Mileform Ltd v Interserve Security Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Gloster |
| Judgment Date | 05 November 2013 |
| Neutral Citation | [2013] EWHC 3386 (QB) |
| Court | Queen's Bench Division |
| Date | 05 November 2013 |
| Docket Number | Case No: HQ11X00494 |
[2013] EWHC 3386 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Gloster
Case No: HQ11X00494
George McPherson (instructed by Mishcon De Reya) for the Claimant
Richard Coplin (instructed by Mills and Reeve LLP) for the Defendant
Hearing dates: 24, 25, 26, 27 February and 7 March 2013; further joint written submissions received on 19 April 2013.
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.
Introduction
This case concerns the terms and formation of a contract for the provision of warehousing, packaging, distribution and storage services. The critical question for the Court's determination is whether the agreement reached between the parties, on or about 15 January 2010, alleged by the claimant to be contained in a partly written and partly oral agreement of that date, contained an exclusivity term, pursuant to which the defendant appointed the claimant to supply the agreed services on an exclusive basis for two years. The claimant contends that such a term was orally agreed and that the defendant's conduct in the period between January 2010 and March 2011 amounted to breaches of its obligation to use the claimant as its sole provider of the relevant services, such that the claimant was entitled to terminate the agreement on the grounds of the defendant's repudiatory breaches in March 201The claimant claims damages not merely for breaches of contract during the operational period of the contract but also in respect of the sums which it allegedly would have earned had the Agreement continued until 31 January 2012. The defendant, on the other hand, contends that no exclusivity term was ever orally agreed between the parties, that, even if such a term had been orally agreed, it had no contractual effect because of an "entire agreement clause" in the written agreement between the parties, and because it was in any event too uncertain to be contractually enforceable, and that such term was unauthorised. The defendant also contends that there was no breach of the agreement on its part.
The parties and the relevant factual background relating to the period prior to 15 January 2010
The following summary of the factual background relating to the period prior to 15 January 2010 was largely agreed between the parties. In so far as it was not agreed, the summary reflects my findings of fact in the light of the evidence.
The claimant company, Mileform Limited ("Mileform"), was incorporated in the United Kingdom in 2001. From its incorporation until mid-2005, Mileform's principal business was managing a shoe shop and a warehousing facility. It was established as a family business by the two Crump brothers, Michael and Peter Crump. They are, and were at all material times, its sole directors and 50% shareholders. Mr Peter Crump was at all material times responsible for running the business. Mr Michael Crump helped to set up the business in April 2001, but thereafter he had limited involvement in the operational side of the business.
The defendant, Interserve Security Limited, formerly MacLellan Attlaw Security Limited, was incorporated in the United Kingdom in 2004. It is currently a member of the Interserve group of companies ("the Interserve group"), having been taken over by that group in 2007. In this judgment I shall refer to the defendant as "Interserve", other than in relation to the period prior to its takeover by the group of companies in; in relation to that earlier period I shall refer to it, as the parties did, as "MacLellan".
Until its takeover in 2007, Mr Michael Crump owned and ran MacLellan. At that time it carried on the business of distributing Red Tag security products, manufactured by AGI Amaray. At all material times its business was effectively the sale of security products to retailers which allowed them to display shop merchandise securely.
In mid-2005, following a request by Mr Michael Crump to Mr Peter Crump, Mileform started providing logistic services to MacLellan. Under the arrangement between Mileform and MacLellan, which was not recorded in any formal written agreement, Mileform warehoused, picked, packed and dispatched Red Tag security products to MacLellan's customers in accordance with its instructions. At all material times Mileform had warehouse premises at The Vennland Centre, Minehead.
After its takeover by the Interserve group in 2007, MacLellan changed its name to Interserve Security Limited. Mr Michael Crump remained managing director of Interserve until his suspension from employment on 27 May 2010. He was also Head of the Business Unit within the definition of Interserve's procedures for the purposes of authorising transactions. His line manager, to whom he reported, was a Mr Bernard Spencer, who had joined the Interserve group in 1986 and in January 2010 was employed by Interserve plc as Chief Operating Officer of the Support Services Division. Mr Spencer gave evidence on behalf of Mileform at trial. Mr Michael Crump did not give evidence at trial, either for Mileform or Interserve.
The pre-existing arrangement between Mileform and MacLellan was not formalised upon MacLellan's takeover by Interserve, and Mileform continued to supply logistic services to Interserve in respect of the Red Tag security products, as it had done previously. At all material times from 2008, if not earlier, the majority of Mileform's turnover derived from the business which it conducted with Interserve.
At all material times Mileform was also the UK sales agent for Workman Marine School Limited ("WMS"), a boat chartering business based in England and Spain, which specialised in the charter of rigid inflatable boats (known as "RIBS") for pleasure and corporate trips. The company is now dissolved, although the business continues. Messrs Peter and Michael Crump and a former Interserve employee, Mr Bill Barkley, who was a witness for Mileform at trial, were all qualified RIBS instructors and in their spare time ran boat trips for WMS. WMS apparently provided corporate entertainment services to Interserve, as well as instruction services. The three men were at all material times close friends.
Mr Michael Crump and Mr Peter Crump were also each 25% shareholders in a company called Corporate Ventures (Europe) Limited ("CVE"), which, between February 2008 and October 2009, received payments of £31,131.25 from Interserve. The payments appeared to have related to trips or other expenses related to boats which were owned by CVE and operated by WMS and/or to corporate entertainment said to have been provided to Interserve. There were no written contracts governing these arrangements or payments.
At all material times until his suspension in May 2010, Mr Barkley operated as Mr Michael Crump's "right hand man". Mr Barkley was not a board director of Interserve, although his job description was "director of client services". He reported principally to Mr Michael Crump, although he was part of Mr Spencer's team and reported to him on occasions. Mr Barkley, Mr Michael Crump and Mr Peter Crump are currently business partners in a new venture set up in 2011.
In about October 2008, the informal arrangements relating to logistic services provided by Mileform were extended to a new range of security products known as the InVue product range. These products performed a similar function to the Red Tag products, but were manufactured by a Dutch company, InVue Security Products B.V. I refer to the Red Tag products and the InVue products collectively as "the Security Products" and to the logistic services provided by Mileform in relation to the Security Products as "the Security Products Services".
The rates which Mileform charged Interserve for the Security Products Services appeared to have been constant since about 2008 and reflected those ultimately set out in the written version of the agreement between the parties. Thus:
i) the distribution rates for Invue and Red Tag Products remained constant from 2008 and thereafter;
ii) £350 per week was charged for administration from 2008 and thereafter;
iii) £12 per hour was charged for the services of Ken Lewis, a Mileform employee, for work carried out at its premises on Interserve's behalf from 2008 and thereafter.
Until late 2008 Interserve and another member of the Interserve group, First Security Limited ("First Security"), had archived human resource records, and other documentation relating to the personnel whom they had previously employed, in a barn in Essex. Interserve and First Security required access to this documentation at relatively short notice in order to provide references for former employees. In January 2009, due to their dissatisfaction with their existing storage facilities, Interserve and First Security agreed with Mileform that the latter would provide file archiving and furniture storage services at Mileform's warehouse premises in Minehead. At this stage, prices for Mileform's storage services had not been finally negotiated. I refer to the services provided by Mileform to Interserve in respect of the storage of archive material and furniture as "the Storage Services".
I find as a fact that the rates charged by Mileform to Interserve during this period were as follows:
i) From about January 2009 to August 2009 Mileform charged £1 per box per week for the storage of boxes following a discussion between Mr Michael Crump and Mr Peter Crump. Mileform also charged a flat weekly rate of £50 for storage of Interserve's furniture.
ii) In about late January or...
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