Gary Fearns t/a Autopaint International v Anglo-Dutch Paint & Chemical Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Christopher Floyd QC |
| Judgment Date | 09 July 2010 |
| Neutral Citation | [2007] EWHC 955 (Ch),[2007] EWHC 1382 (Ch),[2010] EWHC 1708 (Ch) |
| Docket Number | Case No: HC05C01961,Claim No: HC 05C 01961 |
| Court | Chancery Division |
| Date | 09 July 2010 |
[2007] EWHC 955 (Ch)
Mr Christopher Floyd QC
(Sitting as a Deputy Judge of the Chancery Division)
Claim No: HC 05C 01961
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Richard Lissack QC and Mr Giles Fernando (instructed by Bevans) for the Claimant and Part 20 Defendant
Mr Thomas Moody-Stuart (instructed by Faegre & Benson LLP) for the Defendants and Part 20 Claimant.
Heard: 13 th, 14 th, 15 th, 16 th, 19 th February, 19 th March 2007
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
Gary Fearns, the Claimant in this action, hit on a good commercial idea. He decided to sell high quality paint for spray painting cars to a particular sector of the market. He built up an excellent business under the name and trademark Autopaint. The business consisted of his own paint shops and franchisees. For this purpose, he bought paint (including so-called tinters and commodity products such as hardeners and clear coats) from various paint companies, including in particular the Second Defendant, De Beer Lakfabrieken B.V. (“De Beer”) a company run by the Fourth to Sixth Defendants, Messrs. Jongsma, Van Der Woude and Wemmers. The First Defendant, Anglo-Dutch Paint and Chemical Company (“Anglo-Dutch”) is the UK distributor of De Beer and the Third Defendant, Mr Welch is their UK representative.
It is not in dispute that at some point in 2004 Anglo-Dutch began selling paint direct to Autopaint franchisees under the Autopaint brand. The Claimant contends that in doing so Anglo-Dutch (and the other Defendants by association) were acting unlawfully. The Claimant's case, at least as advanced at trial, is based on infringement of trade mark, passing off, malicious falsehood, infringement of copyright and breach of contract. He also alleges that the Defendants have acted together or individually intentionally to inflict economic harm on him by unlawful means. He claims in particular that the loss of his franchise business was caused by the unlawful acts of the Defendants.
These were not the only causes of action which were raised in the Particulars of Claim. I struck out certain other causes of action originally pleaded which required proof of foreign law at the commencement of the trial. Yet further causes of action have not been pursued in the light of the evidence.
The Defendants contend that they were acting at all times with the Claimant's consent. “Consent” is by far the biggest issue in this action. So much so that it was agreed that, as the Defendants shoulder the burden of proof on this issue, they should call their witnesses first. The Defendants also counterclaim for moneys due to them for goods sold and delivered. The Claimant now admits a debt of 598,000 Euros, although that is a comparatively recent development.
Although consent is the key to unlocking much of this dispute, it is not quite the binary issue which it would appear from the foregoing. Thus there is an issue as to the scope of the consent. The Claimant says that even if there was some form of limited consent to allow the Defendants to sell to franchisees, it did not go as far as to sanction what the Defendants ultimately did. Likewise the Defendants say that even if they did not have the benefit of Mr Fearns' consent, then nonetheless there are specific defects in most but not all of the causes of action pleaded against them.
With the above introduction, I must return in more detail to the facts of the case.
Factual background
Autopaint International
The Claimant, Gary Fearns, is the owner of an unincorporated business which trades under the name AUTOPAINT INTERNATIONAL in the supply of paint and associated products for use on cars. It is sometimes referred to in the documents as “API”.
De Beer and Anglo Dutch
De Beer is a manufacturer of automotive paint and associated products. De Beer is based in Lelystad in the Netherlands. Anglo-Dutch is De Beer's distributor in the United Kingdom. From 1988 the Claimant began to buy paint and ancillary products from De Beer for sale under his AUTOPAINT brand.
Mr Welch (the Third Defendant) was Technical and Commercial Manager of De Beer from 1995. Mr Jongsma (the Fourth Defendant) joined De Beer as Export Manager in 1996 and from 1998 to December 2005 was Sales and Marketing Director. Mr Van Der Woude (the Fifth Defendant) joined De Beer in 1996 as Commercial Director and was Managing Director of De Beer from January 1988 until December 2005. He was also a director of Anglo Dutch until December 2005. Mr Wemmers (the Sixth Defendant) trained as a Public Accountant and joined De Beer in 1998 as Financial Controller. He is now Managing Director of De Beer and a director of Anglo Dutch.
The Defendants admit for the purposes of this action that to the extent that any Defendant is liable for any of the pleaded wrongs, they are all jointly and severally liable.
The main Anglo-Dutch and De Beer witnesses
This is a case where an assessment of the credibility of witnesses is, unfortunately, of considerable importance. The documentary record is far from complete. On the critical issue of consent and its scope the Defendants' case as it was ultimately put forward was based on an oral agreement as to which there is an acute conflict. Many of the agreements entered into by Mr Fearns in the course of business were oral.
Mr Jongsma gave evidence by video link from Japan where he was present on business. He did not strike me as an entirely frank witness, being more concerned to find out where questions were going before committing himself to an answer. His ability to recollect events in the critical months seemed to me to be somewhat selective. Although this may be something of a lawyer's criticism, he demonstrated that he had difficulty in distinguishing between a discussion and an agreement. Thus he repeatedly confirmed as accurate the statement in his witness statement that there had been an agreement concerning direct sales at the Schiphol meeting when in fact what he meant was that that this had been discussed. Moreover he signed the Statements of Truth in relation to pleadings which alleged an agreement made at a face-to-face meeting in Liverpool (see below) when his evidence was that the agreement was made by telephone between himself and Mr Fearns at a later date. I have therefore to approach his evidence with some caution.
Mr Welch seemed to me to be doing his best to tell the truth in the witness box. However, his witness statement gave a detailed account of the critical agreement having been made in Liverpool, when he accepted in cross examination that he had no real recollection of the content of the meeting, except that there was heated disagreement.
No particular criticism was made of the Defendants' other witnesses, Mr Van Der Woude and Mr Wemmers. Whilst it seemed to me that they were anxious to defend their positions (particularly on the issue of what their precise intentions were) I have no doubt that they were giving their evidence broadly fairly.
Mr Fearns
Mr Fearns was not a wholly satisfactory witness. Clearly, this action is of great importance to him as a sole trader, and he feels very strongly that he has been wronged by the Defendants. I fear that this led him to overstatement and, on occasions, misstatement in the course of his evidence. On some parts of his evidence, what I believe occurred was that, where events were not entirely clear in his mind, he persuaded himself that the events could not have been as suggested by the Defendants. On other parts it is not possible to be so charitable.
It was also suggested by Mr Moody-Stuart, who appeared for all Defendants, that Mr Fearns had a tendency to place all the ills that had befallen him at the door of the Defendants without recognising his own part in his downfall. I think there is some force in this: but the criticism does not mean that I should conclude that the Defendants were not in fact responsible in law for some or all of the damage which Mr Fearns' business has sustained. That depends on the evidence.
I must mention Mr Fearns' evidence in relation to the Counterclaim. In his first and only witness statement prepared for this action he did not accept that he owed the Defendants any money, and contended that he had been a prompt payer. This was plainly not the case, as his eventual acceptance of the debt claimed by the counterclaim demonstrated. He claimed that he had given this evidence on the strength of an accountants' report (later accepted to be wrong and based on an incomplete documentary record provided by Mr Fearns). That will not do. Given that there had been several discussions and arrangements over the years about managing the overdue debt, the accountants' report must have come as a surprise to Mr Fearns. The accountant claimed to have uncovered an overpayment of £390,000 against invoices in 1996: but given that Autopaint's gross profit in 1996 was only £300,000, this is something which, if it had occurred, would have been picked up at the time or subsequently. Mr Fearns had seized on the accountants' report to put his case in a better light.
Autopaint gets into debt
From about 2000 the Claimant was regularly indebted to De Beer in amounts in excess of his permitted credit terms.
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