Spring Salmon And Seafood Limited V. Wisco Processing Limited+pieters Visbedrijf Nv+fjord Seafood Chile Sa
| Jurisdiction | Scotland |
| Judge | Lord Clarke |
| Date | 29 September 2004 |
| Docket Number | CA5/04 |
| Court | Court of Session |
| Published date | 29 September 2004 |
| OUTER HOUSE, COURT OF SESSION | |
| CA5/04
| OPINION OF LORD CLARKE in the cause SPRING SALMON AND SEAFOOD LIMITED Pursuers; against (FIRST) WISCO PROCESSING LIMITED, (SECOND) PIETERS VISBEDRIJF NV, AND (THIRD) FJORD SEAFOOD CHILE SA Defenders: ________________ |
Pursuers: Hayhow; Tods Murray WS
Defenders: Edward, Solicitor Advocate; Maclay Murray & Spens
29 September 2004
[1]The pursuers, in this commercial action, sue the defenders jointly and severally for breach of contract. The sum sued for is £983,435.75 with interest. The matter came before me for a proof before answer restricted to the merits of the pursuers' case.
History of the parties' communings
[2]I have found the following facts to be established, a good deal of which were not a matter of dispute and comes from correspondence passing between the parties.
[3]The pursuers are a company mainly engaged in the business of processing and supplying seafood and other fish products. In 2002 they had a contract to supply a company known as Oscar Mayer Limited. Oscar Mayer produce ready-made meals and supply them to, inter alia, the large United Kingdom supermarket company, Sainsburys. The pursuers' contract with Oscar Mayer was due to expire originally in October 2002. That contract was subsequently amended, in April 2002, to cover the period from 1 May 2002 to 30 April 2003.
[4]From late in 2000 the pursuers had purchased fish products from the third defenders, a company based in Chile. The third defenders were, and are, members of a group of related companies of whom the first and second named defenders are also members. The group structure is somewhat complex and has changed over the years but, as will be seen, in the event, nothing turns on the exact relationship between the respective defenders.
[5]The Managing Director of the pursuers is Mr Stuart Thomas. He had dealt with Mr Dag Gjerde, who is employed by the third defenders, for the supply, by the third defenders, to the pursuers, of fish and fish products. Mr Dag Gjerde is Norwegian.
[6]The first named defenders are a Scottish company based in Stornoway. They are 100% owned by the second named defenders. The first named defenders are engaged in the business of salmon processing, portioning, filleting and smoking salmon and selling whole fish. The third named defenders were engaged, at the material time, in salmon farming and processing and supplying frozen salmon and salmon pieces to companies in the United Kingdom, including the pursuers. The second named defenders, at the material time, for the purposes of this action, were engaged in processing all kinds of fish. In the course of 2002, a Mr Derrick Harris joined the first defenders as their general manager. He remained in that position until February 2004. Mr Harris was someone known to the pursuer's Mr Stuart Thomas for over 20 years. They had become friends through their business dealings.
[7]In about June 2002, the pursuers approached the first defenders to obtain supplies of fish products from them, which the first defenders agreed to do. The pursuers, through their Mr Thomas, sought to make the trading relationship between them and the first defenders subject to what they described as a non-circumvention and non-disclosure agreement. A copy of this document is attached to 6/19 of process. 6/19 is an e-mail message from Mr Thomas addressed to Mr Harris. It is dated 28 June 2002. It states:
"Please print off the enclosed agreement. Please sign two copies, and post to us for signing. We will return one original. Please fax one signed copy to us asap today on 01189 476235. Any queries please call Rod. Best regards Stuart".
The attached "non-circumvention and non-disclosure agreement" provided inter alia as follows:
"(1) WISCO will not, without the consent of SPRING, make any contract with, deal with or otherwise be involved with a third party introduced by SPRING in any transaction relating to salmon products during the terms of this agreement.....
(4) this agreement shall be binding on all entities owned or controlled by a signatory, and upon the associates, the principals, employees, employers, assignees, family and heirs of each signatory.....
(5) this agreement will remain in effect for five years from the date afixed below and shall be governed by the law of Scotland"
Mr Thomas appears to have followed up his e-mail of 28 June, with an e-mail dated 1 July, which is part of 6/20 of process. It is addressed to Mr Harris and is in the following terms:
"Can you please confirm the number of days from harvest to processing. Do you process your fish pre or post rigor? What is the time from process to delivery in Glasgow? For the Monday delivery please advise time from harvest through process to delivery. Can you please print off the confidentiality contract and fax a signed copy to us. We need to have this done prior to sampling.
Many thanks Stuart".
The reply to that e-mail from Mr Harris is also part of 6/20 of process and it is inter alia in the following terms:
"First thing i am not in a position to sign any contract that would bind wisco to springs (especially as we have not even made a sale between our companies) without a formal agreement on future business, also this a very restrictive agreement which could in effect stop wisco dealing with anyone else in the UK. When we have an agreement on specs and we have entered into a formal trading position I think this will be the time to discuss contracts".
The reply to that e-mail, from Mr Thomas, is an e-mail dated 1 July 2002 addressed to Mr Harris, which is 6/21 of process. That e-mail states inter alia as follows:
"I can see your position but we have to invest a great deal annually to maintain the M & S accreditation and unless we can obtain a non-circumvention agreement with respect to individual contracts then it is difficult for us to proceed. For the moment I will accept an e-mail from you to confirm that the current contract we are working on will not be circumvented by Wisco. I will then revert with full details of our contract and we can work openly. We can agree this initially for a period of 6 months and once the deal is done and the business is underway you can sign our contract specific to this particular piece of business. I hope this will be ok for you."
The reference to "M & S" is a reference to Marks and Spencer. There appears to have been no reply given to Mr Thomas, in writing, to that e-mail.
[8]In Article 2 of condescendence the pursuers aver as follows:
"Inter alia the pursuers would purchase salmon from the first defenders which they would in turn sell on to Oscar Mayer Limited, Furnham Road, Chard, Somerset, (Oscar Mayer) and Members of Oscar Mayer Group of Companies. The Defenders were aware that the Pursuers were selling on their product to Oscar Mayer Group of Companies. The Pursuers were apprehensive that the Defenders might attempt to supply Oscar Mayer direct which would result in the loss of business to the Pursuers" (my emphasis).
That apprehension, it seems, gained a concrete basis in the following circumstances. On 18 July 2002 Mr Thomas e-mailed Mr Harris, number of 6/22 of process. The heading is "Oscar Mayer conflict of interest". The significance of that e-mail is such that I require to set out its terms in full:
"As discussed we have a conflict of interest with your factory in Belgium and our customer Oscar Mayer in Chard, Somerset.
This has been a customer of ours for 6 years and over that time we have built up a portfolio of seafood products. We have a very strong relationship with the company but unfortunately the group buyer has seen the Pieters label on one of your boxes and has contacted Pieters directly in Belgium.
The products we supply are:-
Scottish salmon pieces bagged for poaching (Wisco supply to us).
Chilean salmon pieces bagged for poaching (from our own Chilean salmon portioning line using Fjord Chile raw material).
Salmon portions, centre cuts only 88-100g, deep skinned and boneless, dimensionally controlled, from our factory in Grimsby but cut from fillet supplied by Fjord Chile (Contact: Dag Gjerde). Our selling price: (£4.45/kg!).
These are our current salmon lines with Oscar Mayer and we have been advised that the group buyer has now arranged for samples of these products to come in from Belgium of which the Scottish salmon would come via yourself.
Given the circumstances we of course would have a major problem if Pieters as part of Fjord and Wisco now take this business from us. We would be compelled to withdraw our business from Fjord Chile (21mt of fillet received 2 weeks ago, 20 mt due in 24.7.02 and another 21mt confirmed today); we would also be unable to take any further volumes of pieces from Wisco and we would have withdraw from finalising the 200mt fresh salmon portion contract with Wisco. I am sure that you can see our predicament on this. We put no blame at all on Pieters for these events as we are sure they would not have pursued our customer actively but could you please now clarify the position with regards Fjord and Pieters going forward at your earliest convenience. We would ask you to confirm that you will not sample Oscar Mayer in competition with us.
We have been offered Scottish pieces from a Grimsby packer at under £0.80/kg ongoing but have chosen to continue with your product as it is more suitable for the other customers we have on this product and were trying to generate enough demand to use 100% of your production. It would be crazy if we now have to use this product to compete with Wisco for the same business!
Assuming we can sort all of this out in the next few days we will wish to move forward with a factory trial on the portions. We base the cost of £5.60/kg until you can confirm your new contract with the farms. We will also take the next 3 pallets of Scottish pieces.
We hope to hear back from you tomorrow." (my emphasis).
It is important to...
To continue reading
Request your trial