Raleigh Uk Ltd v Mail Order Cycles Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Norris |
| Judgment Date | 28 April 2010 |
| Neutral Citation | [2010] EWHC 1664 (Ch) |
| Court | Chancery Division |
| Date | 28 April 2010 |
| Docket Number | Case No: HC09C01705 |
[2010] EWHC 1664 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Norris
Case No: HC09C01705
MR. ROBERT O'DONOGHUE (instructed by Messrs. Freeth Cartwright) for the Claimant
MR. SIMEON THROWER (instructed by Messrs. Michael Smith Solicitors) for the Defendant
Approved Judgment
On 2 nd May 2007 the claimant, Raleigh UK Limited, delivered an invoice to Bikes Express Mail Order Bikes at Ipswich in the sum of £121.67 in respect of parts and accessories and a bicycle supplied to Bikes Express in the course of its retail shop and internet business. At the foot of the invoice was the legend,
"All transactions are subject to our standard terms and conditions of sale. To obtain a copy contact the Credit Control Department at the above address."
The terms and conditions then current had the following material features. Clause 2 provided that any contract between Raleigh and its dealers would be on the terms and conditions set out in that document to the exclusion of all other terms and conditions. It provided, further, that any variation to those terms and conditions should have no effect unless expressly agreed in writing and signed by an officer of the company authorised to sign on behalf of Raleigh.
By clause 7 it was provided that the goods should be supplied at the price set out in the Company's published price list current at the date of delivery. It is common ground that the prices so shown were based on the Recommended Retail Price but subject to a discount in favour of the dealer. Clause 8 of the terms and conditions said that the company could invoice the dealer for goods delivered at any time after delivery and that time for payment should be of the essence. The time for payment was, by clause 8.3, stated to be the 15 th of the month following the invoice date unless otherwise agreed in writing by the company. For the terms of the clause "payment" meant "receipt of cleared funds". The delivery of a cheque would therefore not constitute payment. Clause 8.6 provided that the buyer should make all payments due under the contract without any deduction by way of set off, counterclaim or otherwise unless the dealer had a court order authorising such a deduction. Clause 8.8 provided for the payment of contractual interest if a sum was left outstanding beyond its due date for payment and permitted Raleigh to "suspend delivery of any goods or to re-allocate goods to orders received from other customers". Finally, the payment clause provided for a dealer to make an authorised deduction if he made prompt payment.
Clause 11 of the terms and conditions said that the contract would terminate immediately whenever the dealer was in breach of any of the terms of the contract and, in particular, if the dealer failed to make payment to the company within 14 days from the due date. Finally, clause 13 of the terms and conditions provided that any provision in the contract which was held to be invalid or void or otherwise unenforceable or unreasonable should, to the extent of such invalidity voidness, unenforceability or unreasonableness, be deemed severable and the other provisions of the contract should not be affected.
The goods so ordered on those terms and conditions would have been delivered to the defendant and its predecessor under a delivery note which at the bottom bore the legend:
"All transactions are subject to our standard terms and conditions of sale."
In the instant case Mrs. Coe, who has given evidence on behalf of the defendant, says that she did not receive these terms and conditions but I have no doubt that those terms and conditions governed the terms of the relationship between the claimant Raleigh and the defendant and, in fairness to Mrs. Coe, no serious challenge was mounted. The terms and conditions, the invoice and the delivery note impose no condition as to the price at which the goods delivered subject to them must be sold by the dealer. That is unsurprising because Raleigh had itself, in the early 1980s, been subject to an adverse finding by the Monopolies and Mergers Commission as to an attempt to impose Resale Price Maintenance.
Dealers were provided with access to a handbook governing the relationship. Page 2 of that document states as follows:
"The prices charged will be the ruling price at the time of the placing of the order. RRPs (Recommended Retail Prices) are for guidance only. The on shelf price you charge is at your discretion. We reserve the right to amend prices dependent on market forces. Stockist prices are available dependent on your total purchases. See your representative for details."
Every dealer must therefore have understood that Recommended Retail Prices were for guidance only and the actual price charged by the dealer to the customer was at the dealer's discretion.
Bikes Express (as it then was), Mail Order Cycle Limited, the defendant (as it became) operated out of an industrial warehouse in Ipswich. Part of the warehouse was a dedicated retail area but I was told — and it was not challenged on behalf of the defendant — that some 90% of the defendant's business constituted internet sales. At the time at which I have begun the account Bikes Express was an established customer of Raleigh. It had a credit limit of £30,000. It was in the habit of paying slightly late, that is to say, not on the 15 th of the month following the month in which the invoice was delivered, but a matter of days after that. In general, the lateness was within the "tolerance period" (as Raleigh's credit controller described it) of three days. Sometimes the defendant and its predecessor was four or five days late but this also was tolerated by Raleigh and the appropriate prompt payment discount generally allowed.
In July 2007, the position radically altered. In July 2007 there was the coincidence of illness befalling Mrs. Coe and large expenditure upon a house and cars by the Coes themselves. Over this period, the late payment by Bikes Express rose from two, three or four days to 11, 19, 24 and 38 days. This rang alarm bells at Raleigh's Credit Control Department. On 25 th July 2007 Mr. Ward, Raleigh's Credit Manager, wrote to Bikes Express following up a telephone conversation which had taken place between Mr. Rickaby (who had charge of the Bikes Express account) and the Coes. The letter confirmed that Raleigh was reducing the credit limit from £30,000 to £20,000. The letter said that if the trading limit was reached before the invoices became overdue, then Mr. Ward would contact the Coes so that they could process an "on account" payment in order to maintain the supply of bicycles, parts and accessories. It recommended that the Coes kept track of the balance on the "Business to Business" website. The letter concluded:
"I have also noted that there are a number of old invoices outstanding on your account. I would be grateful if you could please e-mail me a list of the queries and/or copies of the warranty claim forms that you have sent in to Raleigh."
More or less by return, Mr. Ward received a letter headed "Mail Order Cycles" from the trading address of Bikes Express in Ipswich. The letter was headed "Change of Company Name". Mrs. Coe, the writer, explained in the letter that they were in the process of selling their company, Bikes Express Limited, to a motorbike courier service and they would therefore now be trading under a different company name, namely, that of the defendant, Mail Order Cycles Limited. That company had very recently been incorporated. The letter concluded:
"Could all accounts please be transferred to our new company name?"
There is no issue in the action but that that last request was complied with and there was a novation of the contract so that the parties became Raleigh UK Limited and Mail Order Cycles Limited with the latter accepting the running balance on the outstanding account. In fact, Bikes Express Limited was not sold to a motorbike courier service. It entered creditors' voluntary liquidation on 14 th February 2008 with a deficiency as regards creditors of £178,000. Of course, Mr. Ward was not to know that. But the performance of the account which had led to the reduction in the credit limit and the receipt of this letter alarmed him. As he put it, "it created noise around the account".
An analysis of two graphs which have been prepared for the purposes of this action demonstrates that the account was put into some sort of order over the following month with the overdue amounts falling to approximately £1,775 and payments being made on the due date. But over the subsequent period the conduct of the account again deteriorated. An analysis of those graphs and of the documents which underlie them demonstrates: (a) that the number of days that the payments were late began to rise again; (b) that the overdue portion of the sums due began to increase; and (c) that there was an increasing cumulative balance of outstanding unpaid invoices. Thus, by 15 th November the total overdue was some £16,154 with payments being made 15 days late. Mr. Ward was aware of this from the performance of the account. He was also alerted by the fact that payments in settlement of Raleigh's account had begun to be made on credit cards instead of by ordinary commercial company cheque. This occasioned him some alarm having regard to what he thought was the nature of the defendant's business. In an internet trading company there is positive cash flow. The...
To continue reading
Request your trial