Robert Andrew Jones v Ios (Ruk) Ltd (in Members' Voluntary Liquidation) and Another
| Jurisdiction | England & Wales |
| Judge | Judge Hodge |
| Judgment Date | 02 March 2012 |
| Neutral Citation | [2012] EWHC 348 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC09C02679 |
| Date | 02 March 2012 |
[2012] EWHC 348 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
7 The Rolls Building,
Fetter Lane,
London EC4A 1NL
His Honour Judge Hodge QC
(sitting as a Judge of the High Court)
Case No: HC09C02679
Mr Mark Vanhegan QC and Mr David Wilkinson, solicitor advocate (instructed by Stevens & Bolton LLP) for the Claimant
Mr Charles Hollander QC and Ms Victoria Wakefield (instructed by Taylor Wessing LLP) for the Defendants
Hearing dates: 16 th– 20 th, 23 rd, 24 th, 27 th January 2012
Judge Hodge QC:
No less than three interesting issues of law fall to be considered in the course of the trial of this witness action: (1) The nature of the interest which a claimant must establish in "confidential information" before he can properly maintain a claim (whether in contract or in equity) for breach of confidence (see chapter 4). (2) The interplay between the admissibility of a claim in contract for damages for the loss of a chance and the "minimum performance" or "least onerous obligation" principle whereby an injured contracting party is only entitled to be compensated for the loss of benefits which he would have been legally entitled to claim if his contract had been performed (see chapter 7). (3) The availability of a claim for Wrotham Park damages 1 in circumstances where a conventional approach to the assessment of damages would result in the award of no more than a purely nominal sum, and the defendant asserts that the relevant breach of contract is incidental or trivial, and has operated to confer upon him no benefit or advantage of any real value (see chapter 8).
This judgment is divided into nine chapters as follows: (1) Introduction (2) The issues in the case (3) The evidence (4) The Confidentiality Agreement: its meaning and effect (5) The alleged beaches in relation to the 2003 invitation to tender (6) The alleged breaches in relation to the 2007 invitation to tender and its implementation in 2008 (7) The loss of chance claim (8) Wrotham Park damages (9) Conclusion and Postscript. I should emphasise, however, that although my judgment is structured in this way for convenience of analysis and exposition, the contents of each individual chapter have informed my judgment as a whole.
I: Introduction
This is the trial of a Part 7 claim (issued on 29 July 2009, and allocated to the multi-track) for damages for breach of a Confidentiality Agreement in the form of a letter dated 5 February 1999 written on the headed notepaper of the first defendant (then called Ricoh UK Limited) and addressed to a company described as CMP Group Purchasing Limited, whose correct name was in fact CMP Group Limited (" CMP"). There is an alternative claim for damages for breach of confidence. CMP's loss is said to range from some £5.5 million to some £28.7 million. The claimant, Mr Jones, is represented by Mark Vanhegan QC, leading Mr David Wilkinson. The defendants are represented by Mr Charles Hollander QC, leading Ms Victoria Wakefield.
Mr Jones established CMP in 1994 and he was its principal shareholder and managing director. CMP acted as an intermediary, offering its business and corporate clients the opportunity of making significant costs savings through the more efficient delivery and management of their photocopying, printing and scanning requirements as a result of the expertise which CMP had developed in the selection, procurement, installation, servicing and use of multifunctional devices ( MFDs) supplied by third parties, notably the first defendant. On acquiring a new client, CMP would ascertain how much it had been paying for devices up to that point, and it would then charge a "device commission", equivalent to 50% of any costs savings achieved by the client against that benchmark. CMP's other revenue streams comprised a "service commission" on every page produced by each device; a "finance commission" from the finance company where the client chose to rent a device (typically for 3 years)
rather than purchasing it outright; and a "residual rental income" (typically equivalent to 50% of the original rental charge) from any device which a client chose to retain after the initial 3-year finance term. CMP acquired as clients a number of large companies including (most significantly for the present case) ADtranz, a global rail systems and signalling manufacturer and service provider, which, in 2000, was acquired by the Canadian aerospace and transportation group, Bombardier, becoming its transportation arm, known as Bombardier Transportation ( Bombardier). Mr Jones took an assignment of CMP's causes of action against the first defendant on 30 April 2009; and shortly thereafter (on 8 June 2009) CMP entered into members' voluntary liquidation.The first and second defendants are part of a worldwide network of some 235 companies providing printing, photocopying and scanning hardware, and related services, and forming part of a group headed by the major Japanese electronics manufacturer, Ricoh Company, Limited. Pursuant to a sale and purchase agreement dated 31 March 2010 all of the first defendant's assets and liabilities (including the present claim) were transferred to another group company, the second defendant (then called Ikon Office Solutions Plc). On the following day, the first defendant changed its name from Ricoh UK Limited to IOS (RUK) Limited, and, at the same time, the second defendant assumed its present name of Ricoh UK Limited. The second defendant was joined to the proceedings by an Order of Master Moncaster dated 5 August 2010. Although this was not apparently appreciated by the parties' legal representatives until late in the trial, the first defendant entered into members' voluntary liquidation on 29 December 2011. It is agreed that, for the purposes of this litigation, nothing turns on the separate corporate identities of the two defendants, and that the second defendant will meet any award of damages (and any order for costs) which may be made against the first defendant. For simplicity, I shall treat the two defendants as singular and refer to them together simply as " Ricoh UK". References to " Ricoh" alone are to be treated as compendious references to any relevant company within the Ricoh group.
Following the hearing of an application by the first defendant for summary judgment on 28 and 29 April 2010, Roth J handed down a reserved judgment on 14 July 2010 which bears the neutral citation number [2010] EWHC 1743 (Ch). Roth J held that the no-contact restriction contained within clause 7 of the Confidentiality Agreement was void and unenforceable as it infringed the prohibition against anti-competitive agreements in Article 101 of the Treaty on the Functioning of the European Union (formerly article 81 EU); and he granted summary judgment for the first defendant on that part of the claim. He also held that a proposed claim for an account of profits was not sustainable in the present case. But the judge went on to dismiss an application by the first defendant for summary judgment on the claimant's other heads of claim. There has been no appeal by either party from any part of Roth J's judgment. That judgment contains (at paragraphs [6]–[11]) a useful summary of the background to the relationship between CMP and Ricoh UK (referred to by Roth J as "Ricoh"), and of the principal terms of the trading and confidentiality agreements into which they entered, which, for convenience, I reproduce here:
"6. CMP's relationship with Ricoh began in late 1994 and the first supply by Ricoh of devices arranged by CMP was in January 1995. Ricoh rapidly became the preferred manufacturer recommended or chosen by CMP. Over 90% of the devices that CMP ever recommended for clients were Ricoh devices.
7. In 1998 CMP sent Ricoh an invitation to tender for the supply of devices to its clients. Mr Jones says that the main aim of the tender was to improve on the discount against the manufacturer's recommended retail price that Ricoh was prepared to offer to CMP's clients (which would of course benefit CMP through the 50% saving arrangement: para 3 above). Ricoh responded with a tender dated 12 August 1998 and it is common ground that Ricoh and CMP then entered into a trading agreement to govern the relations between them (' the Trading Agreement'). The Trading Agreement was of unlimited duration, terminable by either party on 90 days' notice. Clauses 3–4 of the Trading Agreement provide:
'3. The duties of Ricoh:
(i) To provide equipment as required by the customer orders of CMP, see Clause 4(i) at approved prices (see Schedule A of this Agreement). All equipment provided to customers of CMP under the terms of this Agreement shall be new equipment.
(ii) To deliver said equipment within 14 working days of receipt of order.
(iii) To install, train users and service and maintain said equipment in accordance with the Terms and Conditions of approved Service Agreements (see Schedules B and C of this Agreement) at approved service charges (see Schedule D of this Agreement).
(iv) To provide management and billing information data to CMP as required (see Schedules F, G and I of this Agreement).
4. The duties of CMP:
(i) To obtain orders for equipment from its customers at prices approved by Ricoh (see Schedule A of this Agreement). Orders will be placed on official documentation of CMP and orders for Ricoh equipment will be obtained by CMP from its customers where Ricoh equipment is suitable and meets the needs and requirements of CMP's customers. There is no obligation under this Agreement for CMP to recommend that its customers acquire Ricoh equipment.
(ii) To obtain from its customers at the time that equipment is acquired authorised Service Agreements under approved...
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