![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ilkerler Otomotiv & Anor v Perkins Engines Company Ltd [2017] EWCA Civ 183 (23 March 2017) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2017/183.html Cite as: [2017] WLR(D) 204, [2017] EWCA Civ 183, [2017] 4 WLR 144 |
[New search]
[Context]
[View without highlighting]
[Printable RTF version]
[Buy ICLR report: [2017] 4 WLR 144]
[View ICLR summary: [2017] WLR(D) 204]
[Help]
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
THE HONOURABLE MR JUSTICE KNOWLES
Strand, London, WC2A 2LL |
||
B e f o r e :
and
THE RIGHT HONOURABLE LORD JUSTICE BRIGGS
____________________
1) ILKERLER OTOMOTIV SANAYAI VE TICARET ANONIM SIRKETI 2) ILKERLER MAKINA SERVIS SANAYI TICARET ANONIM SIRKETI |
Appellant |
|
- and - |
||
![]() ![]() ![]() ![]() ![]() ![]() |
Respondent |
____________________
Mr Charles Hollander QC & Mr Kyle Lawson (instructed by Walker Morris LLP) for the Respondent
Hearing dates: 14th March 2017
____________________
Crown Copyright ©
Lord Justice Longmore:
Introduction
"2 Appointment and duration
2.1 Subject to the terms hereof [Perkins]
appoints the Distributor as one of its distributors for the Territory and the Distributor accepts such appointment.
2.2 The Distributor's appointment shall be deemed to have commenced on the Commencing Date.
2.3 Unless sooner terminated under the provision of Article 19 hereof, this Agreement shall remain in force for an initial period of 3 years from the Commencing Date. It shall continue in force thereafter until terminated by either party giving to the other at least 6 months prior written notice of termination to expire at the end of such initial period or at any time thereafter.
3.2 The Distributor shall perform its obligations hereunder in accordance with the business plan agreed by the parties. The plan shall include the following information for a projected one-year period:
(i) the Distributor's marketing objectives, including sales and penetrations;
(ii) the resources and facilities required to achieve its objectives;
3.3 The parties shall review the plan at least annually and agree a revised plan following each such review.
13 Changes to Agreement
For any amendment to this Agreement or any part thereof to be valid and binding on the Parties, it must be reduced to writing and signed by authorised representatives of each party.
19 Termination
19.1 In addition to any other rights to terminate contained herein, [Perkins]
may by written notice to the Distributor terminate this Agreement forthwith upon:
19.1.1 any attempted assignment or transfer withoutPerkins'
prior approval by the Distributor of this Agreement or any part thereof or any rights or obligations thereunder; or
19.1.2 the commencement or happening of any occurrence connected with insolvency, bankruptcy, dissolution, administration, receivership or liquidation (or the national equivalent of any of the above within the Territory or any part thereof) of the Distributor; or
19.1.3 a breach of any of the terms of any payment guarantee referenced in Schedule 1 by any party giving that guarantee to theCompany.
19.2 Subject to Article 19.3 relating specifically to deficient performance, if the Distributor is in breach of any of its obligations hereunder, [Perkins]
may serve written notice on the Distributor requiring it to remedy the same within 45 days thereof. Where the Distributor fails, in [
Perkins']
opinion, to so remedy, the
Company
may serve a written notice on the Distributor forthwith terminating this Agreement.
19.3If during the term hereof, [Perkins]
is in its absolute discretion dissatisfied with the Distributor's performance, including without limitation, the Distributor's failure to perform in accordance with the agreed business plan, it may notify the Distributor in writing, detailing the required remedial actions that must be taken within the following 3 months. If [
Perkins]
remains dissatisfied at the end of the 3 months period, it may thereafter terminate this Agreement by serving not less than 3 months written notice of termination on the Distributor.
19.4 [Perkins]
may terminate this Agreement by 6 months written notice to the Distributor if there is any change after the Commencing Date in the management, constitution or circumstances of the Distributor which [
Perkins]
in its absolute discretion deems materially detrimental to its interests hereunder.
22.4 The Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes and replaces any prior communications, representations or agreements (whether oral or in writing).
22.5 This agreement shall be deemed to be an agreement made in England and shall be read and construed and take effect in all respects in accordance with the Laws of England and the parties hereby submit to the jurisdiction of the English Courts."
The judgment
Grounds of Appeal
i) The judge's construction of the agreement was wrong because the parties cannot have intended that the defendant would have a choice as to whether to terminate under Article 2.3 or 19.3.
ii) The judge was wrong to conclude that the claimants' case on variation was impossible:
a) The judge gave undue weight to the fact that the agreement anticipated one year business plans and a six month notice period and did not refer at all to the evidence that the plans agreed in 2010 and 2012 were wholly different.
b) The judge was wrong to conclude that, even if the second claimant had become a party, such fact had no effect on the argument that the agreement was varied. He implicitly accepted that this would demonstrate that the parties were prepared to make legally effective changes without expressly putting them in writing as envisaged by Article 13.
iii) The judge was wrong to conclude that the material provided by the claimants did not amount to a prima facie case of conduct which lacked good faith. The judge elided the concepts of good faith and dishonesty.
Ground 1: Construction
Ground 2: Variation
i) that the agreement was varied so as to make the second claimant a party;
ii) that the agreement was further varied so as to require the claimants to adopt longer term plans than envisaged by Article 3.2;
iii) that such longer term plans, in particular the MGPP which was to be effective for the years 2013, 2014 and 2015, required the claimants to make substantial investment in their business as set out in para 26 of the amended points of claim, including building a new head office in Istanbul at a cost of €1,700,000, training new dealers at a cost of €1,065,000, a marketing campaign costing €645,000 and new software costing €505,000.
"… it would, in my view, be contrary to principle to countenance the implication of a contract from conduct if the conduct relied upon is no more consistent with an intention to contract than with an intention not to contract. It must, surely, be necessary to identify conduct referable to the contract contended for or, at the very least, conduct inconsistent with there being no contract made between the parties to the effect contended for. Put another way, I think it must be fatal to the implications of a contract if the parties would or might have acted exactly as they did in the absence of a contract."
This was echoed by Staughton LJ in The Gudermes [1993] 1 Lloyds Rep at page 320:-
"… it is not enough to show that the parties have done something more than, or something different from, what they were already bound to do under obligations owed to others. What they do must be consistent only with there being a new contract implied, and inconsistent with there being no such contract. The paradigm cases of the shipowner giving up his lien, or the receiver paying the freight, illustrate that."
Ground 3: Implied Terms
"(1) That each party would provide the other with accurate and honest appraisals for the prospects from time to time of the relationship continuing, and on no account to give any misleading impression of those prospects.
(2) That each party would, before terminating the Agreement, warn the other party in clear terms of the reasons which had led it to consider termination, and provide the other party with an opportunity to alter its conduct and/or make representations prior to any termination notice being issued."
"[142] In some contractual contexts the relevant background expectations may extend further to an expectation that the parties will share information relevant to the performance of the contract such that a deliberate omission to disclose such information may amount to bad faith. English law has traditionally drawn a sharp distinction between certain relationships – such as partnership, trusteeship and other fiduciary relationships – on the one hand, in which the parties owe onerous obligations of disclosure to each other, and other contractual relationships in which no duty of disclosure is supposed to operate. Arguably at least, that dichotomy is too simplistic. While it seems unlikely that any duty to disclose information in performance of the contract would be implied where the contract involves a simple exchange, many contracts do not fit this model and involve a longer-term relationship between the parties to which they make a substantial commitment. Such "relational" contracts, as they are sometimes called, may require a high degree of communication, co-operation and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties' understanding and necessary to give business efficacy to the arrangements. Examples of such relational contracts might include some joint venture agreements, franchise agreements and long-term distributorship agreements.
[143] The agreement in this case was a distributorship agreement which required the parties to communicate effectively and co-operate with each other in its performance …."
Conclusion
Lord Justice Briggs: