Seafood Holdings Ltd v My Fish Company Ltd and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 07 April 2017 |
| Neutral Citation | [2017] EWHC 766 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC-2016-002039 |
| Date | 07 April 2017 |
2017 EWHC 766 (CH)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Norris
Case No: HC-2016-002039
Christopher Cook and David Went (instructed by Mills & Reeve LLP) for the Claimant
Martin Budworth and Douglas Cochran (instructed by JMW LLP) for the Defendants
Hearing date: 2 December 2016
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.
Seafood Holdings Limited ("Seafood") is a national supplier of fresh and frozen fish and seafood products to (principally) hotel chains, pubs, and restaurants. One of its eight depots was based at Fleetwood. One of the key customers of the Fleetwood depot was a supermarket chain known as E H Booth & Co Ltd ("Booths"): Seafood suppled Booths with wet fish for the fish counters in store and with pre-packed Booths-branded fish. The Sales Director of Seafood, the branch manager of the Fleetwood depot and the former account manager for Booths was Gary Apps ("Mr Apps"). He parted company with Seafood with effect from 31 March 2015 under the terms of a Settlement Agreement dated 2 April 2015 ("the Agreement").
One of the terms of the Agreement was that Mr Apps would not without the prior written consent of Seafood solicit the custom or business of any relevant customer of Seafood for a period of three months from 31 March 2015.
On 9 April 2015 Mr Apps incorporated My Fish Company Limited ("My Fish") for the purpose of trading in the same line of business as Seafood. On 6 August 2015 Booths gave notice terminating the Seafood supply contract with effect from 5 September 2015. Seafood say that on 7 August 2015 Booths became a customer of My Fish for the supply of wet and prepacked fish, for which purpose My Fish took delivery of packaging and labelling machinery which must have been ordered in May 2015.
The other defendants are former employees of Seafood (as traders or managers connected with the Booths account) who joined Mr Apps at My Fish.
The establishment of a directly competing business by a former senior employee, which new business attracts customers and former employees of his own former employer, can occur without any wrongdoing. But Seafood say that the business now conducted by My Fish was arranged by the individual Defendants whilst they were still its employees and that the Defendants have acted in breach of contract or breach of fiduciary duty or as part of a conspiracy to injure Seafood by unlawful means. The Defendants contest this, and Seafood's case must be proved at trial.
But in addition to defending Seafood's claim My Fish and Mr Apps bring a counterclaim. The broad factual foundation for the claim is the allegation that Seafood began a campaign of pressuring numerous UK fish wholesalers and other suppliers to the industry not to supply My Fish with any products or services, and in some cases that it threatened to withdraw all of Seafood's purchases from the supplier if it did trade with My Fish. The cause of action relied upon is "causing loss by unlawful means" i.e. (a) wrongful interference by Seafood with the actions of a third party in which My Food has an economic interest and (b) an intention on the part of Seafood thereby to cause loss to My Food. The "wrongful interference" or "unlawful means" identified are (a) one common law wrong ("economic duress, being agreements made on illegitimate commercial pressure") and (b) two alleged breaches of the Competition Act 1998 ("the competition law claims").
First, it is alleged that Seafood's activities amounted to an abuse of a dominant position in the market (i) by the imposition of unfair trading conditions on suppliers or (ii) by making contracts with suppliers subject to acceptance of supplemental obligations having no connection with the subject of the contract, contrary to section 18 of the 1998 Act ("the dominance claim"). The "market" relied on is the wholesale supply of wet fish and seafood in the United Kingdom to trade buyers (including retailers, such as Booths and ordinary fishmongers, restaurants and contract caterers). It is alleged that this market is worth £600 million annually, and that Seafood has a 21–25% share of the market i.e. of the selling market. It is accepted that the share is at a level below that at which a rebuttable presumption of dominance arises: but it is argued that Seafood was in a position in the market to have an appreciable influence on the conditions under which competition will develop and was able to act largely in disregard of the conditions under which competition would naturally develop.
Second, it is alleged that Seafood's activities involved the making of agreements having as their object the prevention, restriction or distortion of competition, contrary to section 2 of the 1998 Act ("the object infringement claim"). (The matters prohibited by section 2 of the 1998 Act are sometimes referred to as "the Chapter I prohibition"). The argument is that by its activities in relation to its suppliers Seafood is raising barriers to the entry of My Fish into the downstream (selling) market.
The introduction of the competition law claims into the Counterclaim has had a radical effect on the action both procedurally and substantively. Whereas the claim and the defence, and that part of the counterclaim that relies upon economic duress, involve issues of private law to be determined between two business rivals, competition law is quasi-public, having as its object the protection of consumers (not of business competitors), so that the Court is required to look beyond the immediate interests of My Fish and consider the interests of the market which it serves: see At-the-races v BHB [2007] EWCA Civ 38 at [215]. Because of that a different procedural regime applies.
By this application Seafood seeks summary disposal of the competition law claims advanced by My Fish. It is said that the competition law claims ought to be struck out pursuant to CPR 3.4(2)(a) or (c) as not disclosing any reasonable grounds for bringing economic tort claim based upon them. Alternatively it is said that summary judgment ought to be given under CPR 24.2 on the grounds that My Fish has no real prospect of succeeding in its case that Seafood has committed an economic tort by reason of the competition law claims.
It is artificial to consider only the pleaded case (and assume it to be true) when evidence has also been adduced on either side which (if material) could either underpin an application to amend the statement of case or demonstrate that a pleaded fact cannot be established. I shall therefore focus on the application for summary judgment: but, as will immediately appear, that is not to say that the pleaded case can simply be disregarded.
It may be taken that I have well in mind the principles upon which the jurisdiction conferred by CPR 24 is to be exercised (and in particular to the summary of the applicable principles made by Lewison J in Easy Air [2009] EWHC 339 (Ch)). Roth J (when giving judgment in Sel-Imperial Ltd v British Standards Institution [2010] EWHC 854 (Ch)) made reference to an earlier statement of those principles by Lewison J, and then (at [16] to [18]) went on to make particular observations about their application to competition law claims in these terms:-
"I would add, with regard in particular to competition law claims (or defences), that where the area of law is in the course of development the court should be cautious "to assume that it is beyond argument with real prospect of success that the existing case law will not be extended or modified" so as to encompass the basis of argument advanced… Moreover, it is important that competition claims are pleaded properly. To contend that a party has infringed competition law involves a serious allegation of breach of a quasi-public law, which can lead to the imposition of financial penalties as well as civil liability. A defendant faced with such a claim is entitled to know what specific conduct or agreement is complained of and how that is alleged to violate the law. As Laddie J observed in BHB Enterprises v Victor Chandler International Ltd [2005] EWHC 1074 (Ch) at [43] " These are notoriously burdensome allegations, frequently leading to extensive evidence, including expert reports from economists and accountants. The recent history of cases in which such allegations have been raised illustrates that they can lead to lengthy and expensive trials." Subsequent experience only reinforces the accuracy of that observation. This is not to adopt an over technical approach to pleadings. It is consistent with the overriding objective to enable the case to be dealt with expeditiously and fairly. It is only through the clear articulation of each party's position in its statement of case, with appropriate factual detail, that the other side can know what case it has to meet and what issues any experts have to address, and that the court can effectively exercise its case management powers."
I intend to follow that guidance. But I make clear that I do not understand it to impose some higher "survival" threshold for competition claims than that laid down in CPR 24 itself: nor, if that threshold is crossed, does it mean that the expense and burden of adjudicating upon such competition claims justify the Court saying that My Fish is not entitled to require Seafood to engage in it. Further, I understand the guidance to require My Fish in this case to plead those matters of which it ought to have...
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