BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Strand, London, WC2A 2LL
B e f o r e :
| MOTORTRAK LTD
|- and -
|FCA AUSTRALIA PTY LTD
NIGEL TOZZI QC and MATTHEW LAVY (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the Defendant
Hearing dates: 26 February-1 March, 5-7 March, 12,13,15 March 2018
Crown Copyright ©
Mrs Justice Moulder :
Issues for the court
i) Bribery: Was the Licence Termination Agreement a genuine document? If the Licence Termination Agreement was a genuine document, were the payments made to Mr Campbell (through ACN) by the claimant made pursuant to the Licence Termination Agreement?
ii) Did the defendant affirm the Agreement in 2015? (It is now common ground that when the Third Extension was entered into in 2014, that could not amount to affirmation by the defendant of the Agreement as there is no evidence that Ms Johns knew of the payments to Mr Campbell.)
iii) Is FCAA liable to pay invoices submitted prior to 1 July 2016 in respect of the quarter commencing 1 July 2016 and is Motortrak's claim for loss of profit excluded by virtue of the limitation of liability clause (clause 9.5) in the Original Agreement?
iv) If the payments made to Mr Campbell amounted to bribes,
a) Is FCAA entitled to recover the amount of the bribes?
b) Has FCAA established that it has suffered loss as a result of entering into the Agreement? If so what is the amount of that loss?
The parties have agreed that the question of whether FCAA breached the exclusive jurisdiction clause in the Original Agreement by bringing proceedings against Motortrak in Australia should be left to the consequential hearing following judgment being handed down.
Bribery: Relevant law
"… for the purpose of the civil law a bribe means a payment of a secret commission, which only means (i) that the person making the payment makes it to the agent of the other person with whom he is dealing; (ii) that he makes it to that person knowing that the person is acting as the agent of the other person with whom he is dealing; and (iii) that he fails to disclose to the other person with whom he is dealing that he has made that payment to the person whom he knows to be the other person's agent." (Industries and General Mortgage Co Ltd v Lewis  2 All E.R. 573 at 575)
"I wish to state again emphatically that in such a case as this it is an immaterial inquiry to what extent the bribe or the offer of it influenced the person to whom it was given or offered. A contrary doctrine would be most dangerous, for it would be almost impossible to ascertain what had been the effect of the bribe; and, further, the real evil is not the payment of money, but the secrecy attending it."
Was the Licence Termination Agreement a sham?
"Motortrak is considering a sale of its global business and wishes to terminate the arrangements with ACN for the Asia-Pacific region set out in the [Licence Agreement]. ACN is willing to terminate and cancel the Agreement and this letter records our agreement as follows:"
"3. In consideration of ACN agreeing to the termination of the Agreement, Motortrak shall pay to ACN the sum of AU$2,500,000 to be paid within four years of the date hereof or as agreed between the parties.
5 In the event that Motortrak fails to pay the amount referred to in clause 3, ACN shall be entitled to exercise the rights set out in the Agreement.
6 Within three months of the date of this Agreement, ACN shall transfer any and all shares in Motortrak Pty Ltd to Motortrak or such other entity, as Motortrak shall advise. ACN shall have no further interest in Motortrak Pty Ltd" [emphasis added]
i) Absence of an original document/contemporaneous emails: In cross-examination Mr Pask accepted that no one apart from himself and his wife, and Mr Campbell and his wife, had seen the Licence Agreement and he did not recall how and when he signed it, he did not know where the original signed copy was kept and there were no contemporaneous documents that referred to that agreement. In relation to the Licence Termination Agreement Mr Pask accepted that he did not have an original, he had only a copy. Further Mr Pask could not disclose any contemporaneous emails to which the Licence Termination Agreement was attached. Mr Pask's explanation was that this was because his Motortrak emails were migrated in March 2014 and the archive deleted.
ii) Contemporaneous correspondence: A discussion took place by email between Mr Campbell and Mr Cox in November 2009 regarding reimbursement of Motortrak's expenses. In the course of the exchange Mr Campbell asked Mr Cox:
"finally, whilst not raised in the past, shall I include my expenses for any work overseas aimed at securing further MB business?"
Mr Cox responded:
"I am not privy to the commercial arrangement between yourself and Gary for overseas work so best you discuss that one with him direct."
Mr Campbell then replied, copying the email to Mr Pask:
"again, apologies for any confusion here, but given that we need to progress the global relationship with MB, I am keen to get a clear framework and agreement in place for us going forward (i.e. not meant to be a retrospective comment) and to that end look forward to your thoughts and I shall also discuss separately with Gary." [Emphasis added]
Neither Mr Campbell nor Mr Cox referred to the Licence Agreement in this exchange. Mr Pask said that Mr Cox was aware of the relationship and the fact that Motortrak had acquired the business back from Mr Pratt and awarded it to Mr Campbell although Mr Cox had not seen the Licence Agreement. It was put to Mr Pask in cross-examination that the reference to a need to "get a clear framework and agreement in place … going forward" indicated that there was no agreement in place in November 2009. Mr Pask said there was an agreement in place and Mr Campbell was alluding to the fact that the Licence Agreement was for the APAC region. The understanding was that if Motortrak UK won any global business, Mr Campbell would be entitled to his 30% of the APAC region and vice versa. Mr Pask said there was an understanding between them in relation to the other territories.
iii) Absence of disclosure of the Licence Termination Agreement in connection with proposed sale to dealer.com: from mid-2009 Motortrak was in discussions with dealer.com. An NDA was entered into in November 2009 and by March 2010 a potential acquisition of Motortrak was being discussed. A deal was not reached because Motortrak and dealer.com did not agree a price: dealer.com offered $25 million but Mr Pask wanted $35 million. The negotiations involved financial information being provided to dealer.com. Mr Cox was not aware of the Licence Termination Agreement even though he handled the negotiations on behalf of Motortrak for the proposed sale to dealer.com. In his witness statement Mr Cox said that he recalled Mr Pask informing him that he "bought back the rights from Mr Campbell" but in cross-examination Mr Cox agreed that the only arrangement which he knew about between Mr Pask and Mr Campbell related to ownership of MPL. Mr Pask did not disclose to dealer.com the obligation to pay AU$2.5 million to Mr Campbell pursuant to the Licence Termination Agreement in the course of the negotiations. Mr Pask's evidence in cross-examination was that the obligation was not a liability; had he not paid Mr Campbell the rights would have reverted to Mr Campbell under the Licence Agreement and Mr Pask said he saw it as a "potential obstacle" to the sale and if it got to the point where the price had been agreed, he would have disclosed it [Day 3/43].
iv) Liability not shown in the accounts: the liability to pay Mr Campbell under the Licence Termination Agreement was not shown on the face of the accounts of Motortrak. Mr Pask's explanation was that under the Licence Termination Agreement the rights would revert back to ACN if Motortrak failed to make the payments and he was advised by his accountant, Mr Hollis, that it was not necessary to show it in the accounts of Motortrak as a liability.
v) Calculation of the amount payable: Mr Pask's evidence was that the sum of AU$2.5 million was the outcome of a negotiation with Mr Campbell which reflected the remaining term of the Licence Agreement and what Mr Campbell had given up to take on the licence arrangements. However the evidence was that Mr Campbell had not secured any contracts during the period of the Licence Agreement.
vi) Ownership of MPL: clause 6 of the Licence Termination Agreement provided for the transfer of shares in MPL to Motortrak or an entity selected by Motortrak. The shares in MPL were transferred to Mr Webb; Mr Pask said that he was told that he needed to have an Australian director for an Australian company. His evidence was that he had a "verbal arrangement" that Mr Webb would hold the shares on behalf of Motortrak. The official company records show the registered office of MPL as the address of Mrs Campbell until the company was deregistered in November 2013. Further, bank statements of MPL for March 2011 show that these were addressed to the home address of Mrs Campbell even though the transfer of shares by ACN should have taken place by 1 October 2010. Bank statements of ACN show payments of AU$5940 were made to Mr Webb by ACN on 24 December 2010 and 31 January 2011 by ACN.
vii) Evidence of Mrs Pask: Mrs Pask's evidence was that she was asked by her husband to draft the Licence Termination Agreement. In her witness statement she set out the background leading up to that: she referred to discussions with dealer.com and how they moved to discuss a potential sale. At paragraph 17 she described how Mr Pask and Mr Campbell held meetings at the Melbourne Grand Prix and that sometimes she and Mrs Campbell were present. She then described subsequent meetings in Monaco in May when Mr Pask negotiated the price for the Licence Termination Agreement with Mr Campbell and again says that she was present for some of them at which the amount of AU$2.5 million was agreed. Mrs Pask disclosed a diary entry for May 2010 which gave Mr Campbell's email address and had the words "send doc to him". Her evidence was that she recollected being asked to send the document directly to Mr Campbell which is what she did.
i) the absence of an original document is not conclusive when an agreement is being concluded between parties in different countries. It is not unknown for emails to be migrated to a different system and not retained and this was a relatively small business not a large corporation.
ii) There are unexplained questions concerning the records of MPL and the payments to Mr Webb. The record-keeping may have been an oversight. There is no explanation as to why Mr Webb was not called and whilst the payments to Mr Webb by ACN are also unexplained the evidence of the two payments does not establish that they were salary payments as FCAA submitted.
iii) With regard to the provision in the Licence Termination Agreement that the shares in MPL would be transferred to Motortrak, the shares were transferred to Mr Webb and the evidence of Mr Pask was that the shares were held on behalf of Motortrak. This agreement was not in writing and this is consistent with the evidence of the way in which Mr Pask did business – he had no written agreement with Mr Pratt who ran the previous Australian company.
If the Licence Termination Agreement was a genuine document, were the payments to ACN made pursuant to the Licence Termination Agreement?
|Date of invoice||Amount of invoices||Date of payment instruction||Amount of instruction (AU$)|
It is the claimant's case that the payments were made pursuant to the Licence Termination Agreement.
"no specific payment schedule was agreed because Mr Pask and Mr Campbell agreed orally in Monaco in or around 16 May 2010 that the claimant would only be required to pay ACN 124 as and when the claimant's cash flow would permit a payment. It was also intended that Mr Campbell would be paid from the proceeds of sale of the claimant or its business; not agreeing a payment schedule allowed this to be done as and when the sale took place." [Emphasis added]
However in cross-examination Mr Pask's evidence was that:
"it was not just down to the cash flow alone. So there may have been occasions when we had more cash available and I could have made a larger payment, it was just what I chose to pay at that particular time for whatever reason." [Emphasis added]
Mr Pask continued:
"there was no payment schedule, it was literally it was four years to pay and I paid it as and when it suited me to" [Day 3/92 – 94] [Emphasis added]
In the particulars of claim (paragraph 17.6) the claimant pleaded that this amount comprised AU$30,000 owed by Mr Pask to Mr Campbell and AU$74,127.48 paid by Mr Pask on behalf Motortrak to ACN pursuant to the Licence Termination Agreement. In the claimant's response to the defendant's RFI the claimant stated that the first payment included an additional payment of AU$30,000 which was owed by Mr Pask to Mr Campbell for expenses incurred at the Monaco Grand Prix. The response also stated that Mr Pask wanted to ensure the timely transfer of the shares in MPL and the first payment was made by Mr Pask to encourage Mr Campbell to transfer the shares in MPL. At the start of giving oral evidence, Mr Pask amended paragraph 51 of his witness statement and said that the payment of AU$30,000 had been rounded and the amount was in fact AU$28,700. In cross-examination Mr Pask said he arrived at this figure of AU$28,700 by reverse engineering to arrive at a figure of AU$2.5 million and acknowledged that he had no independent recollection of £17,000. In relation to subsequent payments Mr Pask's evidence in cross-examination was that he would look at the cash balances across the various bank accounts and assess whether or not Motortrak could afford to make payment.
"I do not know why he was sending them, maybe it suited his purposes"
When he was asked why he did not challenge Mr Campbell about the invoices, Mr Pask said that he "probably" did speak to him but it was a matter for Mr Campbell. Mr Pask said:
"if I do not know what an invoice is for, then I would query it… These invoices meant nothing to me, they had no meaning."
"the payments made by Motortrak to ACN between 24 December 2010 and 24 December 2013 inclusive are recorded in the Motortrak books and accounts as being for the buyback of rights originally granted to ACN in 2009 and treated as purchases in those books and accounts." [Emphasis added]
However Mr Pask said that the claimant did not prepare management accounts in the period 2010 – 2013 or profit and loss statements or cash flow statements. Further Mr Pask said that the ACN payments were not in the Sage records (the bookkeeping system used by Motortrak) because he did not pass them to the financial controller.
"I was paying off the 2.5 million liability so I would not have processed [the invoices] through the business because they would have been totally recorded in a false way."
Mr Pask said that information about the payments to ACN was not given to the financial controller; Mr Pask said that he was in control of the business and would expend various amounts of money which were attributed to his director's loan account. At the end of the year he would pass his bank statements and credit card statements to Mr Hollis. As a result he accepted that the invoices did not record the buyback rights and the bank statements only showed payments to ACN. Mr Pask said that Mr Hollis was saying in his letter that the payments were recorded in the accounts. Mr Pask said that Mr Hollis knew the payments were in respect of the licence buyback because Mr Pask had told him.
"…we focused on marketing and the role of digital marketing. We also discussed tracking mechanisms that could assist in assessing the effectiveness of the marketing dollar invested."
"At the interview Mr Campbell spoke about how digital marketing would improve the Australian business and how digital marketing and lead management might be developed. I formed the view that Mr Campbell would be able to manage the transition of the business."
In cross-examination Mr Kett was taken to an email sent to him by Mr Campbell in November 2010 in which Mr Campbell stated:
"we all agree that our digital marketing is woeful… Sam has a clear plan to take back control in this area through an integrated website programme rolled out from us and down through the network, with the aim of going live by March next year."
Mr Kett's evidence was that:
"I see this as a re-confirmation of the plans and the weaknesses that we identified through not only the interview process but a review of OP11, which is the plan for that following year in 2011. So to me this is a reinforcement of the priorities of that organisation, and now a timeframe under which those changes would be instituted."
It was put to Mr Kett that the strategy at that time was to invest heavily in marketing, particularly digital marketing in order to achieve an aggressive growth strategy. Mr Kett's evidence was that
"I think there was a combination of things that Clyde had implemented. Many of them were repositioning of certain pricing for products, a strengthening of the network's acceptance of the brand and their pricing, and marketing was most definitely a part of that within the confines of OP11's fixed cost structure, yes."
Mr Kett agreed that the aim of all those activities was aggressive growth.
"As requested, please find attached a few points to assist with your assurance that the Motortrak contract can be signed based on a thorough evaluation process including other parties...."
In short the process went as follows:
It was brought to numerous upper management's attention that we are losing customers through our brand website linking through to multi-franchise sites….
It was decided that a solution be implemented to provide a united online dealer "frontage"
Multiple parties were met with and the situation discussed and first pass costings provided
These parties included Motortrak, Manheim Fowles, Carsales/Datamotive and an additional software provider whose name escapes me
Based on Sam Tabart's system, James Watkins prepared an evaluation matrix with weightings across several criteria ranging from price to timing, experience and service level.…
Each of us independently found Motortrak to be a standout leader…" [Emphasis added]
"the issue was that there was a rush to get the process started, but it could not start until the contract was signed by me. I was not comfortable signing the contract as I had not seen the due diligence you went through."
Mr Watkins responded to Mr Harding sending him quotes from Manheim Fowles and Sitecore and said that in relation to Carsales, the costs were based on "verbal discussions and the long-standing relationship we have with them for our ELM system".
"Thanks for the opportunity to talk to you today about your initiative.
The following is a ballpark quote for each element of your initiative as discussed.…
I hope this helps you with your discussions internally…" [9/2309] [Emphasis added]
"Mr Campbell does not hold and never has held any interest in Motortrak. His only role in connection with Motortrak's business was under a consultancy agreement which ended in early 2010." [Emphasis added]
i) The way in which Mr Pask's evidence appears to have changed to meet the arguments advanced by the defendant: in particular, as referred to above, his evidence concerning the relationship between the timing of the invoices and the payments, his evidence concerning the amount of expenses comprised in the first payment to explain why the amount to be transferred did not amount to AU$2.5 million precisely, and his evidence on the extent to which payments were determined by the cash flow position of Motortrak. This is not a case where it can be said a witness is mistaken because memory is faulty. The claimant specifically pleaded that there was an oral agreement reached in Monaco around 16 May 2010 that the claimant would only be required to pay ACN as when the claimant's cash flow would permit. This was not a provision which was included in the Licence Termination Agreement but the claimant pleaded that it had been orally agreed. Yet in cross examination Mr Pask sought to change the emphasis so that the agreement was only that the claimant would not be required to pay if it could not afford it. Further as to the timing of such agreement, in his witness statement Mr Pask said:
"Eventually we agreed that Motortrak would pay the sum of 2.5 million over a four year period as and when Motortrak's cash flow would allow payment."
However when it was put to Mr Pask in cross examination that if that was clearly part of the agreement it would have been included in the document Mr Pask said it formed part of a "subsequent discussion".
ii) Mr Pask's failure to give plausible explanations to the court in the face of clear evidence: Mr Pask was asked about two invoices which Motortrak submitted in relation to cars purchased by Motortrak at Mr Campbell's request which were provided to certain celebrities pursuant to the defendant's Ambassador programme. The description on the invoices stated "SWEH Programme update" and "HKSK Programme update" respectively. Mr Pask's evidence in cross-examination was that SWEH referred to the cricketer Shane Warne and Elizabeth Hurley the actress. He said that it should have said "Ambassador programme update" rather than programme update but it was an "update" to the Ambassador programme that FCAA were running in Australia and Motortrak were asked to assist them in obtaining some vehicles. Mr Pask's evidence was that this was wording he was asked to put on to the invoices and he denied that it was an attempt to disguise the invoices as being for services supplied by Motortrak [Day 4/99/].
Mr Pask was also asked about an email sent from Ms Johns to Mr Campbell in February 2013 concerning a replacement car for Elizabeth Hurley whose car had been stolen in the UK. Mr Campbell stated in the email:
"I can get Gary to buy one and invoice us for IT." [Emphasis added]
Mr Pask in cross-examination stated that the email should be read as though the capitalised term was merely the word "it". This explanation to the court of the email from Mr Campbell flew in the face of the obvious interpretation and was in my view patently false.
Mr Pask said that Mr Campbell called him and asked him to assist to provide a car and that is what he did. Counsel for the claimant submitted that Motortrak did not stand to gain anything from the arrangement and was simply assisting a client. However in my view, the invoices suggest that at best Mr Pask saw no difficulty in submitting invoices which did not reflect the reality of what was happening.
iii) The evidence referred to above that Motortrak clients were apparently not told in May 2015 of any connection or any ongoing liabilities by virtue of the termination of the Licence Termination Agreement. Mrs Pask's explanation in cross-examination was that it had been stated in the press reports that Mr Campbell was a director of Motortrak in the UK or that he had a shareholding in the claimant and that is what that statement was designed to address [Day 2/105/23]. However in my view it is evidence that Motortrak was prepared to conceal its relationship with Mr Campbell from its own clients and is some evidence that Mr Pask was willing to advance publicly statements which were untrue in order to safeguard his business.
iv) Mr Pask's failure to give a satisfactory explanation of events: Mr Pask is a successful businessman but provided no satisfactory explanation of why the figure of AU$2.5 million was arrived at as the value of the termination of the Licence Agreement, why the four-year period was chosen, why he made the payments to Mr Campbell when he did, or how the relationship with Mr Campbell worked in relation to the APAC region. He has built a very successful business from which I infer he has a strong grasp of the economics of his business and yet he provided no credible explanation to the court in relation to these matters.
Taking into account all these matters Mr Pask has in my view damaged his overall credibility as a witness and this affects the weight which I give to his evidence.
"I had no idea… Mr Campbell had worked there, he had his own relationships there, so clearly he was leveraging those to gain whatever competitive advantage that he could."
"I also told them that if they wanted to continue talking to Motortrak then they would have to exclude Motortrak Australia (which is the franchised operation I had control over) and go with Motortrak UK which has completely different and separate ownership." [Emphasis added]
Mr Manley's evidence in cross examination, when asked whether he thought that Mr Campbell had some sort of ownership interest was:
"My recollection of it was that he was open that he had an ownership interest and it was -- he in fact said that he wanted to return to an OEM and that it was ending or ended. Specifically of those two I couldn't tell you."
However Mr Manley was not challenged on his evidence in his witness statement that there was no mention of Mr Campbell selling his interest over a four-year period. Further Mr Manley interviewed Mr Campbell but Mr Campbell in his CV (sent to Mr Manley by Mr Kett on 19 August 2010) described himself as "Managing Director, Motortrak Pty Ltd" and gave the dates as "Jan 2008 – now". There was no reference to any ongoing obligations owed by Motortrak to Mr Campbell arising out of the termination of his role.
i) the description on the invoices is inconsistent with the payments being under the Licence Termination Agreement and even assuming that the Licence Termination Agreement was a genuine document, suggests that the true nature of the invoices was for some reason being disguised. Whilst this could be attributable to Mr Campbell, there is no evidence to support this and even if the wording can be attributed to Mr Campbell, Mr Pask did not see fit to challenge the wording which on his case was contrary to the nature of the payments. Mr Pask's evidence that he did not pay attention to the invoices lacks credibility: if he had concluded the invoices had no meaning, it is difficult to understand why he would then have passed the invoices to his accountant.
ii) The timing of the payments leads to an inference that they were made in response to the invoices which were submitted. Again this is an instance where Mr Pask failed to provide a satisfactory explanation to the court. It is an unlikely coincidence in my view that it occurred to Mr Pask to make a payment under the Licence Termination Agreement in each case within a relatively short period of the invoice being submitted, as is demonstrated by the table set out above. Given the apparent link between the invoices and the payments, the fact that the payments themselves were not regular is in my view not persuasive.
iii) Further Mr Pask's instruction to Motortrak's bank to make payment in the amount of the invoice suggests that they were linked yet Mr Pask's evidence was that he determined the amount according to what he felt was appropriate to pay. I do not accept his explanation which seems to me to be implausible given that the amount paid was not a round number but an amount in dollars and cents which coincided with the invoice amount. Even if Mr Pask had determined the amount prior to seeing the invoice, there is no explanation why Mr Pask would choose to discharge a fixed amount in Australian dollars through payments which were not round amounts.
Did FCAA affirm the Agreement?
"where a right of rescission exists, it will be lost if the person entitled to rescind elects to waive that right and affirm the contract after the material facts conferring the right have come to their notice… Examples are where, with full knowledge of a fraud upon him, a person nevertheless takes a benefit under a contract or claims damages for its breach. Both the facts which gave rise to the right of rescission and the existence of that right must be fully known to the entitled party before they can be considered to have waived the right. Affirmation requires express words or unequivocal conduct, but an intention to affirm is not required." [Emphasis added]
"the court… should not be willing to hold that the contract has been affirmed without very clear evidence that the injured party has indeed chosen to go on with the contract notwithstanding the other party's repudiation"
Counsel for the defendant submitted that given that the right to rescission could not realistically be exercised until the replacement service provision was in place, neither passage of time nor FCAA's continued payments for services should be treated as an unequivocal act amounting to affirmation.
"after the immensely positive feedback we had received from Mr Laymac and our discussions about FCAA replicating Motortrak services in other markets."
"FCAA is employing a business as usual approach with Motortrak until 30 June 2016.
Post that date, Shift Digital will be the new provider for all dealer digital solutions, starting with dealer websites as of July 1." [Emphasis added]
Mr Dougherty accepted that this document accurately reflected what was going on in FCAA at the time.
Remedies for FCAA's repudiatory breach
i) payment for its outstanding invoices for the period July to September 2016, totalling AUS $2,066,400, alternatively damages in the said sum for breach of FCAA's obligation to pay those invoices; and
ii) damages for loss of profits on the remainder to the term of the Agreement.
Motortrak's claim for unpaid invoices
"all Core and Subscription Charges are payable quarterly in advance."
Clause 7.1 of the Original Agreement provided that FCAA:
"shall pay Motortrak's invoices provided for the Charges set out in Schedule 2 for the Services within 30 days of the date of invoice."
i) in London & Westminster Loan Co and London & North Western Railway  2 QB 49 the court considered the phrase "quarterly in advance". In that case rent was payable quarterly on the usual quarter days and Vaughan Williams J said:
"it seems to me that the intention of the parties was that the rent should always be due at the commencement of each quarter; but that it should not be treated as in arrear, nor the landlords entitled to enforce their remedies for non-payment until after demand for payment had first been made."[Emphasis added]
ii) In Tonnelier v Smith (1897) 2 Com. Cas. 258 a charterparty required the charterers to pay hire monthly in advance and the Court of Appeal held that the charterers were liable to pay for a month's hire at the beginning of each month even if it was clear the ship would be re-delivered before the month expired.
iii) Tonnelier v Smith was approved by the House of Lords in French Marine v Compagnie Napolitaine  2 AC 494. In that case a charterparty hire charge was payable monthly in advance. Viscount Finlay treated the hire charge as payable in full on 10th of each month.
The court in the two shipping cases assumed that hire was payable at the beginning of the period but did not have to address the issue of whether payments in advance can be claimed prior to the start of the period. The authority of London & Westminster Loan Co turned on the construction of the particular agreement. It did however draw a distinction between the point at which payment became due (the commencement of the quarter) and the point at which the rent became payable (after demand).
"the court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on the parsing of the wording of particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of the drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning.…"
Motortrak's claim for loss of profits: exclusion clause
"neither party shall be liable to the other for:
9.5.1 any indirect or consequential loss or damage at all; or
9.5.2 any loss of business, capital, profit, anticipated saving, reputation or goodwill, arising out of or in connection with the Agreement or its subject matter."
"the parties cannot in a contract have contemplated that the clause should have so wide an ambit as in effect to deprive one party's stipulations of all contractual force: to do so would be to reduce the contract to a mere declaration of intent."
" White & Carter confirmed the general rule that, if one party to a contract repudiates it by refusing to carry out its obligations, the innocent party has a right of election to accept the repudiation and sue for damages or to keep the contract in effect….
 there are two limitations to the principle. The first limitation is that in many cases the party in breach can compel the innocent party to restrict his claim to damages by refusing cooperation: see White & Carter at page 428 and Geys at  – . This is because, if the contract is kept alive, it is kept alive for both parties and so the innocent party must also perform its contractual obligations if it is to earn the right to claim the price that is due to be paid by the party in breach. If the innocent party cannot earn the right to claim the price due to it for its performance without the cooperation of the party in breach, it will not be able to pursue a debt claim and will be limited to a claim in damages. The limitation does not apply in this case because Barclays payment obligations are triggered only, if positive steps are taken by Unicredit to claim payment upon the occurrence of a Credit Event; if Unicredit do nothing, their own payment obligation to Barclays will simply accrue on a quarterly basis but Barclays will not itself be obliged to make any payments.…" [Emphasis added]
"of course, if it be necessary for the defender to do or accept anything before the contract could be completed by the pursuers, the pursuers could not and the court would not have compelled the defender to act, the contract would not been completed and the pursuers only remedy would have been damages. But the peculiarity in that case, as in the present case, was that the pursuers could completely fulfil the contract without any cooperation of the defender." [Emphasis added]
" … Interpretation is… a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause….and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest..."
 this unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated… To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each." [Emphasis added]
"the contractor hereby acknowledges and agrees that the company shall have no liability whatsoever in contract, tort, including negligence, or otherwise for any loss of goodwill, business, revenue or profits…"
"both its position and its content show that clause 18.6 is intended to qualify the extent of the indemnity afforded by clause 18.4. Thus one finds a reference to third-party liability, which can only sensibly be read in context as qualifying the extent to which the Company must, pursuant to clause 18.4, indemnify the Contractor against third party claims, since plainly any provision in this contract will be ineffective to protect the company from third-party claims made directly against it. Similarly the express reference to negligence of the last line of clause 18.6 is a reflection in my view of the limited scope of clause 18.4…"
 I cannot… accept that clause 18.6 serves only to qualify the extent of the indemnity afforded by clause 18.4. The language "no liability whatsoever in contract, tort (including negligence) or otherwise" cannot sensibly be read as simply restricting an indemnity which is itself expressed only to arise in the event of the company's negligence. Something more is intended. The key to the proper construction of this provision is in my view that it excludes heads of loss "suffered by the contractor or any third party in relation to this agreement"… In the context, as I have already remarked, the third-party loss which is referred to in clause 18.6 can only be a loss suffered in consequence of negligent performance by the company of its contractual obligation, express or implied. It is only such third-party losses which will, if brought home to the contractor, generating the company an obligation to indemnify. Such a loss presupposes defective performance of the contract but not refusal to perform it ought to be bound by it. The company does not undertake to indemnify the contractor against liability which it incurs to third parties in consequence of the refusal of the company to perform the contract. In my judgment it is a similar type of loss which is intended to be excluded or qualified whether suffered directly or indirectly by the contractor, i.e. a loss arising out of flawed performance of the contract, and it is that reason that such loss is in each case described as "loss suffered… in relation to this agreement". Had it been intended simply to exclude all liability for loss of profits etc. in the event of any breach of contract by the company, including a simple refusal to perform, there would have been no need to refer to third-party losses as a separate category, since they would have been excluded from the scope of the indemnity by the general words. Reference to third-party losses in my view informs the proper construction of the clause, indicating that the circumstances in which the company's liabilities intend to be qualified are similar to, albeit not coextensive with, those which might also give rise to the obligation to indemnify the contractor against third-party losses. In order to construe the provision consistently with business common sense, I would regard the expression "in relation to this agreement" as meaning in this context "in relation to the performance of this agreement", and thus as not extending to losses suffered in consequence of a refusal to perform or to be bound by the agreement….
 the parties could had they so wished have provided that there should be an exclusion of all liability for financial loss in favour of the company, but not the contractor, in the event of a refusal to perform.… Had the parties intended such an exclusion of all liability for financial loss in the event of refusal or inability of the company to perform, I would have expected them to spell that out clearly, probably in a freestanding clause rather than in a subclause designed in part to qualify an express and limited indemnity, and in one which moreover forms part of a series of subclauses dealing with the provision of indemnities and insurance to support them.… In my judgment however by the language and the context in which they used it they demonstrated that the exclusion related to defective performance of the agreement, not to a refusal or to a disabling inability to perform it." [Emphasis added]
"no claims by Buyer of any kind, whether as to the products delivered or for non-delivery of the products, or otherwise, shall be greater in amount than the purchase price of the product in respect of which such damages are claimed;… In no case shall Buyer or Seller be liable for loss of profits or incidental or consequential damages." [Emphasis added]
"… the clause overall should be construed as referring to the sale and purchase of DIP not to the distinct question of whether the contract might be replaced by different product, propofol…
 second, AZ's construction of the second sentence of clause M is one which leaves Albemarle with no effective remedy for AZ's breach of clause H. This has the effect of making clause H, so far as AZ is concerned, little more than a statement of intent, which would in a very real sense achieve for AZ its narrow construction of clause H through the back door, in circumstances where the court has held, contrary to AZ's case, that the provision obliges AZ to provide details of any third-party offer and give Albemarle the opportunity to match the offer. Viewed cynically, if any right of Albemarle to claim for its loss of profits suffered as a consequence of AZ's breach of that obligation is excluded, there is little incentive for AZ to comply with that obligation." [Emphasis added]
" the principle to which the judge referred has been recognised and applied in a number of cases, including [Tor Line and Kudos]… However it should be seen as one of last resort and there is authority that it applies only in cases where the effect of the clause is to relieve one party from all liability for breach of any of the obligations which he has purported to undertake… Only in such a case could it be said that the contract amounted to nothing more than a mere declaration of intent.
 I fully accept that where the language of an exclusion clause leaves room for doubt as to its meaning, the principle applied in these cases may provide a valuable tool for ascertaining its correct meaning and in some cases it may lead to the conclusion that a restricted meaning must be given to the clause in question in order to achieve the parties common objective. But it does not in my view provide sufficient justification overriding the party's intention where that has been clearly expressed. The principle of freedom of contract, which is still fundamental to our commercial law, requires the court to respect and give effect to the parties agreement.…"
"neither party shall be liable to the other under this subcontract for loss of profits, revenue, business, goodwill, indirect or consequential loss or damage… "
Carr J found that IBM's liability was excluded by clause 20.7. Her reasons were that the language was clear and unambiguous, there was nothing in the context or surrounding clauses that pointed to a different construction and consideration of all the relevant circumstances provided support for a straightforward application. In particular the sub contract was negotiated by two highly sophisticated commercial parties with the benefit of legal advice, there were detailed provisions governing the parties' rights to remedies, on the face of the contract the parties had applied their minds to the scope of the clause providing the detailed and specific exceptions, there were clear words rebutting any presumption that the parties did not intend to abandon their remedies for loss of profit and the clause applied equally to loss suffered by both parties.
" In construing an exception clause against the party which relies upon it, here AZ, the court will strain against a construction which renders that parties obligation under the contract no more than a statement of intent and will not reach that conclusion unless no other conclusion is possible. Where another construction is available which does not have the effect of rendering the parties' obligation no more than a statement of intent, the court should lean towards that alternative construction. This is an application of the principle enunciated by Lord Roskill in Tor Line A/B v Alltrans Group of Canada Ltd (the TFL Prosperity)…" [Emphasis added]
" …the "statement of intent" rule, if such it be, is of little assistance in circumstances where, as here, the wording is plain, the exclusion clause of mutual benefit and detailed in its form"
Further "even if there were scope in principle for the court to strain its construction in favour of [Fujitsu]", Carr J found that the effect of clause 20.7 was not to empty the contract of content. It did not exclude a claim the debt for non-payment of an invoice. Further Fujitsu could bring a claim for declaratory relief and/or injunctive relief. Carr J held:
"… The question is not whether FSL would have adequate remedies but whether or not IBM's construction of clause 20.7 would deprive the contract… of all contractual force. It does not"
FCAA claim for damages
i) the amount of the bribes;
ii) damages for loss on the basis that it would not have entered into an agreement with Motortrak at all or would not have entered into a contract Motortrak on the terms that it did.
"it is unnecessary to prove motive, inducement or loss up to the amount of the bribe" (Hurstanger Limited v Wilson  1 WLR 2351)
"there is no need for the principal to prove… that the principal suffered any loss or that the transaction was in some way of unfair: the law is intended to operate as a deterrent against the giving of bribes, and it will be assumed that the true price of any goods bought by the principal was increased by at least the amount of the bribe" (Daraydan Holdings Limited v Solland International Limited  Ch 119)
Counsel for the claimant submitted that the basis on which a principal can usually recover an amount equal to the bribe is that he is regarded as having been unjustly enriched by the amount of it: Clerk & Lindsell on Torts (22nd edition) at para 18 – 56. However, counsel submitted that it would be perverse to view Motortrak as having been unjustly enriched by the amount of the alleged bribe in circumstances where FCAA affirmed the Agreement.
"Upon analysis, what these rules really describe is the right of a plaintiff who has alternative remedies against the briber (1) to recover from him the amount of the bribe as money had and received, or (2) to recover, as damages for tort, the actual loss which he has sustained as a result of entering into the transaction in respect of which the bribe was given; but in accordance with the decision of the House of Lords in United Australia Limited and Barclays Bank Ltd  AC 1 he need not elect between these alternatives before the time has come for judgment to be entered in his favour in one or other of them."
"This extension to the briber of liability to account to the principal for the amount of the bribe as money had and received, whatever conceptual difficulties it may raise, is now and was by 1956 too well established in English law to be questioned. So both as against the briber and the agent bribed the principal has these alternative remedies: (1) for money had and received under which he can recover the amount of the bribe as money had and received or, (2) for damages for fraud, under which he can recover the amount of the actual loss sustained in consequence of his entering into the transaction in respect of which the bribe was given, but he cannot recover both."
" the agent/fiduciary and the payer of the bribe/secret commission are jointly and severally liable not only to account to the principal for the amount of the bribe but also in damages for fraud for any loss suffered by the principal. Consequently, the agent and the third-party payer are jointly and severally liable to the principal (1) to account for the amount of the bribe in restitution as money had and received; and (2) for damages for any actual loss suffered by the principal from entering into the transaction in respect of which the bribe or secret commission was given or promised. But these are alternative remedies and the principal must elect between the two remedies prior to final judgment being entered." [Emphasis added]
Damages for loss
"to what extent (if at all) did the platform provided by Motortrak pursuant to the Original Agreement and each of the Extensions include functionality that the Australian dealer network and automotive manufacturers already had and/or did not need."
Mr Olver in his report said, amongst other things, in response to this question (paragraph 4.17):
"from a dealer perspective, therefore, there was very little that the Motortrak platform offered that they did not already have."
Further Mr Olver said (paragraph 4.29) that applications such as the National Used Vehicle Locator were not required at all.
"I said the Motortrak solution is fine. I think as a product it is fine. But the process of acquiring it by the business and the lack of scrutiny on other products and other services available at the time, I am not…"
"if we look at the other aspects of Motortrak's product offered by the First and Third Extensions, so leaving out search services for the moment which we will come to, I think it is your evidence that subject to pricing,… you do not have a problem with any of the modules that were included in those extensions."
"no I think my [words] (sic) are not so much the modules, but I think the first and third extensions in terms of, you know, acceptable digital marketing practice were fine. I have no problems with that. My point there was price."
"For each dealer Motortrak will develop a brand-specific monthly SEO work template to create model, news items and department-specific landing pages, local content and reviews, as well as make updates to keyword and meta information. Selected national content, campaigns and brand relevant news can also be promoted on each site. Motortrak will work with dealers to add relevant website content, keywords and internal links to dealers sites to make them more visible in free search engine listings."
"something is really wrong with the Motortrak costs"
Mr McCraith was asked in cross-examination about an email which Mr Ducker sent to Mr Cox on 19 June 2013 in which Mr Ducker referred to a telephone conversation with Mr McCraith. Mr Ducker reported that Mr McCraith said that he "totally understood Motortrak" and "the value of digital and the SEO programme" but that "finance" did not get the value. Mr McCraith agreed that he was impressed with the system but was having difficulty with Mr Hardy. Counsel put it to Mr McCraith:
"I would suggest the message you are giving to Mr Ducker and to Motortrak is: the system is great, but I've got this guy in finance, Mr Hardy, and he's being a pain over the costs."
Mr McCraith responded:
"You could say that, yes."
Mr Hardy then sought to raise the matter directly with Ms Johns in an email of 1 August 2013. Mr McCraith's evidence was that Mr Hardy was concerned about the cost and agreed that as a busy finance director, Mr Hardy did not see the value of the services.
"just a quick heads up on the leads for last month January… in summary Jan 2014 has smashed all previous records for both franchises"
Mr McCraith responded on the same day:
"Congratulations David. We owe you a big lunch based on these results. Please pass on my thanks to all at MT."
"So we changed the start of 2014 the way that the TV calendar works, it starts January through to December, and we front-loaded our TV and we brought a new thing called Big Bash League Cricket which Shane Warne was playing in, and that had enormous ratings. So the combination of all the marketing channels working together did deliver that lead result, that wasn't just Motortrak…
They were important, but they weren't the most important. There was a lot of other elements, such as the creative television work being brought by Maxus and work being done by Digital Dialogue as well."
"SEO was a highly valuable long-term strategy focused on longtail keyword and site optimisations focused on the aggregation of marginal gains".
"an expensive program, on an ongoing basis is a game of diminishing returns on a dealer level…"
Mr O'Leary responded:
"…In SEO, it is actually referred to as the long tail strategy, which is as the returns diminish they become more valuable. So fewer in number but of increasing value. "
It was put to him that:
"no sensible dealer would sign up for a 5-year term paying $2,405 a month for SEO?"
Mr O'Leary rejected that proposition.
"Digital Dialogue recommends a combined SEO and SEM strategy if your budget allows. If not, we recommend concentrating on SEO however please note it will take three – six months to achieve great results. Once you are happy with the volume of leads your Dealership is receiving, you may be able to reduce your SEO budget, however it is not recommended to stop SEO altogether as this will negatively impact the work performed to date." [Emphasis added]
Counsel for FCAA put it to Mr O'Leary that by this proposal, Digital Dialogue were not suggesting a long-term commitment to SEO. Mr O'Leary responded that:
"I think when they say it is not recommended to stop SEO altogether, I think that implies quite the opposite, that it is a long-term commitment."
"there were standard contract terms (in the sense of typical) for marketing and digital service providers where manufacturers were charged on the basis of a monthly fee for service on a per dealer basis with contract length varying from 1 to 5 years."
"Contract terms which Motortrak entered into are typically 3 to 5 years."
"Look, absolutely, if he has seen the contracts, yes, sure, I would respect that…"
"the original cost structure was equivalent to AU$690 per dealer per month or approximately US$500 per dealer per month for a base OEM website package which was typical by US standards."
"it is possible the sheer level of detail presented has the net effect of obscuring the simple truth of this case: there is simply nothing unreasonable about the terms agreed by FCAA the Motortrak to provide a manufacturer website platform or to improve on the platform by the contract extensions." [Emphasis added]
Although this expression of his opinion was in my view unfortunate, there is in my view no real basis on which to challenge his impartiality. His evidence as to the prices charged by dealer.com to various manufacturers and the explanation of how the price varied according to the number of dealers appeared to me to be factual and was not challenged. Counsel for FCAA submitted in closing submissions that Mr O'Leary had been evasive in cross-examination. This was not a view which I took at the time and upon rereading the relevant passages from Mr O'Leary's evidence, I remain of the view that Mr O'Leary was not evasive in his answers.
"it does not fundamentally alter my view on pricing that I have expressed in the reports."
"The relevant point is that because the dealers have access to Carsales, and through Carsales the Pentana system, they didn't need all of the features which Motortrak was selling to FCAA for the dealers to use. They already had them, effectively."
"the fundamental basis for not altering my opinion is that a base website for Dealer.com was set by me at US$699 at precisely that timeframe"
However as noted above, in his report, Mr O'Leary actually states in his report that US$699 was the "base price" but was then discounted.
Further in cross examination he stated:
"When reviewing the exchange rate issue I went back and looked at this, and so there is a range of pricing here. So US$500 per dealer per month for an OEM website package would have been for a website with significantly more volume than FCAA was providing. So it is still within the range. I think that's a fair statement."[Emphasis added]
However this evidence appears to be at odds with his report where he stated that:
"Motortrak's price (at a little more than US$500 per month for FCA dealers) fit almost perfectly into dealer.com's price range on the basis of product and volume of dealers. They charged slightly more than dealer.com charged Acura at $500." [Emphasis added]
Earlier in his report Mr O'Leary had noted that Acura had about 250 dealers.
"well in line with industry pricing for a more robust tool set".
"not outside of the range of what we were accustomed to seeing in the market at that time."
"managing the content of a website for SEO purposes."
Mr O'Leary rejected that statement. Mr O'Leary said that the phrase "relevant website content" meant that the dealers could ask Motortrak to do almost anything. Mr O'Leary noted that Motortrak had a ratio of about 16:1 in terms of people who were doing this work and he therefore presumed that
"there was substantially more work being done in terms of content than would have been typical under a narrowly defined SEO program."
He accepted however that he could not speak to the actual work that they did on a day-to-day basis because he was not present. However Mr Cox gave evidence about the number of individuals that were employed to give effect to the obligations to provide SEO, and although I accept that the scope of the SEO services (and thus its value) at the time of entering into the Second Extension could not be determined with any precision by reference to the contractual description, it seems to me that it is open to Mr O'Leary in giving expert evidence to the court about the value of the SEO services to have regard to what was actually provided within the scope of the general description in the Second Extension.
"my assessment at this point on those products when I looked at them in the US market. What became quite clear to me was there was no fixed term for many of those, or at least we don't know what that fixed term was. It's a very different market, and it didn't fit to what the Australian market was doing at the time. That level of SEO investment is just unheard of in this marketplace.
"But I did satisfy myself that it would be unlikely that a dealer would sign up for five years of SEO work at $2,400 per month." [Emphasis added]
It was unclear from Mr Olver's responses in cross examination how he had arrived at this conclusion.
"a big difference between a programme that allows individual dealers to sign up for some short-term SEO activity and the Motortrak/FCA agreement which entailed FCA paying for its entire dealer network for 36 continuous months."
"Look, if I think that the period was sort of circa three to six months, I could accept there would be some short term value in implementing some comprehensive SEO. It's just a point beyond that that it becomes really difficult to justify that level of ongoing investment." [Emphasis added]
After sending the judgment out in draft to counsel in the usual way, two points were raised by the parties: