Dale Farm Dairy Group Ltd v Akram
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SCHIEMANN,LORD JUSTICE SAVILLE,THE PRESIDENT |
| Judgment Date | 17 July 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0717-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | CCRTF 95/0693/C |
| Date | 17 July 1997 |
[1997] EWCA Civ J0717-2
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRADFORD COUNTY COURT
(His Honour Judge Grenfell)
Royal Courts of Justice
Strand
London W2A 2LL
The President
Lord Justice Saville
Lord Justice Schiemann
CCRTF 95/0693/C
MR MICHAEL BOOTH (instructed by Messrs Kidd Meller & Co, Huddersfield HD7 1DE) appeared on behalf of the Appellant/Third Defendant.
MR PAUL CASOK QC AND MR DAVID WILBY (instructed by Messrs Last Cawthra Feather & Co, Bradford BD1 3TQ) appeared on behalf of the Respondent/Plaintiff.
This case concerns a milkman who was allegedly in breach of an agreement which he made with the Plaintiff Dairy's predecessor in title and on which, for the purposes of this appeal, it is accepted that the Dairy is in principle entitled to sue. His wife was also party to the agreement and indeed there was a second agreement containing similar terms. However, these factors are of no significance to the point of law which we have to decide and I ignore them for the sake of simplicity.
The agreement placed various obligations on each party to it. The milkman is described as the purchaser and the Dairy as the Company. The most presently relevant obligations are the following:-
By Clause 3.(1) "The purchaser undertakes…to purchase from the Company all milk to be sold or supplied in the purchaser's business" ["The purchaser's exclusive purchase obligation"].
By Clause 3(3) "The purchaser undertakes not to sell milk by way of retail to any customer of the company"["The purchasers non-competition obligation"].
By Clause 4(2) "The Company undertakes…not to sell milk by way of retail to the customers of the purchaser's business" ["The supplier's non-competition obligation"]
The Dairy sued the Milkman for breach of the purchaser's exclusive purchase obligation and sued the third defendants ["the farmers"] on the basis that they had supplied milk to the Milkman and had knowingly procured a breach of contract. The farmers raised a preliminary issue asserting that the relevant term of the agreement was unenforceable as being in breach of the provisions of the Restrictive Trade Practices Act 1976 ["the Act"]. That preliminary issue was ordered to be tried separately and was decided against the farmers by H.H Judge Grenfell in March 1995. He held that the agreement was not registrable under the Act and that therefore the Dairy could enforce its terms. This is an appeal by the farmers against that decision.
The agreement was in more or less standard form in the industry. The appeal has taken longer than usual to come on because since the decision of HH Judge Grenfell the enforceability of similar terms in the standard form agreement has been the subject of decisions by this court and the House of Lords in Associated Dairies Ltd v Baines [1996] I.C.R.183 and [1997] 2 W.L.R. 364 respectively. This court held that the terms in the standard form agreement were unenforceable. The House of Lords took the contrary view. Mr Booth, who appears for the farmers, of course accepts that this presents him with a problem but places before us an argument which had not been raised in the course of the Baines proceedings. That case came before the courts on the express basis that neither side wished to argue the point which Mr Booth wishes to argue before us. In those circumstances, he submits 1 that the House of Lords decision does not preclude this court, if it accepts his submissions, from ruling that the agreement is unenforceable. For my part, I am prepared to proceed on this basis and look at his submissions on their merits.
Before considering the submissions, it is useful to set out shortly the broad scheme of the Act. It sets out a statutory regime for the control of restrictive trading agreements. The Act applies to an agreement in respect of the supply of goods if it is made between 2 or more parties carrying on business in the UK and restrictions as specified in sect. 6(1) are accepted under it by 2 or more parties. Restrictions in an agreement to which the Act applies are not prohibited as such. Instead, the Act requires particulars of such
agreements to be furnished to the Director General of Fair Trading ("DGFT") before they take effect: sect.24 and Sched.2. The DGFT then places those agreements on a public register and assesses whether or not the restrictions under the agreement are of such economic significance as to call for reference to the Restrictive Practices Court ("RP Court"); if they appear not to be of such significance, the DGFT makes representations accordingly to the Secretary of State who may then direct that the agreement should not be so referred: sect.21(2). In practice, the DGFT's representations under sect.21(2) are generally accepted and the great majority of duly registered agreements are dealt with in this way. But if a registered agreement is not appropriate for such directions and the restrictions thereunder are not determined, the DGFT refers it to the RP Court for consideration of whether it is contrary to the public interest, applying the statutory test: sect.1(2)(c) and (3) and see sect.10.Breach of the statutory obligation to furnish particulars is not an offence. The sanction for failing properly to furnish particulars is set out in sect. 35. In particular:
(a) the agreement is void in respect of all relevant restrictions accepted thereunder;
(b) it is unlawful for any party who carries on business in the UK to enforce those restrictions.
The scheme of the Act is that the question whether or no an agreement is registrable is one which has to be answered in a relatively mechanistic way. By contrast, the examination of the question whether an agreement is against the public interest is an examination of substance rather than form. In the present case we are not concerned with this examination of the merits but with the mechanistic exercise of deciding whether or no the agreement is registrable.
The Act clearly does not require all agreements to be registered. It only requires restrictive agreements to be registered. The Act does not even require all restrictive agreements to be registered. The Act employs, as a matter of legislative drafting technique, a complicated three part method of identifying agreements which need to be registered.
1. Section 6 sets out those agreements to which the Act applies. However, in deciding whether or no the agreement in question falls within section 6 one must look at the agreement as shorn of the restrictions of which section 9 tells one to take no account.
2. Section 9 provides that no account is to be taken of certain restrictions and certain terms in any agreement under consideration.
3. Section 28 provides that the Act is not to apply to the agreements described in Schedule 3. In deciding whether the agreement is one of those described in Schedule 3 one must look at the agreement as shorn of the restrictions of which section 9 tells one to take no account.
It is common ground that prima facie the agreement fell within section 6. The case turns on whether the Dairy can rely on one of the many exemptions in Schedule 3. It reads as follows:-
2. Exclusive dealing
This Act does not apply to an agreement for the supply of goods between two persons neither of whom is a trade association, being an agreement to which no other person is party and under which no such restrictions as are described in Section 6(1) above are accepted….. other than restrictions accepted…:-
(a)...
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