Mackie Motors (Brechin) Ltd v RCI Financial Services Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lady Justice Andrews,Sir Geoffrey Vos |
| Judgment Date | 04 May 2023 |
| Neutral Citation | [2023] EWCA Civ 476 |
| Docket Number | Case No: CA-2022-001936 |
| Court | Court of Appeal (Civil Division) |
[2023] EWCA Civ 476
Sir Geoffrey Vos, MASTER OF THE ROLLS
Lady Justice Asplin
and
Lady Justice Andrews
Case No: CA-2022-001936
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPETITION LIST (ChD)
Mr Simon Gleeson (Sitting as a Deputy High Court Judge)
Royal Courts of Justice
Strand, London, WC2A 2LL
David Cavender KC and Thomas Pausey (instructed by Freeths LLP) for the Appellant
David Peters (instructed by Stephenson Harwood LLP) for the Respondent
Hearing date: 15 March 2023
Approved Judgment
This judgment was handed down remotely at 11.00 a.m. on 4 May 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This is an appeal from the order of Mr Simon Gleeson, sitting as a Deputy High Court Judge, dated 22 July 2022, refusing the Appellant, Mackie Motors (Brechin) Limited (“Mackie”), permission to amend its Particulars of Claim and striking out the claim. The central issue is whether Mackie's claim that an umbrella or relational agreement can be inferred has a real prospect of success. The alleged umbrella agreement is said to overlay Mackie's car dealership arrangements with the Respondent, RCI Finance Services Limited (“RCI”), Renault UK Limited (“Renault”) and Nissan Motors GB Limited (“Nissan”). There are also subsidiary issues as to whether Mackie's claims as to the interpretation of its dealership contracts, as to estoppels that have arisen and as to the terms that should be implied into those agreements have a real prospect of success.
The issues arise in the following circumstances. For many years, Mackie was the authorised distributor of Renault, Nissan and, later, Dacia cars in the north-east of Scotland. Mackie's relationship with Renault and Nissan and subsequently, Dacia, was founded on a series of written dealership agreements (the “Dealership Agreements”). Under the Dealership Agreements, Mackie was granted the right to promote, market, supply, sell, repair and maintain Renault, Nissan and, latterly, Dacia vehicles within its “exclusive territory”.
RCI is a wholly owned subsidiary of Renault. Since about 2007/8 it has provided financing and administrative services to Mackie. Prior to 2007, financing was provided by Renault Finance Services and Nissan Finance. There were six contracts between Mackie and RCI in relation to dealer financing which included the financing of the purchase of stock both of new and used cars and of parts (the “RCI contracts”). Those contracts operated on a rolling basis.
Under the Dealership Agreements, amongst other things, Mackie was subject to an annual ordering commitment in relation to Renault vehicles and was obliged to offer RCI financing agreements to its customers. Renault was not, however, obliged to supply a particular quantity of vehicles. Moreover, customer finance was provided through agreements made directly between RCI and the customer. There was no written contract with Mackie in relation to the provision of such customer finance. In addition, there were no written agreements in relation to RCI's provision of ancillary administrative services, referred to as “platform services” and “database services”. The platform services were provided via online platform systems through which Mackie could order vehicles and parts and propose new customers to RCI, Renault and Nissan. The database services were in the form of online databases of existing finance agreements to which Mackie was given access. Clearing services were also provided pursuant to written agreements (the “Clearing Agreements”). Those services took the form of clearing accounts controlled by RCI through which all financial transactions between Mackie, RCI, Renault and Nissan were conducted.
The Dealership Agreements were capable of termination by either party giving not less than 24 months' written notice expiring at any time. The RCI contracts contained a 7-day notice termination clause.
RCI became concerned about whether Mackie was involved in money laundering and, as a result, made a suspicious activity report to the National Crime Agency on 23 November 2021. The supply of spare parts to Mackie ceased on 24 November 2021 and all other services were terminated on 27 November 2021. On 7 December 2021, notices determining the RCI contracts were served. They expired on 16 December 2021.
These proceedings were commenced on 16 December 2021. Mackie sought an interim injunction restraining RCI from ceasing to provide the dealer financing services pursuant to the RCI contracts. Mackie alleged that RCI had abused a dominant market position contrary to section 18 of the Competition Act 1998 and that the provisions said to entitle RCI to terminate the RCI contracts on 7-days' notice were unfair pursuant to the Unfair Contract Terms Act 1977 (“ UCTA”). The application for an interim injunction was refused by HHJ Saffman on the basis that neither the competition nor the UCTA claim had a real prospect of success.
Having failed to obtain injunctive relief, Mackie sold its sites to another Renault/Nissan franchised dealership in what it described as a “fire sale”.
The DAPOC
Mackie then produced draft amended particulars of claim (the “DAPOC”) in which its claim was re-characterised. The competition claim was no longer pursued. Instead, it alleged that Mackie, RCI, Renault and Nissan were parties to an implied umbrella “relational” agreement pursuant to which:
i) RCI, both on its own behalf and as agent for Renault and Nissan, provided Mackie with dealer financing, customer financing, clearing services, platform services and database services (the “Services”);
ii) Mackie received the Services to enable it to perform its obligations and exercise its rights under the Dealership Agreements whilst seeking to earn commissions and bonuses set out in communications from RCI, Renault and Nissan; and
iii) Renault and Nissan maximised the supply and sale of their vehicles and the advancement of their brands within Mackie's exclusive dealership territory.
Mackie alleged that the umbrella agreement was entered into in around 1976 between Mackie and Renault, in 1998 in respect of Nissan and in 2007 in respect of RCI. Alternatively, it was alleged that the umbrella agreement was entered into between Mackie, Renault, Nissan and RCI no later than 2008. Further, it was alleged that the umbrella agreement could “be inferred from and/or demonstrated by (in particular)” the matters set out in 10 sub-paragraphs.
Mackie also alleged two specific implied terms of the umbrella agreement as follows: (i) that the parties would act in good faith in its performance, and (ii) that RCI would not withhold the Services or terminate the umbrella agreement in the absence of good cause and without a reasonable notice period of 24 months.
Further, Mackie alleged that the termination provisions in the RCI contracts should be interpreted so that their notice period coincided with the 24 months specified in the Dealership Agreements.
In addition, Mackie alleged that RCI was estopped from relying on the 7-day notice provision in the RCI contracts. In particular, it was pleaded that, by representing that RCI and Mackie were long-term partners, and by closely collaborating and co-operating with Mackie in the performance of the Dealership Agreements, and by training, incentivising and associating with Mackie's staff and representatives, RCI had represented that it would not terminate the RCI contracts or demand repayment of an interest free loan except on 24 months' notice, or in the alternative, until such notice expired at the same time as any valid notice to terminate the Dealership Agreements.
The DAPOC also contains an alternative claim that RCI was not entitled to invoke the 7-day notice term in order to terminate the RCI contracts as a result of section 3(2)(b) of UCTA.
Finally, Mackie advanced a case that the RCI contracts themselves were subject to implied terms restricting RCI's ability to terminate them or to withdraw or limit the financing provided under them.
The applications before the judge, his approach and conclusions
Mackie sought permission to amend its claim in the form of the DAPOC and to join Renault and Nissan as parties. RCI argued that the DAPOC did not plead claims with a real prospect of success and did not meet the test for strike out or reverse summary judgment. RCI applied, accordingly, to have the original pleading struck out, or, in the alternative, for summary judgment. It was these applications which came before the judge.
It is accepted that the judge applied the correct tests in relation to the task before him and otherwise directed himself properly. At [10] of the judgment, he cited the Court of Appeal in Elite Property Holdings v Barclays Bank [2019] EWCA Civ 204 as follows:
“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...
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