged breaches relate to the opening of retail premises at the Bicester Outlet Village in Oxfordshire in April 2004, which Artpower alleges has involved Bespoke in breaches of clauses 2.1(b) and/or 6.1(f) of the licence agreement.
The Judge's findings
The first three issues, it was common ground, stood or fell together. They turned on a single issue of fact: did Mr Boateng, prior to the agreements, represent to Messrs Morris and Tufnell, that there would be no O-Z Collection products in Debenhams after 31 st August 2003? The Judge held he did not. Artpower appeal that finding of fact.
The fourth issue was also determined in Bespoke's favour. Artpower do not appeal this decision, but as will be seen, the Judge's findings here have a carry-over effect on the other issues.
The Judge also rejected Artpower's case on the fifth point. This involves a question of construction and is under appeal.
Finally the Judge found in favour of Artpower in relation to the sixth and last preliminary point, again a question of construction. Bespoke cross appeal in relation to that.
Issues (1)-(3)
Appeal on a question of fact: principles
There was no real dispute as to these. They were recently re-examined by this court in Assicurazioni v Arab Insurance [2003] 1 W.L.R. 577. Where, as here, an assault is made on a finding of primary fact reached after seeing and hearing the witnesses, the appellant must show that the judge was plainly wrong.
The appeal on the Judge's findings of fact
Mr John Davies QC, for Artpower, with dogged...
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