Evans Marshall & Company Ltd v Bertola S.A.
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE EDMUND DAVIES,LORD JUSTICE CAIRNS |
| Judgment Date | 20 December 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J1220-5 |
| Date | 20 December 1972 |
| Court | Court of Appeal (Civil Division) |
[1972] EWCA Civ J1220-5
Lord Justice Sachs
Lord Justice Edmund Davies and
Lord Justice Cairns
In The Supreme Court of Judicature
Court of Appeal
(Civil Division)
(from Mr Justice Kerr, London (Q. B. D.)
MR C. W. G. ROSS-MUNRO Q.C. MR A. LESTER & MR D. DONALDSON (instructed by Messrs. Herbert Smith & Co.) appeared on behalf of the Appellants (Plaintiffs), Evans Marshall &. Co. Ltd.
MR. R.J. PARKER, Q. C., MR R. ALEXANDER and MR N. PHILLIPS (instructed by Messrs. Stephenson, Harwood & Tatham) appeared on behalf of the Respondents (Defendants).
(As Revised)
LOUD JUSTICE SACHS: In the proceedings before this court the Plaintiffs are Evans Marshall & Co. Ltd., wholesale wine merchants, with a registered office in London: they are, and have since 1961 been, a wholly owned subsidiary of Bass, Charrington (Vintners) Ltd. They have issued two writs in the Queen's Bench Division (Commercial Court), one dated 10 November (1972. E. No. 2242) and one dated 1 December (1972. E. No. 2422). There are two Defendants: the first Bertola S.A., incorporated in Spain (whom I will refer to as "Bertola"), sherry merchants, a wholly owned subsidiary of another Spanish company, Rumasa S.A. (Rumasa"); the second, Independent Sherry Importers Ltd. ("I.S.I."), whose registered office in London is 293, Regent Street, which is also the registered office of Rumasa (U. K.) Ltd., another subsidiary of Rumasa S. A.
The relief claimed in each writ relates to the same set of events, the division of the claims for relief being due to concern, when the matter first came before the Commercial Court Judge, not to prejudice Bertola on certain points which arose under the provisions of Rules of the Supreme Court Order 11 - reasons which need not now be recited. In view of the course thus adopted, whilst both Bertola and I.S.I. are Defendants in the first action, Bertola is the only defendant in the second.
The claims in both actions arise out of the purported unilateral termination by Bertola of a sole distributor and agency agreement with the Plaintiffs that had, at the date that termination was intended to operate, 30 October 1972, still some fourteen years to run - unless, of course, there was good cause for its termination. The claims against I.S.I.arise from the fact that they were, as from that date, 30 October, granted the distributor rights previously held by the Plaintiffs, having been privy to the purported termination of the latter's agreement with Bertola.
On 24 November four applications came before Mr Justice Kerr. One was by Bertola to discharge an order made ex parte on 16 November giving leave to serve on them in Spain the concurrent writ in relation to the first action, which as against them claims only an injunction; one was an application by the Plaintiffs for leave to serve on Bertola in Spain the second writ claiming against them damages and further relief; and the third and fourth were by the Plaintiffs for interlocutory injunctions designed to restrain Bertola from selling or distributing sherry in the United Kingdom otherwise than through the agency o" the Plaintiffs and to restrain I.S.I. from distributing or selling Bertola sherry in this country.
After a hearing which occupied some two and a half days Mr Justice Kerr delivered, on the 30 November, a considered judgment refusing Bertola's application to discharge the order for service upon them of the first concurrent writ; granting leave for service of the second concurrent writ; and refusing to grant an interlocutory injunction - taking into account, in regard to this refusal, an offer made by Rumasa to hold themselves responsible for any damages up to £500,000 which might be awarded against Bertola to the Plaintiffs in the actions. Bertola now appeals against the first two orders, and the Plaintiffs appeal against the refusal to grant interlocutory injunctions.
Looking at the two actions together, the claims made in them, as originally set out in the 10 November writ, can be summarised as follows. As against both Defendants there are claims for damages for unlawful conspiracy to injure, for the above-mentioned injunctions to restrain them from selling or distributing Bertola sherry in this country except through the Plaintiffs, and for ancillary injunctions aimed at preventing the appointment of other agents or the making of statements to the effect that the distributorship agreement had been terminated. As against Bertola there are claims for a declaration that ties agreement was valid and subsisting, and also a clay or damages for its breach; as against I.S.I. damages for wrongful interference with contracts to which the Plaintiffs are a party, and also damages for interference with their trade by unlawful means.
The facts with which these proceedings' are concerned have been the subject of affidavits extending to wore than 80 pages, accompanied by exhibits with a matching number of pages. These have been fully analysed with great "are in the judgment of Mr Justice kerr. It is accordingly sufficient in this court to summarise in narrative form "the salient features of the series of events waich preceded the issue of the writs. Naturally here, as at first instance, it must be remembered that anything said as to those facts simply relates to such evidence as has been made available upon affidavit and must in no way be taken as prejudging such findings as may become necessary at trial.
Contractual Relationship: September 1951. to June 1972.
The contractual relationship between the Plaintiffs and Bertola commenced with an Agreement dated 26 September 1951.
At that time both parties to it were independent companies: Bertola had not previously marketed its sherry in the United Kingdom, the British Empire (except Nigeria) or the Commonwealth.
The Plaintiffs, for their part, had apparently not previously been concerned with the marketing of Spanish sherry. The agreement was to extend over a period of five years, and then for a further period of five, unless one of the parties had given notice to terminate it at the end of the first five years.
By the provisions of the agreement, Bertola granted to the Plaintiffs sale agency and distribution rights for its products in the territories already mentioned, specifically agreeing not to sell them there except through the Plaintiffs. The Plaintiffs, on their side, bound themselves to sell and distribute the relevant products in those territories and not there to sell any thet were similar. The prices to be charged by Bertola were to be subject to market fluctuations, and they were in effect to be fixed by Bertola, subject to being in conformity with the practice of the Association of Sherry Shippers. There was no clause binding the Plaintiffs to adhere to any particular wholesale or retail prices or to any specific margin of profit.
Advertising in the relevant territories was to be done by the Plaintiffs at their own expense, save insofar as Bertola might direct any additional advertising, wnich would then be at its expense.
By clause 13 Bertola was entitled to determine the agreement if the Plaintiffs did not execute their duties.
Two further clauses were also of importance. Clause 14 gave the Plaintiffs the right to nominate as many sub-agents as they desired in the above territories. Clause 15 provided that "if any law claim arises between the two parties it will be submitted to the Barcelona Court of Justice". (Disputes as to quality were to go to an official body at Jerez).
The 1951 agreement was varied on 9 April 1954 by providing that it should extend twenty years from 26 September 1953: this longer period being "substituted for the first period of 5 years" in the old agreement. Save that Bertola was to transfer to the Plaintiffs certain shares in an English company (Bertola &. Co. Ltd.), there was in substance no change in the subsisting arrangements apart from that relating to the duration of the agreement.
In 1961 the Plaintiffs became a wholly owned subsidiary of Bass, Charrington (Vintners) Ltd., and in due course had the same Marketing Director (Mr Holloway) as that company, and a Chairman (Mr. Williams) who was the latter's Managing Director. After that had happened, a fresh agreement was negotiated between the Plaintiffs and Bertola and concluded on 19 February 1962, under which the duration the 1951 agreement was again varied. This time it was extended until 30 September 1986. Subject to that extension all the other terms and provisions of the older agreement were confirmed.
According to the uncontradicted evidence of Mr Williams, the Managing Director of the Plaintiffs, the extensions to the original agreement resulted from a happy commercial relationship between the parties, and the arrangements between them again worked satisfactorily from June 1961 to June 1972.
During those long periods of time, sales of Bertola sherry gradually increased. From a nil start the annual sales had reached 41,000 cases by 1958, and 102,000 cases by the end of 1971: the projection for 1972 was 112,000.
Bertola had, during that period, been concerned to market a sweet that would compete with Bristol Cream. Considerable advertising expenditure had been incurred by the Plaintiffs in promoting sales. Over the period of years from 1959 to 1971 inclusive that expenditure had averaged about £40,000 a year, totalling £475,000, and Messrs. J. Walter Thompson were, at any rate during the latter part of that period, in charge of the relevant advertising schemes. The main success of Bertola had been in Scotland, where it had become a leading brand., marketed at a price appreciably below that of Bristol Cream. In the Morth of England there were also substantial sales, but there had not been...
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