RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Company KG
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 16 May 2008 |
| Neutral Citation | [2008] EWHC 1087 (TCC) |
| Docket Number | Case No: HT-07172 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 16 May 2008 |
[2008] EWHC 1087 (TCC)
IN THE HIGH COURT OF JUSTICE
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Christopher Clarke
Case No: HT-07172
Charles Manzoni (instructed by Addleshaw Goddard) for the Claimant
Kenneth MacLean QC & Michael Fealy (instructed by Pinsent Masons LLP) for the Defendant
Hearing dates: 17 TH—19 TH MARCH 2008
Judgment Approved by the court
for handing down
(subject to editorial corrections)
This case is another example of the perils of proceeding with work under a letter of intent. The preliminary issues before me require the determination of what were the terms of a contract constituted (in part) by a letter of intent, whether that contract came to an end, whether it was replaced by another one, and, if so, what were its terms.
The defendant —Molkerei Alois Gmbh & Co Kg (“Müller”) —is a well known leading European dairy product supplier. At its premises in Market Drayton it produces, amongst other things, different brands of yoghurt and dairy rice products. The Claimant —RTS Flexible Systems Limited (“RTS”) —specialises in the supply of automated machines for packaging and product handling in the food and consumer goods industry.
Müller manufactures its products with two types of packaging: a round single pot containing yoghurt or rice product, and a square twin pot in which there is yoghurt or rice product in one section and fruit purée or cereal in another smaller one. The yoghurts and the fruit purées come in different flavours. As well as selling individual pots of yoghurt Müller sells variety packs (“multi-packs”) containing a number of pots (usually 6) of different flavours (usually 3). In order to produce the multi-packs Müller's employees would take pallets of single flavour yoghurts, mix the individual pots to form the desired multi-pack (the combinations of flavours in which differed), and then put the complete pack into a flow wrapping machine. The flow wrapped packs would then be placed into trays before being re-palletised.
Müller wished to automate the process of collating and flow wrapping multi-packs of different flavours of twin pots. It also wished to produce multi packs of its single pot products which could be placed into a tray that had originally held 12 single pots. Flow wrapping could not be used for this purpose because the trays that held the single pots could not accommodate the flow wrapped packs. As a result the original trays were wasted – probably as many as over a million a year.
Müller and RTS made contact initially in 2000. Discussions continued in subsequent years, particularly from December 2003 onwards. In April 2004 RTS produced a quotation – Quotation A –for the automation of the infeed (mixing of pots and placing them) into an existing flow wrapper machine on one line. Thereafter RTS produced 10 further quotations for equipment (down to Quotation K), all of them after Quotation A in a format requested by Müller. In the course of this process the scope of the project expanded, contracted and then expanded again as Müller discussed its requirements with RTS and other potential suppliers.
The work which, in the event, RTS undertook was the design, manufacture, assembly, works testing, delivery, installation and commissioning at Müller's factory in Market Drayton of the equipment described as Line 1 and Line 2 as shown on a drawing. A version of that drawing, showing the equipment to be supplied by RTS in red, is annexed to this judgment.
Line 1
The equipment for Line 1 was intended to solve the problem of wasted trays for single pots. Single pots in trays (12 to a tray) were to be loaded onto infeed conveyors supplied by RTS. In the case of three of the conveyors the loading was to be done manually. In the case of the fourth it was to be done automatically by a depalletiser which RTS was to supply. Each conveyor would convey trays of pots of a single flavour to one of four de-traying units, also supplied by RTS. In these units the pots would be lifted up (by suction) together with the trays (by grip). The grip would then release the trays which would be conveyed (by the conveyor shaped rather like an extended paperclip) towards the Vepatec Packer, also supplied by RTS. The sets of 12 pots, now de-trayed, would be deposited on a short conveyor belt which would take them towards one of 4 “Flex Picker” robots again supplied by RTS.
Meanwhile pre-printed and cut pieces of card would be loaded into the Mohrbach Erector (in blue on the plan). The erector partially forms a cardboard carton with 6 holes in it for the pots. This carton is then carried along the Mohrbach conveyor to a position in range of the robots. Each robot was to be capable of picking up and placing up to 2 pots of a single flavour at a time, so that up to 4 different flavours could be placed in the multi pack. When, but not before, the cartons reach the right spot the robots pick up the pots (usually 2 per robot) and place them in the pre-cut holes in the semi formed cartons. At this stage the pots are suspended, the majority of the pot having passed through the hole in the carton and the top being caught by the cardboard in which the holes have been cut. The cartons, each now holding 6 single pots in a variety of flavours, are then conveyed to the Mohrbach Closer. This finishes the creation of what is known as Top Clip packaging by folding the top of the carton and gluing it into a closed position.
The cartons then move to the Vepatec tray loading machines (supplied by RTS) for loading into the original trays – 2 packs of 6 yoghurts per tray. The cartons then move to the Markem labelling machine and the Loma Checkweigher and then the Palletiser and Stretch wrapper.
In addition Line 1 was to mix and repack square pots into boxes but at a reduced rate.
Line 2
Line 2 was for the flow wrapping of twin pots. As with Line 1, four infeed conveyors (all to be loaded manually) were to convey 12 individual twin pots on trays to the RTS supplied detraying units. The trays would then, following detraying, be conveyed to the RTS supplied Vepatec tray loading machine. Meanwhile the twin pots would be conveyed towards the Flexpicker robots which would place them, two at a time, onto a piece of flat printed cardboard which is carried along the line by a conveyor towards the Rose Forgrove flowrapper. The contents of each pack (3 pots stacked on 3 other pots resting on a flat piece of cardboard) are then presented to the flowrapper machine. This wraps the 6 twin pots in a printed plastic wrapper which it then cuts and seals. The packs are then conveyed to the Vepatec packing machine which loads them into their original trays, 2 packs to a tray. They then pass to the labelling machine, weighing machine, palletiser and stretch wrapper.
Two things are apparent from the above description. Firstly RTS was not to supply all the equipment for Lines 1 and 2. It was not to, and did not, supply (i) the Mohrbach erectors, conveyor and closer; (ii) the Rose Forgrove flowrapper and associated conveyor; (iii) the Markem labellers; (iv) the Loma checkweighers; (v) the palletisers and off-pallet infeed terminals; and (vi) everything further down the line 1. As is apparent from that list Müller was to supply, inter alia, the packaging equipment for the lines. Secondly, the ability of the lines to produce the desired number of packs per minute was dependent on the proper functioning of all the equipment and the efficient interaction of different pieces of equipment. That which was not to be supplied by RTS was described as “Free Issue Equipment”.
The negotiations prior to Quotation J
Each of RTS' quotations, with the exception of Quotation E, referred to RTS' terms and conditions (and from quotation F RTS' standard terms and conditions) of sale. These were, however, never provided to Müller until November 2007 when RTS' solicitors disclosed them. Müller did not ask for them in 2005.
On 20 th August 2004, after Quotation E had been delivered, there was a meeting between Mr Etienne Croquette, the Sales Manager of RTS, and Mr David Salisbury of Müller at which Müller indicated that it wished any contract to be based on its own commercial terms rather than those of RTS. RTS said that it was happy to discuss this and asked Müller to produce a copy of the terms that it wished to use. At a further meeting on 17 th September 2004 Müller raised the issue again. Mr Croquette suggested that Müller should use form MF/1 as a base. MF/1 is a model form devised by the Institute of Electrical Engineers, which RTS regarded as neutral as between employing and contracting interests.
On 26 th November 2004, by which time RTS had produced Quotation G, Müller produced a first draft of the special conditions it sought to incorporate. This involved some 27 pages of amendments. RTS roundly rejected this in December.
Quotation H
On 7 th January 2005 Mr David Bradford, RTS' Managing Director, submitted Quotation H to Müller. In his letter of that date he recorded the parties' anticipation that all or part of the quotation document would be used as the User Requirement Specification (“URS”) for the project. He pointed out that the quotation was currently based on RTS' standard terms and conditions “as it was agreed that any amendments to the standard MF1 contract would be decided after supplier selection”. He said that RTS would make themselves available to discuss a set of amendments to MF/1 “and would then re-issue our quotation under the new agreed terms”.
On Monday 10 th January a meeting took place between RTS and Müller. David Bradford and Etienne Croquette presented RTS' quotation H to a Müller team consisting of (i) Trevor...
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