Mackie Motors (Brechin) Ltd v RCI Financial Services Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Simon Gleeson |
| Judgment Date | 22 July 2022 |
| Neutral Citation | [2022] EWHC 1942 (Ch) |
| Docket Number | Case No: CP-2021-000024 |
| Court | Chancery Division |
| Year | 2022 |
[2022] EWHC 1942 (Ch)
Mr Simon Gleeson
Sitting as a Deputy High Court Judge
Case No: CP-2021-000024
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMPETITION LIST (ChD)
7 Rolls Buildings
Fetter lane, London
EC4A 1NL
David Cavender QC and Thomas Pausey (instructed by Freeths LLP) for the Claimant
David Peters (instructed by Stephenson Harwood LLP) for the Defendant
Hearing date: 12 July 2022
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.
This judgment was handed down by the Judge remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 22 July 2022 at 10.30am.
The claimant (“Mackie”) was for many years the authorised distributor for Renault, Nissan and (later) Dacia cars for the North East of Scotland. The overall position was relatively straightforward – Renault, Nissan, Dacia and Mackie had a common interest in selling as many cars as possible in the region, and co-operated closely in order to achieve that aim. A key player in this regard was the Defendant, RCI Financial Services Limited (“RCI”). RCI was a wholly-owned subsidiary of Renault, established for the purpose of providing finance in respect of the sale of cars manufactured by Renault, Nissan and Dacia. This finance took two forms. One was the provision of finance to customers wishing to buy cars. The other was finance provided to dealers such as Mackie to finance their operations.
These arrangements were documented by a patchwork of contracts. The foundational documents were the Dealership Agreements entered into by Mackie with Renault, Nissan and Dacia. There were also six separate contracts with RCI governing the provision of different types of financing to Mackie (the “RCI contracts”). There were also a number of other services provided to Mackie which do not seem to have been the subject of any documentation at all. Finally, by the various Dealership Agreements, Mackie was obliged to offer RCI financing agreements to its customers. However, the provision of these customer facilities was through bilateral agreements between the customer and RCI, and did not form part of the RCI contracts.
In their capacity as providers of finance to Mackie, RCI routinely scrutinised Mackie's accounts, and discovered a particular transaction which Mackie had entered into. This was a transaction which had no obvious connection with Mackie's business of operating a franchised motor dealership and service centre, and in which Mackie intermediated the provision of finance by a Panamanian entity to a Ukrainian entity. The question of the legitimacy or otherwise of this transaction is not before me. However, the consequence of RCI's discovery of this transaction was that RCI formed a suspicion that Mackie had engaged in money laundering. RCI therefore made a suspicious activity report to that effect to the National Crime Agency (“NCA”) on the 23 November 2021. On the 24 November the provision of spare parts to Mackie ceased, on the 27 November the provision of all other services also ceased. On the 7 December notices terminating the relationship were served (the “Notices”). On that date, RCI sought consent from the NCA under s.335 of the Proceeds of Crime Act 2002 to receive repayment of funds advanced to Mackie upon the termination of its arrangements with it.
The Litigation history
On 15 December 2021, Mackie issued, in the Competition List of the Business and Property Courts in Leeds, an urgent claim for interim injunctive relief against RCI. Further to this, on 16 December 2021, Mackie filed its particulars of claim (the “Original Claim”). The case set out in the Original Claim, and in respect of which the urgent interim relief was sought, was that RCI had abused its dominant position in serving the Notices (the “Competition Law Claim”). There was an ancillary argument that the provisions said to entitle RCI to terminate on seven-days' notice were unfair (the “ UCTA Argument”).
Mackie's claim for an urgent interim injunction was rejected by HHJ Saffman at a hearing on 16 December 2021, on the basis that neither the Competition Claim nor the UCTA claim had any real prospect of success. HHJ Saffman also, on his own motion, transferred the proceedings to the Competition List of the Business and Property Courts of England and Wales.
In order to resolve the issue of its deadlocked business, Mackie sold its sites to another Renault/Nissan franchised dealership in an urgent sale for what is said by Mackie to be well below market value.
In January 2022, Mackie indicated to RCI that it intended to amend its particulars of claim and a procedural timeline was agreed by the parties for the consideration of those amendments. A copy of the draft amended particulars of claim (the “DAPOC”) was provided to RCI on 11 March 2022. The proposed amendments withdraw the Competition Law Claim and instead pursue a general contractual law claim for damages arising out of the overall contractual relationship between Mackie, RCI and others. This has resulted in a purely contractual claim appearing in the Competition List.
RCI argues that the amendments proposed in the DAPOC do not properly plead claims with a real prospect of success. It therefore argues that the DAPOC does not meet the tests for strike out or reverse summary judgement. RCI also applies to the original pleading to be struck out or, in the alternative, summary judgement.
The DAPOC alleges an implied agreement between the parties to the Original Claim and also Renault and Nissan. It therefore applies for the joinder of Renault and Nissan in this action. However, that application only becomes relevant if the arguments for that implied agreement survive the strike-out application.
The relevant test of intelligibility and apparent credibility was summarised by the Court of Appeal in Elite Property Holdings v Barclays Bank [2019] EWCA Civ 204 at [41]–[42]:
“41. For the amendments to be allowed the Appellants need to show that they have a real as opposed to fanciful prospect of success which is one that is more than merely arguable and carries some degree of conviction: ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472. A claim does not have such a prospect where (a) it is possible to say with confidence that the factual basis for the claim is fanciful because it is entirely without substance; (b) the claimant does not have material to support at least a prima facie case that the allegations are correct; and/or (c) the claim has pleaded insufficient facts in support of their case to entitle the Court to draw the necessary inferences: Three Rivers District Council v Bank of England (No3) [2003] 2 AC 1.
42. The court is entitled to reject a version of the facts which is implausible, self-contradictory or not supported by the contemporaneous documents and it is appropriate for the court to consider whether the proposed pleading is coherent and contains the properly particularised elements of the cause of action relied upon…”
Other important points of principle have also been recognised in the authorities. In particular, in assessing the factual basis of the claim, the Court should (i) not conduct a “mini-trial”, (ii) be conscious of the concern that live issues of fact may only be properly determined following the hearing of oral evidence and (iii) take into account the evidence that can reasonably be expected to be available at trial as well as the evidence actually placed before it.
It is not normally appropriate in a summary procedure to decide a controversial question of law in a developing area, as it is desirable that development of the law is based on actual rather than hypothetical facts: Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2012] 1 WLR 1804 at [84]. This is particularly so where there are complicated issues involving mixed questions of fact and law.
Ultimately, regardless of how it is precisely stated, the test of arguability is a relatively “low threshold” for the applicant to overcome.
Mackie's position
It is not, I think, disputed that the apparent effect of the express terms of the written agreements in place between RCI and Mackie permit RCI to do exactly what it has done. Mackie's challenge is based on one or more of five propositions. First, that the entire arrangement between the parties was subject to an implied “umbrella agreement”, whose terms constrain RCI from terminating the agreements. Second, that there are terms implied into the express agreements which have that effect. Third, that the true construction of the express terms of the written agreements gives them a different meaning from their apparent meaning, so that they do not have the effect that they appear to have. Fourth, that RCI is estopped from exercising its contractual rights by reason of representations made to Mackie. Fifth, that the terms of the agreements by which RCI seeks to act contravene the Unfair Contract Terms Act. The first four of these are new claims, which are raised for the first time in the DAPOC. The position as regards the fifth is more complex – an UCTA claim was made (and dismissed) in the previous proceedings, but the UCTA claim made in the DAPOC is advanced on a different basis from that advanced in the injunction proceedings.
Umbrella Agreement
The case which the claimant seeks to plead is, in summary, that the entire arrangement between all of these parties should be viewed as being subject to an implied “umbrella” contract. This implied contract should be taken...
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Mackie Motors (Brechin) Ltd v RCI Financial Services Ltd
...BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES COMPETITION LIST (ChD) Mr Simon Gleeson (Sitting as a Deputy High Court Judge) [2022] EWHC 1942 (Ch) Royal Courts of Justice Strand, London, WC2A 2LL David Cavender KC and Thomas Pausey (instructed by Freeths LLP) for the David Peters (instr......