Pinewood Technologies Asia Pacific Ltd v Pinewood Technologies Plc
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Joanna Smith |
| Judgment Date | 13 October 2023 |
| Neutral Citation | [2023] EWHC 2506 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2022-000244 |
[2023] EWHC 2506 (TCC)
Mrs Justice Joanna Smith DBE
Case No: HT-2022-000244
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Rolls Building
Fetter Lane
London, EC4A 1NL
Tom Sprange KC and Kabir Bhalla (instructed by King & Spalding International LLP) for the Claimant
Tamara Oppenheimer KC and Max Kasriel (instructed by Trowers & Hamlins LLP) for the Defendant
Hearing dates: 12 & 13 July 2023
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 has been handed down by the judge by circulation to the parties' representatives by email and released to The National Archives. The date for hand-down is deemed to be 2 pm, 13 October 2023.
The Defendant (“ Pinewood”) applies pursuant to CPR r.24.2 for reverse summary judgment of the claim brought by the Claimant (“ PTAP”), together with summary judgment on its counterclaim (“ the SJ Application”). In response, PTAP applies (i) to amend its Reply and Defence to Counterclaim dated 2 December 2022 pursuant to CPR r.17.1(2)(b) and r.17.3; and (ii) for specific disclosure pursuant to the court's general case management powers in CPR r.3.1(2)(m) (“ the PTAP Application”).
The SJ Application invites the court:
a. to construe the provisions of an exclusion clause contained at clause 16.2 of two similar contracts on which the claim is based dated respectively the 28 July 2017 and the 8 January 2019 (“ the First Reseller Agreement” and “ the Second Reseller Agreement”; together “ the Reseller Agreements”). In particular, to grant reverse summary judgment on the basis that PTAP's claim for breach of various general obligations imposed on Pinewood under the Reseller Agreements is excluded by clause 16.2 by virtue of being a claim for “loss of profit”, alternatively for “any costs or expenses…incurred in reliance on” those agreements; alternatively
b. to declare that Pinewood's liability is limited by reason of the provisions of clause 16.3 of the Reseller Agreements to £134,528 in respect of the First Reseller Agreement and to £0 in respect of the Second Reseller Agreement;
c. to enter summary judgment on Pinewood's counterclaim for outstanding sums due under the Reseller Agreements in the sums of US$212,105 and THB 15,517,413 plus interest in circumstances where PTAP has no legally recognisable defence. Pinewood relies upon a “no set off” provision in clause 8.10 of the Reseller Agreements in support of the proposition that there is no proper basis to deny it judgment on its counterclaim, inviting the court to construe that provision now.
PTAP opposes the SJ Application, contending that it raises questions of construction that can only be dealt with at trial (I shall refer to the legal arguments raised by the SJ Application as “ the Construction Arguments”) and that, further, the need for this case to be determined at trial is borne out by the PTAP Application, which seeks:
a. an amendment to the Reply and Defence to Counterclaim to plead that clause 16 of the Reseller Agreements formed part of Pinewood's written standard terms of business within the meaning of section 3(1) of the Unfair Contract Terms Act 1977 (“ UCTA 1977”), such that Pinewood is not entitled to seek to exclude or restrict its liability by reference to clause 16. PTAP contends that clauses 16.2 and 16.3 of the Reseller Agreements do not meet the requirement of “reasonableness” under section 11 UCTA 1977 (“ the UCTA Argument”). By a letter sent on the second day of the hearing, PTAP's solicitors also indicated that PTAP wished to make a similar amendment so as expressly to aver that clause 8.10 of the Reseller Agreements also formed part of Pinewood's written standard terms of business such that Pinewood is not entitled to exclude the application of equitable set off by reference to clause 8.10 because that clause also does not meet the requirement of reasonableness under section 11 UCTA 1977. It is common ground that I should treat this as part of the PTAP Application.
b. specific disclosure in respect of eight categories of document, two of which are designed to obtain additional information to support the UCTA Argument. The remaining six categories are designed to explore the possibility that PTAP has a claim against Pinewood for “fraud or fraudulent misrepresentation”, in respect of which clause 16.1 of the Reseller Agreements makes clear that Pinewood's liability is not excluded (“ the Fraud Argument”).
The Background:
Pinewood is a UK-registered company and a subsidiary of Pendragon Plc (“ Pendragon”), one of the world's largest automotive retailers, listed on the main market of the London Stock Exchange with group revenue of some £3.6 billion. Pinewood develops and supplies a dealer management system (“ the Pinewood DMS”) for the automotive industry. A DMS is a bundled management information system containing software that meets the needs of the finance, sales, workshop, parts, inventory and administration components of running a motor dealership. Pinewood typically contracts with independent partners known as “resellers” to market and sell the Pinewood DMS to motor vehicle dealerships outside the United Kingdom. PTAP, an unrelated company notwithstanding its similar name, is just such a reseller, registered in Hong Kong.
Pursuant to the First Reseller Agreement, PTAP was appointed exclusive reseller of the Pinewood DMS (pursuant to a non-exclusive licence) in Hong Kong SAR, Guam, Thailand, Macau SAR, the Philippines and Vietnam. Pursuant to the Second Reseller Agreement, which was in materially identical terms save for the territories covered, PTAP was appointed exclusive reseller in Japan. It is common ground that the Reseller Agreements were signed on behalf of PTAP by Mr David Neilsen and on behalf of Pinewood by Mr Paul Hopkinson, both directors of the respective companies.
The Reseller Agreements include the following express terms which are material for the purposes of the SJ Application.
By clause 3.1, PTAP was appointed by Pinewood as the “exclusive reseller of the [Pinewood DMS] in the Territory for the Term”, with the right to sell Pinewood DMS Services “to and only for use by Motor Vehicle Dealerships, and only for use with respect to Motor Vehicle Dealership outlets physically located within the Territory”.
Clause 4 sets out competition restrictions that apply to the parties during the Term. Clause 4.2(c) places an obligation on PTAP not to “for the Term, promote, market, sell, licence, resell, supply or otherwise provide or deal in any software, licence or services to or in relation to Motor Vehicle Dealerships, which is or are similar to or may compete with the [Pinewood DMS] and/or [Pinewood DMS] Services…”. Clause 5 identifies the targets that PTAP was to achieve for new users for each year that the agreement was in force and clause 6 provides for Pinewood to grant a nonexclusive licence to PTAP in relation to the Pinewood DMS.
Clause 8 provides for payment by PTAP to Pinewood of monthly fees in US$ (or THB in respect of Thailand), on a fixed basis proportionate to the number of Pinewood DMS user accounts provided from time to time by PTAP to its customers in the relevant territories. Such fees are known as the “ Pinnacle User Account Monthly Fees”. Clause 8.10 provides as follows:
“ Deductions and Withholding Taxes
The Pinnacle User Account Monthly Fees (and all value added taxes and sales taxes thereon) shall be the net amount payable by the Reseller, and shall be made in full without withholding, deduction or set-off, including in respect of any taxes, charges, and other duties that may be imposed by any law or country on the same or on either party (with the exception of any corporation tax charged by the UK government on Pinewood's net income), and the Reseller shall be responsible for paying any such taxes, charges and other duties, except in so far as any such taxes, charges and other duties may be credited in full by Pinewood against its own tax liabilities. The parties agree to co-operate in all respects necessary to take advantage of such double taxation treaties as may be available, and each party agrees to assist the other party to mitigate or obtain a credit or reduction of such taxes, charges and other duties, including providing any information, certificates and documentation reasonably required.”
Each of the parties to the Reseller Agreements had “General Obligations” plainly designed to facilitate the smooth functioning of the relationship. Thus, PTAP agreed in clause 9 (amongst other things) to promote the Pinewood DMS to all Car Motor Vehicle Dealerships in the Territory, to employ sufficient staff to ensure fulfilment of its obligations, to uphold Pinewood's reputation, to comply with applicable laws and to provide information to Pinewood on a regular basis as to its activities. Pinewood's “General Obligations” were set out in clause 10. These included the supply of promotional materials, training and support. Clause 10.5 is in the following terms:
“ Future Developments
Pinewood will keep [PTAP] advised about all releases and further development of the [Pinewood DMS] which may assist [PTAP] in the successful operation and promotion and sale of [Pinewood DMS] Services. Pinewood will make any necessary changes to ensure that the [Pinewood DMS] meets the legal requirements of the Territory, provided that [PTAP] provides Pinewood reasonable notice and detail of the changes required. Pinewood will use its best endeavours to make any necessary changes to ensure that the [Pinewood DMS] meets...
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