Renault UK Ltd v FleetPro Technical Services Ltd
| Jurisdiction | England & Wales |
| Judge | HIS HONOUR JUDGE RICHARD SEYMOUR Q.C. |
| Judgment Date | 13 November 2007 |
| Neutral Citation | [2007] EWHC 2541 (QB) |
| Date | 13 November 2007 |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ06X03034 |
[2007] EWHC 2541 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Richard Seymour Q.C.
(Sitting as a Judge of the High Court)
Case No: HQ06X03034
Andrew Bruce (instructed by Iliffes Booth Bennett) for the Claimant
Laura John (instructed by Healys) for the First Defendant
The Second Defendant appeared in person
Hearing dates: 15, 16, 17, 18, 19 and 22 October 2007
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
The claimant, Renault UK Ltd. (“the Importer”), imports into the United Kingdom the products of Renault S.A. (“the Manufacturer”), the well-known French manufacturer of motor vehicles. The Importer is a wholly-owned subsidiary of the Manufacturer. The Importer purchases from the Manufacturer at prices fixed by the Manufacturer the vehicles which are imported.
The Importer supplies the vehicles which it imports from the Manufacturer to a network of dealers across the United Kingdom. As I understood it, there are about 220 authorised Renault dealers in the country. It seems that the Importer determines the prices at which it supplies vehicles to dealers.
A company called REAGROUP UK Ltd. (“the Distributor”) operates a number of dealerships within the network supplied by the Importer. One of the dealerships operated by the Distributor is at premises situate at 305, Brighton Road, Coulsdon, Surrey and trades under the name Renault Croydon. In this judgment I shall refer to that particular dealership as “the Dealer”. The Distributor is a wholly-owned subsidiary of the Importer. The Dealer supplies vehicles to customers wishing to purchase them. Such customers may be members of the general public wishing to acquire vehicles for their own use, which, in this judgment, I shall describe as “retail” customers, or what are called “fleet” customers, that is to say companies or organisations which wish to acquire a fleet of vehicles to operate for the purposes of their activities.
At least in relation to vehicles manufactured by the Manufacturer and sold by retail by the Dealer, the operation is vertically-integrated. What is sold on the forecourt in Coulsdon is a vehicle originating with the Manufacturer, which has reached the forecourt in Coulsdon through a network effectively controlled by the Manufacturer, consisting of the subsidiary of the Manufacturer, the Importer, and the subsidiary of that subsidiary, the Distributor. That means, amongst other things, that the Manufacturer has the means, if it chooses to exercise it, to determine the effective sale price of the vehicle on the forecourt in Coulsdon. Manifestly the Manufacturer sets the price at which the Importer buys from it each vehicle which the Importer imports. Plainly the Importer sets the price at which a distributor in its dealership network acquires any vehicle which it wishes to resell to a customer. Through the ability to control by means of shareholdings the activities of both the Importer and the Distributor, the Manufacturer has the opportunity, if it chooses to take advantage of it, effectively to ensure what profit is made where in the vertical integration which I have described.
Motor manufacturers and their associated importers and distributors are in competition with other marques. The evidence put before me in the form of statistical information assembled by the Society of Motor Manufacturers and Traders Ltd. (“SMMT”) indicated that there were, in 2005 and 2006 some 45 major marques of cars available in the United Kingdom. No doubt not all of those marques offer all types of cars.
The particular statistics of SMMT which were put in evidence concerned “Registrations of new cars in the United Kingdom – by marque”. Those statistics, which were not challenged as to their accuracy, demonstrated that cars manufactured by the Manufacturer declined as percentage of the total share of the market between 2004 and 2006. In 2004 the percentage of the market held by cars produced by the Manufacturer was 7.38. In 2005 the equivalent percentage was 7.16. However, in December 2005 the percentage was 5.27, down from 6.63 in December 2004, whilst in January 2006 the percentage was 5.44, down from 7.92 in January 2005.
At the root of this action lay what are apparently called in the motor industry “affinity schemes”. An affinity scheme is a mechanism for supplying cars to retail customers at substantial discounts as compared with the list prices. Presumably the object of an affinity scheme is to boost the sales of the cars which are included within it. It appears to be an important part of an affinity scheme that its existence does not become widely known to retail distributors of cars of the marque within a particular scheme or to the general public. Because of the feature of an affinity scheme that substantial discounts, as compared with list prices, are offered, it is essential for any affinity scheme to work that the manufacturer of the marque concerned, or at least the importer, is involved and agrees to the operation of the scheme. It may be that there are various ways, in detail, in which an affinity scheme could be operated. The particular scheme with which this action was concerned related to members of the British Airline Pilots Association (“BALPA”), and members of the immediate families of such members. For ease of reference I shall describe all those intended to be included in the scheme simply as “BALPA members”.
So far as the evidence went, none of the Manufacturer, the Importer, the Distributor or the Dealer had any connection whatever with BALPA before the establishment of the affinity scheme (“the BALPA Scheme”) involving that organisation. What, so the witnesses called on behalf of the Importer, and in particular Miss Carolyn Sample, Regional Fleet Manager of the Importer for the South East of England, said was important about BALPA was that it could be treated as a closed group comprising BALPA members.
No suggestion was made that BALPA members were particularly deserving of the charity of the Manufacturer, the Importer, the Distributor or the Dealer. Indeed, to the contrary, one of the attractions of this particular group seemed to be that the members were likely to be affluent, and therefore to have money to spend on cars.
It is not material to the issues in this action to consider in any detail how the BALPA Scheme came to be established. It appears that the initiative in the first instance came from BALPA, sometime during 2004. BALPA has a subsidiary company, BALPA Financial Services Ltd. (“BFS”), which carries on business as a provider of financial and other services to BALPA members. The making of arrangements for the BALPA Scheme was entrusted, at the BALPA end, to BFS. BFS decided to engage an agent to manage the BALPA Scheme. In due course BFS entered into an agreement with the first defendant, FleetPro Technical Services Ltd. (“FleetPro”), under which it was to manage the scheme and pay BFS a commission on each vehicle supplied under it. The agreement in question was in writing and was not actually executed until 4 November 2005. However, the BALPA Scheme in fact started operating as from 1 March 2005.
Mr. Russell Thoms, the second defendant, is, and was at all material times, the sole director and shareholder of FleetPro, and its only employee.
The BALPA Scheme was established by BALPA with the assistance of FleetPro. Included within it were marques other than that of the Manufacturer, but this action was not concerned with those other marques. There were, I think, seven other marques within the scheme.
At the stage at which the BALPA Scheme was being established, towards the end of 2004, Mr. Thoms made contact with Mr. Simon Arnold, at that time a corporate accounts manager employed by the Importer, to seek to establish whether the Importer would be interested in participating in the BALPA Scheme, and, if so, on what terms. The Importer had already, by the time of this contact, been approached by another of those seeking to obtain the business of managing the BALPA Scheme, Mr. Nicholas Gauntlett, a director of a company called The Car Company (UK) Ltd. (“The Car Co.”).
Before coming to the way in which matters developed after Mr. Thoms made contact with Mr. Arnold, it is convenient to set out how the Importer dealt with affinity schemes.
The Importer, in common with, as I understood it, many importers of cars in the United Kingdom, sought to differentiate between retail customers for cars, who were expected to approach a member of the distribution network and negotiate to purchase a car through that member, and fleet customers. Fleet customers, certainly in some, perhaps many, instances were felt to merit the attention of the Importer itself and thus there were employees of the Importer, such as Miss Sample and Mr. Arnold, whose function was to deal with fleet customers. The system seems to have been that the basic commercial terms of supply of vehicles for fleet customers dealt with by the Importer were negotiated between the Importer and the fleet customer, but the actual delivery of vehicles was undertaken by a member or members of the distribution network. The negotiation between the Importer and the fleet customer was essentially about the discounts from list price which the Importer was prepared to allow in respect of the vehicles to be sold. Once a discount was agreed for each class of vehicle to be supplied, inevitably involving some...
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