Spice Girls Ltd v Aprilia World Service BV
| Jurisdiction | England & Wales |
| Judge | The Vice-Chancellor |
| Judgment Date | 24 January 2002 |
| Neutral Citation | [2002] EWCA Civ 15 |
| Docket Number | Case No: A3/2000/3122 |
| Court | Court of Appeal (Civil Division) |
| Date | 24 January 2002 |
[2002] EWCA Civ 15
The Vice-Chancellor
Lord Justice Chadwick and
Lord Justice Rix
Case No: A3/2000/3122
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MRS. JUSTICE ARDEN
Royal Courts of Justice
Strand,
London, WC2A 2LL
Mr. Ian Mill QC and Mr. Vernon Flynn (instructed by Messrs Lee and Thompson) for the Appellants
Mr. Andrew Sutcliffe QC(instructed by CMS Cameron McKenna) for the Respondents
Hearing dates : 27th, 28th 29th November 2001
This is the judgment of the Court
Introduction
1. On 24th February 1998 the Spice Girls, a well-known group of girl singers then consisting of five members, embarked on a tour of Europe. The claimant ("SGL"), a company owned by them and through which their services were exploited, had instructed agents ("KLP") to obtain sponsors for the tour. The agents made contact with Aprilia Spa ("Aprilia"), a company incorporated in Italy and a manufacturer of motorcycles. On 4th March 1998 heads of agreement were reached between SGL and Aprilia for the latter to sponsor the Spice Girls tour of Europe, due to end on 29th May 1998, and, on a more limited basis, the tour of the United States then planned for the period from 15th June to 31st August 1998. The sponsorship was announced on 8th March 1998.
2. The terms of the heads of agreement were substantially performed by all parties until given contractual effect by an agreement in writing dated 6th May 1998 ("the Agreement") made between SGL and Aprilia World Service BV ("AWS"), a member of the Aprilia Group incorporated in the Netherlands. In the period between the conclusion of the heads of agreement and the execution of the Agreement two significant events occurred. The first is a fax sent on 30th March 1998 by KLP to Aprilia in which confirmation was given of the commitment of the Spice Girls to their involvement with Aprilia. The second is the filming in London on 4th May 1998 of a TV commercial ("the commercial shoot") in which all five Spice Girls participated which was designed to implant in the minds of the public an association between the products of Aprilia, primarily air-cooled motor scooters, and the Spice Girls.
3. The Agreement signed on 6th May 1998 described the Spice Girls as "currently consisting" of the five named members. It provided for AWS to pay £400,000 by three instalments, two of which had already been paid, and £112,500 as a non-returnable advance against royalties payable in respect of motor scooters manufactured and sold by the Aprilia Group bearing the name Sonic Spice. On 31st May 1998 it was announced that Ms Geri Halliwell, professionally known as Ginger Spice, had left the Spice Girls on 27th May 1998.
4. In a letter dated 8th June 1998 AWS informed SGL that it did not consider the departure of Ms Halliwell to constitute a breach of contract. Nevertheless AWS refused to pay either the third instalment or the advance against royalties. These proceedings were commenced by SGL on 22nd October 1998. SGL claimed payment of £212,500 being the balance of the third instalment and the non-returnable advance together with VAT and interest. The original defence and counterclaim of AWS relied on an express or implied representation and/or implied term or collateral warranty that SGL was unaware of any matter which might give AWS reason to believe that the Spice Girls might cease to consist of all five members during the minimum term of the Agreement. It was contended that SGL was aware of such matter and that AWS would give particulars thereof after discovery in the action.
5. In October 1999 Ms Geri Halliwell published her autobiography entitled "If Only". She disclosed that on both 3rd and 9th March 1998 she had informed the other four members of the Spice Girls that she intended to leave the Spice Girls at the end of the US tour in September 1998. She also revealed that at a meeting at Wembley Arena on 25th April 1998 she informed both the other members of the Spice Girls and their solicitor/manager of her intention.
6. In the light of these revelations AWS amended its defence and counterclaim so as to extend and particularise its contention that the Agreement had been induced by misrepresentation. AWS relied on the fax dated 30th March 1998, the description of the group in the Agreement as "currently consisting" of the five members, the participation of all the Spice Girls in the commercial shoot and the revelations in Ms Halliwell's autobiography with regard to the communication of her intentions to the other members of the group on 3rd and 9th March and 25th April 1998.
7. The action was tried by Arden J from 7th to 14th February 2000. She gave judgment on 24th February 2000. She concluded that any claim for breach of contract was precluded by the letter from AWS of 8th June 1998. There is no appeal in respect of that conclusion. The judge also decided that SGL was liable to AWS under s.2(1) Misrepresentation Act 1967 in respect only of misrepresentations by conduct arising from the participation of all five Spice Girls in the commercial shoot on 4th May 1998 and their approval of promotional material depicting the five Spice Girls intended for use in connection with Aprilia's scooters at any time during the period of the Agreement. She rejected all the other misrepresentations on which AWS relied. Both SGL and AWS contend that those decisions are wrong. The judge adjourned the action for further argument on issues relating to the amount of the liability of SGL to AWS and the effect of that liability on the claim of SGL against AWS.
8. In circumstances to which we will refer in greater detail later the conclusions of Arden J on those issues are contained in two further judgments given on 12th June and 20th July 2000. In summary she concluded that:
(1) SGL was liable to AWS for £39,699 as the value of scooters delivered by AWS to SGL pursuant to the Agreement;
(2) AWS was not required to give credit against that liability for any benefit derived by AWS from the effect of the Spice Girls sponsorship; and
(3) the sums claimed by SGL would, if paid, be recoverable by AWS under s.2(1) Misrepresentation Act 1967, so that, to avoid circuity of action, the claim of SGL should be dismissed.
SGL disputes the second conclusion. Success in that respect might have a corresponding effect on the third conclusion; to that extent therefore SGL challenges the third conclusion.
9. Arden J dealt with the costs of the proceedings on 20th July 2000. Though AWS had been successful she ordered it to pay 10% of its own and SGL's costs on the ground that AWS had acted unreasonably in pursuing its claim in contract and one form of express representation. AWS contends that the judge erred in principle and had no good reason for making such an order against a successful party.
10. Accordingly the issues for our determination are:
(1) whether SGL is liable to AWS under s.2(1) Misrepresentation Act 1967 either on the narrow basis accepted by the judge but challenged by SGL or the wider basis for which AWS contends;
(2) whether AWS is liable to give credit to SGL against the liability of the latter for any and, if so, what amount as representing the benefit derived by AWS from the Agreement;
(3) whether the judge should have ordered AWS to pay 10% of its own and SGL's costs of the action.
We will deal with those issues in that order.
Is SGL liable to AWS under s.2(1) Misrepresentation Act 1967s.2(1) Misrepresentation Act 1967?
The Facts
11. To explain the submissions of the parties and our conclusions it is necessary to describe the factual background in much greater detail. Nevertheless it is convenient at the outset to set out the terms of s.2(1) and to make some observations on it at this stage. S.2(1) provides:
"Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true."
12. Thus liability depends on four elements: (a) a misrepresentation made by one person to another, (b) a subsequent contract between them, (c) consequential loss and (d) an absence, at the time the contract was made, of a belief or reasonable grounds therefor in the truth of the facts represented. If all those conditions are satisfied then the representor is liable to the representee for such damages as would be payable if the misrepresentation had been made fraudulently. The relevant contract is the Agreement signed on 6th May 1998. If any misrepresentation for which AWS contends is made out it is not contended that SGL could or did establish the relevant belief or grounds therefor. Nor, subject to the second issue, is it disputed that AWS sustained loss. Thus the liability of SGL depends, largely, on whether at any time before the Agreement was signed a misrepresentation was made by SGL to AWS.
13. It is convenient to start with a description of those primarily involved. There were five Spice Girls called Geri Halliwell (Ginger Spice), Emma Bunton (Baby Spice), Victoria Adams (Posh Spice), Melanie Brown (Scary Spice) and Melanie Chisholm (Sporty Spice). Each had her own service...
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