Rispond Estate And Others V. Mainstream Scotland Limited
| Jurisdiction | Scotland |
| Judge | Lord Clarke |
| Neutral Citation | [2005] CSOH 129 |
| Court | Court of Session |
| Docket Number | CA45/04 |
| Published date | 29 September 2005 |
| Date | 29 September 2005 |
| Year | 2005 |
| OUTER HOUSE, COURT OF SESSION [2005] CSOH 129 | |
| CA45/04
| OPINION OF LORD CLARKE in the cause RISPOND ESTATE AND OTHERS Pursuers; against MAINSTREAM SCOTLAND LIMITED Defenders: ________________ |
Pursuers: Bowen; Gillespie Macandrew
Defenders: Cowan, Solicitor Advocate; Simpson & Marwick W.S.
29 September 2005
Introduction
[1]In this commercial action, the pursuers sued the defenders for payment of two sums together with interest. The first sum sued for was £28,750 and the second sum sued for was £77,686. The first sum related to the breach of an alleged agreement between the parties for the supply, by the pursuers to the defenders, in 2003, of a quantity of salmon fry. The second sum related to an alleged agreement by the pursuers to supply the defenders with a quantity of salmon smolts during 2003.
[2]The case came before me for proof before answer. At the beginning of his closing submissions, counsel for the pursuers, sought leave to amend the conclusions, no doubt in the light of the evidence which had been led. Counsel sought to reduce the sum first concluded for to £28,125 and to reduce the second sum concluded for to £37,200. This was not opposed and I allowed the pursuers to amend their conclusions to that effect.
The background to and circumstances of the dispute
[3]The background to this action is that the parties had for some years, prior to 2003, dealt with each other for the supply to the defenders by the pursuers of salmon fry and smolts. On 17 April 1998 Mr Charles Marsham, who is one of the two partners forming the firm who are the first named pursuers, and who was the pursuers' principal witness at the proof, signed a document, which is 36/1 of process. The document is headed "HEADS OF AGREEMENT between Aquascot Group; Rispond Fish Farms Limited; Rispond Estate and Mr and Mrs Charles J L B Marsham." The document was signed, on behalf of the Aquascot Group of Companies, by Keith D Agnew, who was apparently a Director of the company known as Aquascot Sea Farms Limited, which is the former name of the present defenders. The Heads of Agreement bear to relate, to some significant extent, to the purchase by the Aquascot Group of companies of shares of Mr Marsham and his wife in a company known as Rispond Fish Farms Limited and certain consequences flowing therefrom. These matters were not explored, in any detail, at the proof. Paragraphs 4 and 5 of the Heads of Agreement were in the following terms:
"4. Rispond Estate to purchase approximately 50,000 10gm parr and approximately 250,000 1998 fry for £38,500 - payment to be delayed until smolts are supplied to Aquascot. Rispond Estate will also purchase 157,000 SI at 50p and 52,000 S2 at 80p and will be invoiced by Aquascot. Rispond Estate will then sell the above when ready for sea to Rispond Fish Farms Ltd for 59p and 91p respectively.
5. Aquascot and Rispond Estate to enter into a smolt supply contract for 5 years with 2 years notice and price negotiation for 200,000 to 300,000 smolt p.a. starting at 60p each. Ova to cost Rispond Estate no more than £35 per 1000 and any vaccine to be supplied".
There was no evidence before me which established that, in implement of what is said in paragraph 5, the parties entered into a five year smolt supply contract. It will be noted that nothing is said in paragraph 5 about the weight which any smolts should have achieved before being supplied to the defenders.
[4]Mr Marsham, in evidence, advised the Court that, following the signature of that document, the pursuers supplied smolts each year to the defenders up until 2003. He said that, in the early years, the defenders were content to take smolts of relatively small size at delivery in April/May and that these could have an average weight of 40 grams each. The price to be paid for the smolts fell to be negotiated between the parties each year. The person from the defenders, with whom Mr Marsham dealt directly, was a Mr Andy Reeve. Because of changes in market conditions, and also the requirements of the defenders' new Norwegian owners, the defenders required, in due course, to be provided with smolts of increasing weight. The pursuers sought to meet the defenders' requirements in that respect. The practice between the parties was that the defenders' requirement in respect of supply of smolts would be discussed and agreed during the course of one year for delivery in the Spring of the following year. That reflected the cycle of development from the purchase of ova, to the bringing on of the fish, to smolt stage, by the pursuers. On 30 September 2002 Mr Marsham e-mailed Mr Reeve, apparently after a discussion about the defenders' requirements for 2003, regarding the quantity and weight of smolt. The e-mail (36/4 of process) is in the following terms:
"Sample weights 30-9-02
21-24gms......... 60,000
24-28gms........ 115,000
28-32gms........ 160,000
Total........ 335,000
The above populations need grading and I would anticipate that we will end up with the following smolts:
60gms early - mid April ........ 160,000
60gms end April ........ 120,000
Total ........ 280,000
Whether the 'culls' 65,000 have any value or use is dubious.
Your thoughts regarding the supply for 2003 would also be much appreciated as we need to place orders for ova in the very near future.
I would be most grateful if we finalise plans soonest as it looks as if I am off to the South Coast at the weekend".
Subsequent to that e-mail being received by Mr Reeve, he informed Mr Marsham that the defenders' requirements for 2003 involved the supply of smolts of 80 plus grams weight only. In response to that, Mr Marsham wrote, on 12 November 2003, to Mr Robert Murray, who was a Director of the defenders and its financial controller. A copy of that letter was sent to Mr Andy Reeve. The letter (36/5 of process) is in the following terms:
"Apologies for not getting back to you before but we were away following our meeting in Alness.
Our position is quite clear, we consider that we have a contract with yourselves to supply up to 300,000 60gms smolts during spring 2003. We do not accept that the specifications of smolts can be unilaterally altered during the period of production.
However we are aware of your change of requirements and without prejudice we are prepared to try and seek a solution.
We are prepared to try and re-sell the above smolts to third parties at best price providing that you underwrite the price to 90% of 75p each and reimburse us for any justifiable expense incurred in marketing.
For avoidance of doubt we would expect to be paid 67.5p each for any unsold smolts and the difference between price and 67.5p for any smolts sold at below 67.5p.
In the event the smolts are sold at a price of above 75p each, we undertake to repay yourselves up to £12,000 of the surplus to repay the cost of the vaccine.
Your thoughts or comment on the above would of course be appreciated and expected"
[5]The evidence before me was that the defenders, at this stage, had made it clear to Mr Marsham that they were not interested in taking a supply of smolts which were less than 80grams in weight. Mr Marsham did not consider that it would be either practicable or commercially viable, standing the nature of the pursuers' fish farm operation and facilities, to produce smolts of 80grams plus by the Spring of 2003. In discussion, it was suggested that the pursuers might seek to supply smolts at the weights achievable by the pursuers in Spring 2003 to a third party. The terms of that discussion, are to some extent, at least, reflected in Mr Marsham's letter of 36/5 of process. The discussion was followed up by a proposal from Mr Murray of the defenders, which was contained in an e-mail 36/6 of process. The proposal was in the following terms:
"1. If you sell the smolts to a third party in addition to the third party sale price you will receive 20% of the previously agreed smolt price from Aquascot.
2. If you do not sell the smolts Aquascot will purchase the smolts at a 20% discount to the previously agreed sale price.
We need to agree this by latest end of November or Norway want us the [sic] write indicating that there is no deal at all".
The e-mail was headed "Draft Agreement". Mr Marsham and Mr Murray then had an e-mail correspondence on 22 November 2002 to clarify the proposal further. This correspondence is contained in 36/7 and 36/8 of process. Mr Marsham, in evidence, said that after the clarification given in that correspondence, he accepted the defenders' proposal regarding his production of smolts for 2003 and began to seek to sell them to third parties. By March 2003 it was clear that the pursuers' efforts in that respect were proving to be unsuccessful. On 24 March 2003 Mr Marsham e-mailed Mr Reeves, in inter alia, the following terms (36/13 of process):
"It does not look as if we have been successful in finding a home for the smolts. We think they will be ready for transfer around mid April. Please advise us as to destination etc to allow organisation of well boats"
It is in relation to what followed between the parties regarding the supply of the smolts that the second conclusion in the pursuers' summons is directed.
[6]In the meantime Mr Reeve had, on 26 February 2003, e-mailed Mr Marsham enquiring as to the possibility of the pursuers supplying the defenders with salmon fry (36/9 of process). The following correspondence regarding this matter, adduced at the proof, was as follows. Mr Marsham replied to Mr Reeves in an e-mail (36/10 of process). In it he wrote:
"310,000 frys should be possible subject to survival rates.
Price at 20p each ex farm would be around the minimum that we could accept. However 3.5gr by end of April may be pushing it a little. We intend to start feeding 1st March and can keep the temps around 12/14ºc depending on ambient."
That e-mail was followed by another from Mr Marsham dated 14 March 2003 to Mr Reeve (36/11 of process). In...
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