Jones v Ricoh UK Ltd
Jurisdiction | England & Wales |
Judge | Mr JUSTICE ROTH,Mr Justice Roth,or |
Judgment Date | 14 July 2010 |
Neutral Citation | [2010] EWHC 1743 (Ch) |
Court | Chancery Division |
Docket Number | Case No: HC09C02679 |
Date | 14 July 2010 |
[2010] EWHC 1743 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before: The Hon Mr Justice Roth
Case No: HC09C02679
Stephen Males QC (instructed by Stevens & Bolton LLP) for the Claimant
Charles Hollander QC (instructed by Taylor Wessing LLP) for the Defendant
Hearing dates: 28 and 29 April 2010
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.
Mr Justice Roth:
There are before the court applications by the Defendant (“Ricoh”) for summary judgment and by the Claimant, Mr Robert Jones, for permission to amend his Particulars of Claim. It is common ground that the amendment should be allowed if it would state an arguable claim, and that Ricoh's application should accordingly be approached on the basis of the pleadings as it is proposed they be amended.
The Parties
Mr Jones was the founder, principal shareholder and managing director of CMP Group Limited (“CMP”). 1 CMP went into voluntary liquidation on 8 June 2009, and Mr Jones brings this claim as assignee of the causes of action that vested in CMP. CMP was incorporated in 1994. Its business was to provide assistance to companies in the acquisition and management of their photocopying equipment and operations. In particular, CMP dealt with large corporate clients which had several autonomous operating companies or divisions, offering them centralised and more efficient management of their photocopying and related requirements so as to achieve costs savings. Over time, CMP became concerned not only with photocopiers but also with so-called multi-functional office automation devices (“MFDs”) which could in addition print, scan and fax.
In his evidence, Mr Jones explains that on dealing with a new client, CMP at the outset ascertained how much it had been paying for devices up to that point, and then the remuneration received by CMP would be 50% of any costs savings achieved by the client against that benchmark. CMP also received commissions (which were disclosed to the client) from finance companies that funded the client's acquisitions and the service companies that were retained to service the equipment once installed. CMP acquired as clients a number of large international or foreign companies, including ABB, DHL, Mercedes-Benz and, most significantly for the present case, ADtranz, a global rail systems and signalling manufacturer which became CMP's major client.
CMP negotiated on behalf of its clients with manufacturers of MFDs and ongoing service providers (usually also the manufacturer) and leasing organisations to obtain the best terms and provide for the smooth delivery, installation and servicing of the devices at the clients' premises.
Ricoh is an indirect subsidiary carrying on business in the United Kingdom of Ricoh Company Limited of Japan (“Ricoh Japan”), one of the world's leading manufacturers of MFDs. Ricoh Japan has some 157 such subsidiaries operating around the world. Ricoh describes its competitors in the UK market as including the other leading global manufacturers, such as Toshiba, Xerox, Konica, Samsung and Canon.
The relationship between CMP and Ricoh
CMP's relationship with Ricoh began in late 1994 and the first supply by Ricoh of devices arranged by CMP was in January 1995. Ricoh rapidly became the preferred
manufacturer recommended or chosen by CMP. Over 90% of the devices that CMP ever recommended for clients were Ricoh devices.
In 1998 CMP sent Ricoh an invitation to tender for the supply of devices to its clients. Mr Jones say that the main aim of the tender was to improve on the discount against the manufacturer's recommended retail price that Ricoh was prepared to offer to CMP's clients (which would of course benefit CMP through the 50% saving arrangement: para 3 above). Ricoh responded with a tender dated 12 August 1998 and it is common ground that Ricoh and CMP then entered into a trading agreement to govern the relations between them (“the Trading Agreement”). The Trading Agreement was of unlimited duration, terminable by either party on 90 days' notice. Clauses 3–4 of the Trading Agreement provide:
“3. The duties of Ricoh:
(i) To provide equipment as required by the customer orders of CMP, see Clause 4(i) at approved prices (see Schedule A of this Agreement). All equipment provided to customers of CMP under the terms of this Agreement shall be new equipment.
(ii) To deliver said equipment within 14 working days of receipt of order.
(iii) To install, train users and service and maintain said equipment in accordance with the Terms and Conditions of approved Service Agreements (see Schedules B and C of this Agreement) at approved service charges (see Schedule D of this Agreement).
(iv) To provide management and billing information data to CMP as required (see Schedules F, G and I of this Agreement
4. The duties of CMP:
(i) To obtain orders for equipment from its customers at prices approved by Ricoh (see Schedule A of this Agreement). Orders will be placed on official documentation of CMP and orders for Ricoh equipment will be obtained by CMP from its customers where Ricoh equipment is suitable and meets the needs and requirements of CMP's customers. There is no obligation under this Agreement for CMP to recommend that its customers acquire Ricoh equipment.
(ii) To obtain from its customers at the time that equipment is acquired authorised Service Agreements under approved terms and conditions and at approved service charges (see Schedules B, C, D and E of this Agreement).”
Although Ricoh asserts that it would sell its equipment to CMP, either directly or to a finance company at CMP's request, and that CMP would resell the devices to its clients or arrange for them to be leased by the finance company, such that Ricoh had no direct contractual relationship with CMP's clients, Mr Jones is emphatic that this is not correct and that the purchases were made, albeit on CMP's advice and at its instigation, direct from Ricoh by CMP's clients. Indeed, he explains that “CMP's business model was based on its independence and the fact that it did not buy or sell devices.” Mr Jones says that the only exception was where the client leased the devices, in which case after the final payment to the leasing company, ownership of the device would be transferred to CMP for a nominal sum; CMP would then either continue renting the devices in its own name to the client or sell them to second-hand dealers. However, in every case, the contracts for servicing the devices were between the clients and Ricoh.
Mr Jones' account of the contractual arrangements appears to be borne out by clauses 5 and 6(i) of the Trading Agreement, which provide:
“5. Any orders for equipment or Service Agreement obtained by CMP from its customers under the terms of this Agreement may be rejected by Ricoh on the grounds of credit rating, pricing or conflicts of interest.
6. Payments:
(i) Equipment orders
At the time orders for equipment are obtained by CMP from its customers CMP will provide Ricoh either:
(a) An official purchase order on CMP documentation from CMP's customer against which Ricoh may invoice that customer for both Ricoh's selling price of equipment to customers of CMP (see Schedule A of this Agreement) and fees payable to CMP.
or(b) An official purchase order from a leasing company against which Ricoh may invoice that leasing company for Ricoh's selling price of equipment to customers of CMP (see Schedule A of this Agreement).
When equipment orders are obtained by CMP from its customers and equipment is to be acquired on a cash purchase basis as per (a) above the order documentation will be submitted with an invoice from CMP to Ricoh. The invoices will reflect an agreed and stated amount authorised and acknowledged by CMP's customer as being the difference between Ricoh's selling price to customers of CMP (see Schedule A of this Agreement) and the net total amount payable by CMP's customers as per CMP's official documentation.”
Mr Jones states that he became increasingly aware of the importance to CMP of the control of the client relationship and that CMP was vulnerable to being cut out of that relationship by Ricoh, especially as CMP's business was not spread between a range of suppliers. Mr Jones therefore agreed with Mr Marcus I'Anson, Ricoh's then sales director, that their companies should enter into a formal confidentiality agreement. Accordingly, a letter agreement dated 5 February 1999 was concluded and signed by both parties (“the Confidentiality Agreement”), apparently following an initial draft prepared by CMP's then solicitors. The Confidentiality Agreement is relatively short, and since this claim is based on alleged breaches of some of its terms it is necessary to quote from it fairly fully. It is written on the notepaper of Ricoh, addressed to CMP, and reads insofar as material:
“We write to confirm that we requested you to disclose to us Confidential Information (as defined below) in relation to [CMP's] system for the acquisition of photocopying users and photocopying equipment acquirers (“the System”).
For the purpose of this letter “Confidential Information” means documents and information of whatever nature and in whatever form relating to [CMP] or its businesses, business practices, finances, affairs, dealings, clients, suppliers, agents or employees disclosed or otherwise received by any Relevant Person whether before or after the date of this letter directly or indirectly by or from [CMP] or any of its employees, agents or professional advisers but excluding information which at the time of being...
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