SERE Holdings Ltd v Volkswagen Group UK Ltd

JurisdictionEngland & Wales
JudgeMr Christopher Nugee QC
Judgment Date05 July 2004
Neutral Citation[2004] EWHC 1551 (Ch)
CourtChancery Division
Docket NumberCase No: 4BM30066
Date05 July 2004

[2004] EWHC 1551 (Ch)

IN THE HIGH COURT OF JUSTICE

Royal courts of Justice

Strand, London WC2A 2LL

Before:

Mr Christopher Nugee Qc Sitting as a Deputy Judge Of The High Court

Case No: 4BM30066

Between:
Sere Holdings Limited
Claimant
and
Volkswagen Group United Kingdom Limited
Defendant

Mr Avtar Khangure QC and Mr Jeremy Richmond (instructed by Rubric Legal) for the claimant

Mr Richard Fowler QC and Mr Michael Bowsher (instructed by Eversheds LLP) for the defendant

1

Hearing date: 11 June 2004

2

JUDGMENT: APPROVED BY THE COURT FOR HANDING DOWN (SUBJECT TO EDITORIAL CORRECTIONS)

Mr Christopher Nugee QC
3

Mr Christopher Nugee QC

1. Two applications are formally listed before the court: an application by the claimant dated 15 April 2004 for an interim injunction, and an application by the defendant dated 23 April 2004 for an extension of time for service of the defence. But neither application has in fact been argued before me. Instead Mr Khangure QC for the claimant has applied for permission to amend both the particulars of claim and the claimant's application for an injunction, recognising that if the latter permission is granted there will necessarily have to be an adjournment of that application. Mr Fowler QC for the defendant has not objected to the grant of permission to amend the particulars of claim but has resisted the grant of permission to amend the application for an injunction. In the event the only issue I have to decide is whether to grant that permission.

4

2. The claimant is a company incorporated in Northern Ireland and carries on the business, inter alia, of selling cars, including new SEAT cars. These are manufactured by SEAT SA, but the arrangements for their distribution, at any rate in the United Kingdom, are handled by the defendant, which uses the trading name SEAT UK for these purposes. In October 2003 the claimant entered into two contracts called SEAT dealer agreements with the defendant ("the agreements"). One related to a dealership at Lisburn with which I am not directly concerned, and one to a dealership in West Belfast, with which I am.

5

3. In 2002 another SERE company (SERE Motors Limited) held the two dealerships at Lisburn and West Belfast, and according to Mr Stanley Edgar, the managing director of the claimant, either that company or he himself as sole trader had done so since 1994. There was also a dealership in East Belfast which was held by a company referred to in the evidence as the Agnew Group. On 31 July 2002, the European Commission adopted Regulation No 1400/2002. This regulation provides block exemption from Article 81(1) of the European Treaty for agreements, inter alia, for the distribution of new motor vehicles which conform to its terms, and is hence commonly referred to as the block exemption regulation (the BER). It replaced Commission Regulation 1475/95 (the old BER) which had also provided block exemption but on rather different terms.

6

4. I will have to refer to some of the BER's terms in more detail in due course, but for present purposes its significance is that it prompted the defendant in September 2002 to notify its dealers across the UK that it was preparing a new form of dealership agreement to conform with the requirements of the new BER. The BER in general came into force on 1 October 2002 (Article 12(1)) but subject to a transitional period under Article 11 under which agreements already in force on 30 September 2002 continued to qualify for exemption for a period of one year to 30 September 2003 if they satisfied the conditions for exemption in the old BER even if they did not satisfy those of the new BER. The defendant therefore needed to replace its dealership agreements by 1 October 2003.

7

5. There were various meetings between representatives of the claimant, in particular Mr Edgar, and representatives of the defendant in the period leading up to the new agreements. I need not detail all these at this stage; there is a considerable dispute about precisely what was said to the claimant at them. In essence the claimant's case is that the defendant told Mr Edgar that it had decided to move to a one operator operation for the Greater Belfast area and that the claimant was the defendant's preferred choice for that role. The defendant's case, as set out in the witness statement of Mr Iain Carmichael, the head of operations of SEAT UK, is that the defendant had indeed come to the conclusion in around December 2002 that it would make sense to continue with only one of the two dealers in Belfast who then had appointments but that no promise was made that it would be the claimant: some of the relevant individuals in the defendant's organisation had a preference for the Agnew Group and some for SERE.

8

6. What did eventually become clear is that the new dealerships would have to be in the name of the claimant rather than SERE Motors Ltd (the precise reason for this, although debated in the evidence, is not something I need consider); and at some stage (Mr Edgar says in August 2003) two new agreements in the name of the claimant were signed on its behalf by Mr Edgar and returned to the defendant. Although expressed to take effect from an effective date of 1 October 2003 (as required by the new BER) they were not in fact signed on behalf of the defendant until 23 October 2003.

9

7. According to Mr Edgar, he was however told by Mr Carmichael at a meeting as early as 10 October 2003, even before the defendant had signed the agreements, that the Agnew Group was now the defendant's preferred dealer in the Greater Belfast area and that he (Mr Carmichael) was going to terminate both of them; they would be signed off but a reason would be found to justify their withdrawal with immediate effect. Again according to Mr Edgar, there was a further meeting on 13 November 2003 at the defendant's offices in Milton Keynes with, among others, Mr Kevin James (described by Mr Edgar as the "number one in SEAT UK") and Mr Carmichael at which Mr Carmichael indicated that the claimant was in breach of the agreements by not meeting its annual purchase requirement and that the defendant would be terminating them with immediate effect but delaying the implementation date to 1 March 2004.

10

8. Mr Carmichael in his witness statement makes it clear that he does not accept Mr Edgar's account of these meetings but does not give his own account; what is however undisputed is that the defendant sent to the claimant two notices dated 17 November 2003 terminating the agreements, with an effective termination date of 1 March 2004, on grounds of material breach of sales standards and failure to purchase the agreed annual target for vehicles.

11

9. That led to the issue of these proceedings on 26 February 2004 (in the Birmingham District Registry) in which the claimant sought a declaration that the purported termination of the agreements was ineffective and an injunction to restrain the defendant from acting on the notices of termination. On the same day the claimant issued an application for an injunction with a return date of 27 February 2004, but by agreement of the parties the issue of the validity of the termination of the agreements was referred to arbitration (pursuant to an arbitration clause in the agreements) and the notices of termination suspended pending the outcome of the arbitration. An order was accordingly made by consent on 27 February 2004 by Miss Sonia Proudman QC adjourning the application for an injunction generally with permission to the claimant to restore on seven days' notice. The arbitration is still pending, although it has proceeded very slowly due to the parties' failure to agree on a suitable QC to act as arbitrator, and the court is therefore no longer concerned with any question as to whether the agreements have been validly terminated or not.

12

10. The next relevant development was on 11 March 2004 when advertisements appeared in the Belfast Telegraph, a daily newspaper with a large circulation in Belfast, for a number of job vacancies with the Agnew Group. The advertisements stated that the Agnew Group was "now opening a new AGNEW SEAT dealership in Boucher Road" and gave details of nine vacancies including a sales manager and three sales executives. The claimant's premises are also on Boucher Road, which is described in the evidence as the prime central Belfast area for car dealerships, and are some 80 yards away from the site of the proposed new Agnew premises.

13

11. This led the claimant's solicitors, Rubric Legal, to complain to the defendant's solicitors, Eversheds, that the defendant was in breach of the agreements. At this stage I should set out the relevant terms of the agreements. I am told they are in identical form but I am only directly concerned with the West Belfast one. This contains the following provisions:

i) The agreement describes itself as a SEAT dealer agreement and is made between the defendant under the name SEAT UK and the claimant, identified as the dealer under Exhibit 9.

ii) Recital (A) recites that SEAT SA has decided to distribute its New Vehicles in the European Economic Area "through a selected and quantified number of dealers fulfilling certain qualitative criteria". The relevance of this will become apparent.

iii) Clause 1 is headed "Basis of Agreement". Under clause 1.2 the dealer "shall be entitled and obliged to distribute the Products within the European Economic Area."

iv) Clause 2 is headed "Distribution Right —Reserved Direct Sales —Direct Sales". Clause 2.1 provides:

"The Dealer is hereby granted the non-exclusive distribution right together with a specific number of SEAT dealers determined by SEAT SA for the sale of Products in the European Economic Area. Upon conclusion of this agreement, the dealer will be active in the European Economic Area together with the other SEAT Dealers, SEAT Service Partners and SEAT Original...

To continue reading

Request your trial
11 cases
  • C Spencer Ltd v MW High Tech Projects UK Ltd
    • United Kingdom
    • Queen's Bench Division (Technology and Construction Court)
    • October 2, 2019
    ...by convention from operating upon the Subcontract. Reliance is placed on Sere Holdings Ltd v Volkswagen Group United Kingdom Ltd [2004] EWHC 1551 (Ch) [25]; Lloyd v MGL (Rugby) Ltd [2007] EWCA Civ 153 [28] and Jet2.com v Blackpool Airport Ltd [2010] EWHC 3166 (Comm) [40]. Those cases do ......
  • Macdonald Estates Plc V. Regenesis (2005) Dunferline Limited
    • United Kingdom
    • Court of Session
    • July 11, 2007
    ...neither were Exxonmobil Sales and Supply Corp v Texaco Ltd [2003] 2 Lloyd's Rep. 686, SERE Holdings Ltd v Volkswagen Group UK Ltd [2004] EWHC 1551 (Ch.) or Ravennari SpA v New Century Shipbuilding Co Ltd [2006] EWHC 733 (Comm.). The defenders' argument was supported by J J Huber (Investment......
  • Seakom Ltd and Another v Knowledgepool Group Ltd
    • United Kingdom
    • Chancery Division
    • December 18, 2013
    ...prior extra-contractual promises but not a shared interpretation as to the meaning and effect of the contract — see Sere Holdings Ltd v Volkswagen Group United Kingdom Ltd [2004] EWHC 1551 and Lloyds v MGL (Rugby) Ltd [2006] EWCA Civ 153. 118 In closing, Seakom's position refined to a posit......
  • Barclays Bank Plc v (1) Unicredit Bank AG (formerly known as Bayerische Hypo-Und Vereinsbank AG) (2) Unicredit Bank Austria AG
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • December 21, 2012
    ...a transaction, to which the doctrine also now extends ( ING Bank v Ros Roca SA [2012] 1 WLR 472 at [64(i)]). 87 In Sere Holdings Limited v Volkswagen Group United Kingdom Ltd [2004] EWHC 1551 Mr Christopher Nugee QC, sitting as a deputy High Court Judge, held that an entire agreement clause......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT