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You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Aston Martin Lagonda Ltd v Premier International Motors Group Co WLL [2024] EWHC 284 (Comm) (19 February 2024) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2024/284.html Cite as: [2024] EWHC 284 (Comm) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
LONDON CIRCUIT COMMERCIAL COURT
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
(Sitting as a Deputy Judge of the High Court)
____________________
ASTON MARTIN LAGONDA LIMITED |
Claimant |
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- and – |
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PREMIER INTERNATIONAL MOTORS GROUP CO. W.L.L. |
Defendant |
____________________
Jeff Chapman KC and Hannah Bernstein (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Defendant
Hearing dates: 4, 5, 6, 7, 8, 11, 12 and 14 December 2023
____________________
Crown Copyright ©
Lesley Anderson KC :
Introduction
The Heritage Vehicles
The Contractual Framework
The 2015 Agreement
The 2016 Agreement
The Classic Car Market
(i) The extent to which the price received for each of the 2015 Heritage Vehicles was reflective of the [PMP] that existed on the date the parties entered into the 2015 Agreement;
(ii) The extent to which the price received for each of the 2015 Heritage Vehicles was reflective of the [PMP] that existed at the point of sale;
(iii) The extent to which the price received for each of the 2016 Heritage Vehicles was reflective of [CMV] that existed at the point of sale;
(iv) The extent to which the restoration, works and/or repair costs incurred in respect of the 2015 Heritage Vehicles – where such costs exceeded £10,000 in respect of any of the 2015 Heritage Vehicles – were reasonably and proportionately incurred given the conditions in which the vehicles had been stored; their state on receipt; and the eventual sale price which was then achieved;
(v) The extent to which the restoration, works and/or repair costs incurred in respect of the 2016 Heritage Vehicles – where such costs exceeded £10,000 in respect of any of the 2016 Heritage Vehicles – were reasonably and proportionately incurred given the conditions in which the vehicles had been stored; their state on receipt; and the eventual sale price which was then achieved;
(vi) The extent to which the sales process followed in respect of each of the Heritage Vehicles ensured that the Heritage Vehicles were sold for as close to [CMV], or to [PMP] as possible.
The Witnesses
"In the light of these considerations, the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses' recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth".
Factual Background
The Proper Construction of the 2015 Agreement and the 2016 Agreements
"The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made".
"… the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so, the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other".
"When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to 'what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean', to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focussing on the meaning of the relevant words … in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the [contract], (iii) the overall purpose of the clause and the [contract], (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions…".
17. "First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focusing on the issue covered by the provision when agreeing the wording of that provision.
18. Secondly, when it comes to considering the centrally relevant words to be interpreted, I accept that the less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. That is simply the obverse of the sensible proposition that the clearer the natural meaning the more difficult it is to justify departing from it. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning. If there is a specific error in the drafting, it may often have no relevance to the issue of interpretation which the court has to resolve.
19. The third point I should mention is that commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG [1974] AC 235, 251 and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191, 201, quoted by Lord Carnwath at para 110, have to be read and applied bearing that important point in mind.
20. Fourthly, while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.
21. The fifth point concerns the facts known to the parties. When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time that the contract was made, and which were known or reasonably available to both parties. Given that a contract is a bilateral, or synallagmatic, arrangement involving both parties, it cannot be right, when interpreting a contractual provision, to take into account a fact or circumstance known only to one of the parties.
22. Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council v Stewart Milne Group Ltd [2011] UKSC 56, 2012 SCLR 114, where the court concluded that "any … approach" other than that which was adopted "would defeat the parties' clear objectives", but the conclusion was based on what the parties "had in mind when they entered into" the contract (see paras 17 and 22)".
The 2015 Agreement
The Appropriate Exchange Rate for the Debt
AML's Power of Sale – Notice and Prices
What price was AML obliged to achieve on the sale of the 2015 Heritage Vehicles?
The Requirement for a Collective Assessment
What was the scope of PIMG's liability for costs under the 2015 Agreement?
If liable, on what date was PIMG obliged to make payment?
Interest
The 2016 Agreement
Assured Provenance Certification (APC)
The Best Endeavours Obligation
What price was AML obliged to achieve on the sale of the 2016 Heritage Vehicles?
The Requirement for Collective Assessment
What was the scope of PIMG's liability for costs under the 2016 Agreement?
The Credit Note
"By clauses 2.b and 2.c of the 2016 Agreement, certain sums were to be offset against the £14.3 million Credit Note until that sum was exhausted. In particular: (i) the price of certain Special Cars to be shipped by AML was to be offset in full; (ii) any repatriation or restoration costs incurred by AML on behalf of PIMG under clause 1.c of the 2016 Agreement were to be offset in full; and (iii) the price of certain Special Cars to be shipped by AML in 2017 and 2018 were to be offset in part".
"In the premises, if and to the extent that the Court determines that under Clause 1.e of the 2016 Agreement AML was entitled to charge PIMG for any or all of the repatriation and restoration costs as pleaded in paragraph 13 of the Amended Particulars of Claim (and disputed in paragraph 16 above), which fell within Clause 1.e of the 2016 Agreement, such sums should have been offset against the outstanding balance of the Credit Note and are not otherwise recoverable from PIMG by AML".
"Further or in the alternative PIMG is entitled to and claims all necessary accounts and inquiries into the balance due from AML to PIMG under the Credit Note; a declaration that such balance is due and owing to PIMG; and either (i) an order that the said balance be paid by AML to PIMG and/or (ii) an order that the said balance be set off against any and all sums claimed by AML in these proceedings as damages or otherwise. The unexhausted balance on the Credit Note as at 10 November 2023 is £5,384,080; calculated as set out in paragraphs 3, 4(a) and 4(b) of the letter dated 22 February 2023 from Slaughter and May to [CMS]. It is denied that the sum of £441,000 set out in paragraph 4(c), or the sums set out in paragraphs 7 and 8 of the letter, fall to be deducted from the Credit Note balance".
Interest
Subsequent Events and the Sale of the 2015 and 2016 Heritage Vehicles
The Expert Evidence
The Alleged Breaches of the 2015 Agreement
Did AML act in breach of Clause 2.7(b) by failing to give 5 days' notice to PIMG and/or did PIMG have knowledge and/or consent to and/or give authority for the sales?
Did AML act in breach of Clause 2.7(b) by failing to sell the 2015 Heritage Vehicles at prevailing market prices (PMP)?
Were the repair, re-work and restoration costs reasonably and proportionately incurred in relation to the 2015 Heritage Vehicles?
Were the storage costs reasonably and proportionately incurred in relation to the 2015 Heritage Vehicles?
Is AML entitled to recover commissions on the sale of the 2015 Heritage Vehicles, and if so, in what amount?
Is PIMG liable to pay the 2015 Shortfall and has AML properly invoiced PIMG for the 2015 Shortfall?
The Alleged Breaches of the 2016 Agreement
Did AML act in breach of Clause 3(a) by either (i) failing to use its best endeavours to sell the 2016 Heritage Vehicles at contemporary market values (CMV) or (ii) by failing to achieve CMV in relation to them?
Did AML act in breach of an implied term by failing to achieve at least the minimum level of Assured Provenance Certification (APC)?
Were the repair, re-work and restoration costs reasonably and proportionately incurred in relation to the 2016 Heritage Vehicles?
Were the storage costs reasonably and proportionately incurred in relation to the 2016 Heritage Vehicles?
Is AML entitled to recover commissions on the sale of the 2016 Heritage Vehicles, and if so, in what amount?
Is PIMG liable to pay the 2016 Shortfall and has AML properly invoiced PIMG for the 2016 Shortfall?
The Credit Note
Other matters
Disposal