Wickman Machine Tool Sales Ltd v L. Schuler A.G.
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE EDMUND DAVIES,LORD JUSTICE STEPHENSON |
| Judgment Date | 26 April 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J0426-3 |
| Date | 26 April 1972 |
| Court | Court of Appeal (Civil Division) |
[1972] EWCA Civ J0426-3
The Master Of The Rolls (Lord Denning)
Lord Justice Edmund Davies and
Lord Justice Stephenson
In The Supreme Court of Judicature
Court of Appeal
Appeal by claimant from order of Mr. Justice Mocatta dated 18th February, 1971.
Mr. ANDREW BATESON, Q.C., and Mr. C. GRAY (instructed by Messrs. Joyns on-Hicks & Co., London agents for Messrs. Rotherham & Co.) appeared on behalf of the Appellant Claimants.
Mr. DAVID HIRST, Q.C., Mr. R.A. Gatehouse, Q.C., and Mr. A. WHITFIELD) instructed by Messrs. Allen and Overy) appeared on behalf of the Respondents.
OUTLINE OF FACTS
L. Schuler A.G. are German manufacturers with their factory at Goeppingen in West Germany. They make huge panel presses and supply them to motor manufacturers. They make other things as well. In 1963 they appointed an English company to distribute their goods in England. It was Wickman Machine Tool Sales Ltd. I will call it "Wickman Sales". It is a subsidiary of a big manufacturing company - Wickham Ltd. The appointment was: to be for 4½ years. The English distributors - Wickman Sales - were to sell the panel presses as agents for the German manufacturers -Schuler - at a commission. They were to sell the other things on a resale basis.
In the written agreement, Wickman Sales promised to send their representative to visit six of the leading motor manufacturers in England at least once in every week. The purpose was to try to get orders for panel presses. During 1963 Wickman Sates failed to make the visits every week as they should have done. Schuler complained but did not seek to terminate the agreement on that account. Steps were taken by Wickman Sales to ensure the required visits in the future. These largely succeeded but there were a few occasions when visits were missed. The breaches were not material breaches. They were quite trifling. But, nevertheless, Schuler sought on that account to terminate the appointment. They terminated it on 27th October, 1964. Wickman Sales say that this termination was unjustified. It was, they say, a repudation of the contract and they claim damages on that account. Schuler say that they were entitled to terminate it as they did.
The dispute went to arbitration. The arbitrator was Mr. Peter Bristow, Q.C. (now Mr. Justice Bristow). He heard the caseon seven days in July 1969. His award was in favour of the English distributors, but he stated it in the form of a special case. This came before Mr. Justice Mocatta for seven days in January and February, 1971. He decided in favour of the German manufaaturers. It came before us in February 1972, and we heard it for five days. Now we come to give our decision. Eventually the case will be found to turn on the meaning of one word "condition". But first I must give the details.
1. THE AGREEMENT OF 1st MAY. 1963
The agreement between the parties is dated 1st May, 1963. There are two clauses which need close consideration. I will set themout, underlining the important words. Clause 7 is the clause which requires Wickman Sales to send representatives to visit the motor manufacturers. It says:-
"7. Promotion by Wickman Sales
(a) Wickman Sales will use its best endeavours to promote and extend the sale of Schuler products in the Territory;
(b) It shall be a condition of this agreement that -
(1) Wickman Sales shall send its representatives to visit the six firms whose names are listed In the Schedule hereto (i.e. Ford. Vauxhall. B.M.C. Pressed Steel and Leyland) at least once in every week for the purpose of soliciting orders for panel presses.
(ii) That the same representative shall visit each firm on each occasion unless there are unavoidable reasons preventing the visit being made by that representative, in which csse the visit shall be made by an alternate representative, and Wickman Sales will ensure that such a visit is always made by the same alternate representative.
Wickman Sales agrees to inform Schuler of the names of the representatives and alternate representatives instructed to make the visit required by this clause."
Clause 11 provides for a power to determine the agreement. It says:-
11 Duration of Agreement
(a) This Agreement and the rightsgranted hereunder to Wickman Sales shall commence on 1st May, 1963, and shall continue in force (unless previously determined as hereinafter provided) until 31st day of December, 1967, andthereafter unless and until determined by either party upon giving to the other not less than 12 months' notice in writing to that affect expiring on the said 31st day of December 1967 or any subsequent anniversary thereof PROVIDED that Schuler or Wickman Sales may by notice in writing to the other determine this Agreement forthwith if:-
(i) the other shall have committed a material breach of its obligations hereunder and shall have failed to remedy the same within 60 days of being required in writing so to do,or
(ii) the other shall cease to carry on business or shall enter into liquidation (other than a members' voluntary liquidation for the purposes of reconstruction or amalgamation) or shall suffer the appointment of a Receiver of the whole or a material part of its undertaking;
and PROVIDED FURTHER that Schuler may by notice determine this Agreement forthwith if Wickman Sales shall cease to be a wholly-owned subsidiary of Wickman Limited.
2. THE PERIOD FROM 1st May. 1963 to 13th January, 1964.
The arbitrator found that during this period there were failures by Wickham Sales to visit the six firms as required by clause 7, and that these failures were a material breach of the obligation. These failures were the subject of discussion between the two leading figures - Mr. Schuler for Schuler's and Mr. S.W. Perkins of Wickman Sales. They were the sole members present at a Board Meeting of a subsidiary company - Schuler Presses Ltd. They met on 21st November, 1963, at the Dorchester Hotel. The minutes snow that they thought a failure to visit could not be made a ground for determining the agreement unless it was a material breach. The minutes read:-
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1. "It would seem that the Wickman organisation as at present constituted is not suitable for their obligation to visit the firms in the Motor-Car Industry, as described in their agreement - not less than once a week exclusively on Schuler business.
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2. This puts them in breach of contract, which, under the terms of the agreements must be righted in sixty days from notice thereof.
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3. The solution is that Mr. A.C. Silverton should be made responsible for all panel-press business."
Mr. Silverton was an employee of Schuler's, who was to beseconded to work with Wickman. He discussed the position with Mr. Saramons, the legal adviser of Schuler's. On 14th December, 1963, he reported to Mr. Schuler:-
"…. In my discussions with Mr. Sammons, he advised that, according to the Contract. Wickman have sixty days to remedy any breach".
The arbitrator found that the precise extent of the failure to visit was not known to Mr. Schuler: but that he never contemplated determining the distributorship agreement because of the breach. Both he and Mr. Perkins concentrated on making the agreement work effectively. It was arranged that Mr. Silverton was to back up the Wickman Sales effort in respect of the motor finds. They completed a revised visiting schedule so as to enable the agreement to be complied with.
The arbitrator found that on the facts there was a waiver by Schuler's or their rights in respect of breaches antecedent to 13th January, 1964. This was challenged before us by Mr. Hirst, Q.C., on the ground that Schiller's did not have full knowledge of all the breaches, but only vague information that there had been breaches. It is true that Schuler's only knew in a general sort of way that there had been breaches, but it is quite clear that they did not trouble to ask for details. Their conduct was such that, whatever the extent of the breaches, they were not going to determine the agreement on account of them. That is the reason why Mr. Silverton was appointed and a revised visiting schedule prepared. Their conduct is a clear waiver of all breaches up to 13th January, 1964.
3 THE PERIOD FROM 13th JANUARY, 1964 to 13th JULY. 1964.
From 13th January, 1964, to 29th June, 1964, there was a very considerable improvement in weekly visits. Nearly all were performed. Very few were missed and these often with good excuse,as, for instance, when a firm asked the representative not to call. Out of 144 weekly visits to the six firms, only 15 were missed. The arbitrator found that these failures were not a material breach.
From 29th June, 1964 to 13th July, 1964, there was an important exhibition of machine tools at Olympia. During that fortnight all the Wickman representatives were on duty at Olympia. They were visited there by representatives from the six motor firms. So the Wickman representatives did not make separate visits to the firms themselves. The arbitrator found that the failures to visit during the period of the Olympia Exhibition were not a material breach.
Olympia, however, proved a turning point in the relations of the parties. Mr. Perkins of Wickman had been in poor health. So Wickman relieved him of his duties. He did not attend, at Olympia. When Mr. Schuler arrived at Olympia he was told the news about Mr. Perkins. It came as "a great hard shock to him". He decided to determine the agreement with Wickman. On getting back to Germany, he wrote an important letter of 14th July, 1964 to Wickmans:-
"We fully recognise and appreciate that your Company must be free to take its own decisions regarding the appointment of personnel, but you will no doubt appreciate the significance which your decision has to your relationship with...
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