ON APPEAL FROM HIGH COURT OF JUSTICE
THE HONOURABLE MR JUSTICE FLAUX
Strand, London, WC2A 2LL
B e f o r e :
THE RIGHT HONOURABLE LORD JUSTICE LONGMORE
THE RIGHT HONOURABLE LORD JUSTICE LLOYD
| SAFEWAY STORES LIMITED & OTHERS
|- and -
|TWIGGER & OTHERS
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7404 1424
Official Shorthand Writers to the Court)
Mr Robert Anderson QC & Mr Tristan Jones (instructed by Wragge & Co LLP) for the Respondents
Hearing dates : 10th & 11th November 2010
Crown Copyright ©
Lord Justice Longmore:
Introduction and Background
"1) Subject to section 3, agreements between undertakings, decisions by associations of undertakings or concerted practices which –
a) may affect trade within the United Kingdom, and
b) have as their object of effect the prevention, restriction or distortion of competition within the United Kingdom,
are prohibited unless they are exempt in accordance with the provisions of this part.
2) Subsection (1) applies, in particular, to agreements, decisions or practices which –
a) directly or indirectly fix purchase or selling prices or any other trading conditions;
b) limit or control production, markets, technical development or investment;
c) share markets or sources of supply;
d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
3) Subsection (1) applies only if the agreement, decision or practice is, or is intended to be, implemented in the United Kingdom.
4) Any agreement or decision which is prohibited by subsection (1) is void".
"1) On making a decision that an agreement has infringed the Chapter I prohibition, the OFT may require an undertaking which is a party to the agreement to pay the OFT a penalty in respect of the infringement.
2) On making a decision that conduct has infringed the Chapter II prohibition, the OFT may require the undertaking concerned to pay the OFT a penalty in respect of the infringement.
3) The OFT may impose a penalty on an undertaking under subsection (1) or (2) only if the OFT is satisfied that the infringement has been committed intentionally or negligently by the undertaking.
4) Subsection (1) is subject to section 39 and does not apply if the Director is satisfied that the undertaking acted on the reasonable assumption that that section gave it immunity in respect of the agreement".
Engagement of the ex turpi causa maxim
Application of the ex turpi causa maxim
"has been committed intentionally or negligently by the undertaking."
We must therefore proceed on the basis that Safeway is attempting to recover damages for the consequences of an infringement committed intentionally or negligently.
Application of the maxim to Corporations
"One possibility is that the court may come to the conclusion that the rule was not intended to apply to companies at all; for example, a law which created an offence for which the only penalty was community service. Another possibility is that the court might interpret the law as meaning that it could apply to a company only on the basis of its primary rules of attribution, i.e. if the act giving rise to liability was specifically authorised by a resolution of the board or an unanimous agreement of the shareholders. But there will be many cases in which neither of these solutions is satisfactory; in which the court considers that the law was intended to apply to companies and that, although it excludes ordinary vicarious liability, insistence on the primary rules of attribution would in practice defeat that intention. In such a case, the court must fashion a special rule of attribution for the particular substantive rule. This is always a matter of interpretation: given that it was intended to apply to a company, how was it intended to apply? Whose act (or knowledge, or state of mind) was for this purpose intended to count as the act etc. of the company? One finds the answer to this question by applying the usual canons of interpretation, taking into account the language of the rule (if it is a statute) and its content and policy."
Mr Anderson submitted that there was no need to have regard to any "special rule of attribution" in this case because the ex turpi maxim could not apply unless the claimants were personally at fault and in no way could they be said to be personally at fault in this case.
"Attractively though these submissions on behalf of the defendants were put, I cannot accept them. It is true that, as between the claimants and the OFT, the issue of attribution did not arise since the relevant wrongdoing was inevitably that of the claimants as the "undertakings". It would have been of no avail for the claimants in their dealings with the OFT to say that it was the defendants who had carried out the anti-competitive acts and practices, since the defendants were directors and employees acting in the course of their employment. However, contrary to the defendants' submissions, the question whether, in consequence, the ex turpi causa rule applies to preclude a claim over against the defendants is simply not addressed by the Competition Act, which is not concerned with relations between the undertaking and its employees. It seems to me that the answer to that question depends upon the correct analysis of the liability which the claimants are under."
The judge then concluded that the claimants' liability was, arguably, not a personal liability at all and that the determination of that question depended on whether it could be said that each of the defendants was "the directing mind or will" "of the claimant companies" which could not be decided on an application for summary judgment (para 68).
Was the company a victim so that the acts of its directors or employees cannot be attributed to it (the Hampshire Land Point)?
Lord Justice Lloyd:
Lord Justice Pill:
"Consumer protection, which is the purpose of statutes of this kind, is achieved only if the occurrence of the prohibited acts or omissions is prevented. It is the deterrent effect of penal provisions which protects the consumer from the loss he would sustain if the offence were committed. If it is committed he does not receive the amount of any fine. As a tax-payer he will bear part of the expense of maintaining a convicted offender in prison."
"Here is a case of absolute liability. This man incurred that liability through no fault, no negligence or dishonesty on his part. He incurred it because he was grossly misled by the insurance brokers whose duty it was to advise him. It would, as I think, be quite wrong in such circumstances if he was not able to recover the amount of this fine as a just debt."
Other heads of damage were also held to be recoverable. Sachs LJ and Edmund Davies LJ gave judgments to a similar effect.
Discontinuance Against Eighth Defendant
"(1) Unless the court orders otherwise, a claimant who discontinues is liable for the costs which a defendant against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant.
(2) If proceedings are only partly discontinued –
(a) the claimant is liable under paragraph (1) for costs relating only to the part of the proceedings which he is discontinuing; and
(b) unless the court orders otherwise, the costs which the claimant is liable to pay must not be assessed until the conclusion of the rest of the proceedings."