Marks and Spencer Plc v Freshfields Bruckhaus Deringer (A Firm)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Lawrence Collins |
| Judgment Date | 02 June 2004 |
| Neutral Citation | [2004] EWHC 1337 (Ch) |
| Docket Number | Case No: HC04C01839 |
| Court | Chancery Division |
| Date | 02 June 2004 |
[2004] EWHC 1337 (Ch)
The Honourable Mr. Justice Lawrence Collins
Case No: HC04C01839
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
MR. KENNETH MacLEAN, Q.C. and MR. JAMES GOLDSMITH as instructed by Slaughter & May for the Claimant.
MR. MICHAEL BRINDLE, Q.C. and MR. EDWARD LEVEY as instructed by the Defendant.
Approved Judgment
Mr. Justice Lawrence Collins
This is an application by Marks & Spencer Plc ("M&S") for an injunction prohibiting the intended defendant, Freshfields Bruckhaus Deringer, more commonly known as "Freshfields", from acting for or advising or otherwise assisting Revival Acquisitions Limited and/or Philip Green and/or any other entity or individual owned by or acting in concert with Mr. Green in relation to any acquisition or potential acquisition of the shares, assets or business of M&S.
On 27 th May Revival Acquisitions Limited, a company owned by Mr. Philip Green and his family, announced that it was considering making an offer for M&S and that it intended to approach the M&S board in the following few days with its proposal and to seek a recommendation of its offer. The offer, if it materialises, will be made by a consortium consisting of the family interests of Mr. Green and a number of major financial institutions. In accordance with the modern practice M&S does not retain a single firm or even a couple of firms to advise it in relation to all legal issues arising in the course of its business. Instead it retains a number of legal advisers, said to be more than a dozen, to advise it in relation to different legal matters. One of those firms is Freshfields.
Alastair Crawford, who is a partner in Freshfields and who specialises in dispute resolution, as it is now called, is the relationship partner responsible for client liaison with M&S. M&S's main contact at Freshfields on the commercial side is another partner, Mr. Head, who specialises in corporate law, mergers, acquisitions and joint ventures.
Last Saturday, the 29 th May, M&S first learned that Freshfields were acting on behalf of Mr. Green in relation to his possible bid for M&S. Later that day in response to telephone calls, Mr. Crawford telephoned Mr. Ivens, who is head of the legal department of M&S, and confirmed that Freshfields were indeed acting for the consortium. M&S's evidence is that a number of other law firms who act for or who have previously acted for M&S contacted Mr. Ivens last Friday to seek M&S's consent to their acting for other entities with an interest in the possible bid for M&S. The evidence is, depending on the nature of the relationship with the firm in question and after appropriate enquiry, that Mr. Ivens either gave M&S's consent or declined to do so.
M&S complains that Freshfields made no mention to M&S that they were acting or intending to act for the consortium, nor had they sought the consent of M&S to do so, even though they were a firm which had acted for M&S in many matters and had charged somewhere between £1 million and £1.5 million in fees for the work they had done in recent years.
M&S's position is that it is concerned that by acting for the consortium in circumstances where Freshfields have an existing and on-going retainer for M&S in respect of certain matters, Freshfields have placed themselves in a position of conflict of interest or potential conflict of interest and, in addition and quite separately, by acting for the consortium in circumstances where Freshfields have previously acted for M&S and obtained confidential information as a result of doing so, there is a real risk that such information may be disclosed by Freshfields to the consortium. In particular, M&S says that it retained Freshfields through Mr. Head and other members of the corporate department in early 2001 to advise in relation to the contractual arrangements entered into between M&S and George Davies concerning the Per Una women's wear brand of clothing and accessories. In the parlance of the firm, that has been referred to, presumably by its original file name, as Project George. It is well-known that since Per Una was introduced by M&S in 2001 it has become one of the most successful and profitable M&S product lines.
I am going to refer to a number of matters, some of which were dealt with in greater detail in the evidence and in the oral argument but I am endeavouring not to deal with any matters which are confidential, but if I do trespass into those matters I have invited counsel to stop me elaborating on them.
In late 2003 M&S and Mr. Davies reached, in principle, agreement to restructure the Per Una contracts and Freshfields were retained by M&S. Freshfields gave some advice in late January on the matters which M&S should seek to include in any contractual negotiation. In February 2004 Freshfields advised M&S in relation to a notice served by Mr. Davies pursuant to the Per Una contracts, which raised somes issues which are relevant to and would need to be addressed as part of the proposed restructuring. It is expected that heads of agreement will be agreed shortly and it was M&S's intention to ask Freshfields to commence drafting the relevant amending agreements.
M&S say that Freshfields have over the last five years been used for the majority of M&S's complex and/or high end contentious work.. Freshfields have also advised in relation to a number of important commercial and employment matters. As a result, Freshfields have acquired confidential information about the supply chain, including the term of supply of contracts, pricing policies, supply volumes and M&S's attitude to termination and renewal of the same. In addition, they have acquired information about logistical arrangements such as processes for transportation, dependency on food supply lines and the Per Una product range, including the terms of the contract arrangements with Mr. Davies and also information about senior management contracts.
In particular, they were instructed in the well-known Baird litigation (Baird Textile Holdings Ltd v. Marks and Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER (Comm) 737) in which they acted for M&S in the litigation brought by a supplier for alleged wrongful termination which involved important questions about estoppel and formation of contracts. M&S says that that litigation involved a massive disclosure exercise and the review by Freshfields of M&S's supplier contracts generally, and that they acquired detailed knowledge of the terms of the supply contracts, including terms of trade and M&S's policy towards entry into and termination of the same. In addition, they were instructed in relation to the possible expansion by M&S into a new market...
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