Fearns (t/a Autopaint International) v Anglo-Dutch Paint & Chemical Company Ltd. & Ors [2008] EWCA Civ 99

[2008] EWCA Civ 99

Case No A3/2007/1292

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

[2007] EWHC 955 (Ch)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

Chancery Division

Christopher Floyd QC, sitting as a High Court Judge

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 19/02/2008

Before

LORD JUSTICE WALLER

Vice President of the Court of Appeal, Civil Division

LADY JUSTICE ARDEN

LORD JUSTICE TOULSON

Between

Gary Fearns t/a Autopaint InternationalAppellant

Anglo-Dutch Paint & Chemical Company Ltd & OrsRespondents

Alistair Wilson QC and Giles Fernando (instructed by Messrs Bevans) for Appellant

Thomas Moody-Stuart (instructed by Messrs Faegre & Benson) for Respondent

Hearing Hearing dates : 14 th– 16 th January 2008

Judgment

Introduction

[1]The appellant Gary Fearns (Mr Fearns) built up a substantial business, trading as Autopaint. He sold through his own shops but the most important part of his business was conducted through franchisees. He purchased paint in Autopaint tins and other Autopaint products such as tinters, and commodity products such as hardeners, and clear coats from various suppliers but in particular from the respondents, (De Beer). He became heavily indebted to De Beer and in the context of seeking reduction of that debt De Beer sought Mr Fearns’ consent to supplying Mr Fearns’ franchisees direct. The issue at the trial was whether they ever obtained that consent. It was never in issue that De Beer did at some stage supply the franchisees direct; and it was never in issue that ultimately Mr Fearns lost his franchisees and that those franchisees began to trade with De Beer. But consent was an issue.

[2]Mr Fearns brought proceedings against De Beer contending that they had acted unlawfully. He alleged infringement of his trade mark, passing off, malicious falsehood, infringement of copyright and breach of contract. He also alleged conspiracy against all defendants who, in addition to De Beer themselves, included employees of De Beer responsible for the actions of De Beer during the relevant time. He claimed that the defendants had destroyed his business by acting unlawfully with the intention of taking from him his franchisees, claiming damages on that basis and claiming an inquiry as to the damages suffered.

[3]Directions were given for the trial of the action and it came on before Mr Christopher Floyd QC (as he then was) sitting as a Deputy High Court Judge. The critical issue he had to decide so far as liability was concerned was whether Mr Fearns had ever given consent to direct sales. There was a debate before him as to the extent causation was to be decided by him, as opposed to being left to any inquiry as to damages if he found any unlawful conduct by the defendants. By a judgment given on 2nd May 2007 the Deputy Judge found(1) that in a telephone conversation at the end of May 2004 between Mr Fearns and the fourth defendant, (Mr Jongsma), Mr Fearns had given consent for supplies to be made direct “where Mr Fearns was himself unable to supply” the franchisee;

(2) that De Beer had acted unlawfully by infringing Mr Fearns’ trade mark and been guilty of passing off by supplying direct to franchisees outside the limits of the consent, (the extent of which would have to be subject to the inquiry on damages); and

(3) that De Beer and/or other defendants’ unlawful conduct was not causative of Mr Fearns’ loss of his franchisees, that loss being caused by Mr Fearns’ financial status and consequential inability to supply his franchisees. The judge had to deal with the question of costs which he did in a way with which both parties are dissatisfied, but which I need not explore further as it has been agreed, and an order made, postponing consideration of an appeal by both parties until after decision on other aspects.

[4]The Deputy Judge (apart from granting permission to appeal his orders as to costs) granted permission to appeal two aspects. First he granted permission to appeal his finding on consent “because relevant material bearing on issue may have been overlooked in the light of late pleading of agreement”. He also granted permission to appeal his decision on causation “i.e. whether it should have been decided at trial”. Thus the issues with which this judgment deals are(1) consent and

(2) causation.

Consent

[5]The question whether consent was given was a question of primary fact turning on whether Mr Jongsma for the defendants or Mr Fearns for Autopaint was accurate in what they maintained occurred at meetings and in a telephone conversation in May 2004. The answer largely depended on the judge’s assessment of the credibility both of Mr Fearns and Mr Jongsma and the other witnesses called by De Beer who were present at meetings or involved at the time in the taking of decisions for De Beer.

[6]It is important to bear in mind the position of the Court of Appeal when considering an appeal against a finding of primary fact. As Clarke LJ put it in Assicurazioni Generali SpA v Arab Insurance Group

[2003] 1 WLR 577

at 580:- “In appeals against conclusions of primary fact the approach of an appellate court will depend upon the weight to be attached to the findings of the judge and that weight will depend upon the extent to which, as the trial judge, the judge has an advantage over the appellate court; the greater that advantage the more reluctant the appellate court should be to interfere.”

[7]The judge tested the question of whose evidence he should believe against such documents as existed, which were few in number, and by seeking to place the conversation in its correct chronological position so as to assess the inherent likelihood of such a consent being given. Some criticism is made of the judge in the way he carried out that exercise. To some extent this court is in as good a position as the judge to place the alleged conversation in its correct chronological position, and assess inherent likelihoods, but this court must remember that it suffers the great disadvantage of not hearing the witnesses, and indeed of not having sat through the whole trial. An appeal court is only taken to certain aspects of a trial, on which counsel may be able to shine a light, which places an emphasis or an interpretation which fuller acquaintance with all that went on at the trial the point may not deserve.

[8]The question which the judge had to answer was particularly difficult because the judge, for reasons which he gives in paragraphs 12 (in relation to Mr Jongsma) and 15 to 17 (in relation to Mr Fearns), had to treat both key witnesses with caution. Mr Fearns was described by the judge as a “not wholly satisfactory witness”. At times he persuaded himself events could not have been as suggested by the defendants – on other parts the judge said “it is not possible to be so charitable”.

[9]The difficulty with Mr Jongsma was that he was prepared to assert matters as being agreed when they had simply been discussed. Indeed(1) he had asserted there was agreement to direct selling to franchisees at a meeting on 11th March 2004 reporting that as having happened to his colleagues at the time [see para 23 of the judgment];

(2) in the defence it was pleaded that the consent was given at a meeting on 24th May 2004 attended by the third defendant (Mr Welch), Mr Jongsma and Mr Fearns, and that pleading was attested to by Mr Jongsma. Only in his witness statement dated 14th December 2006 did Mr Jongsma assert that the consent was in fact given in a telephone conversation between himself and Mr Fearns at the end of May 2004 [see paragraph 38].

[10]As regards other witnesses called on behalf of the defendants the judge thought Mr Welch was doing his best to tell the truth, but he was criticised by the judge for giving a detailed account of the agreement having been made at the meeting on 24th May 2004 because, when he came to give evidence, he could remember nothing of that meeting except that there was “heated disagreement”. Of the other witnesses, Mr Van Der Woude and Mr Wemmers, the judge had no doubt “they were giving their evidence broadly fairly” and, as will appear, that is of particular importance.

The late pleading

[11]Some emphasis is placed by those representing Mr Fearns on the appeal on the fact that consent in a conversation at the end of May 2004 came in only by late amendment. In the light of the fact that Mr Jongsma was asserting this to be the position in his witness statement, it is slightly strange that Mr Moody-Stuart, acting for the defendants, did not before or even at the commencement of the trial produce an amendment to the pleading. Since the main issue at the trial was consent, the defendants called their witnesses first but an amendment was not produced until the evening of the third day, just before Mr Jongsma, the final witness for the defendants, was going to give evidence by video link.

[12]But it certainly cannot be said that Mr Fearns’ advisers or Mr Fearns himself were taken by surprise, or that this was one of those cases where destructive cross examination had destroyed one case and only then did another appear. Counsel for Mr Fearns, then Mr Lissack QC, clearly appreciated from the outset of the trial that the defendants’ case was to be consent by telephone; that was the way it had been put in the written submissions on behalf of the defendants delivered before the trial [see paragraph 26], and it was referred to by Mr Lissack in his cross examination of the first witness called by the defendants, Mr Wemmers; [see day 2 page 111.]. Thus, although much forensic mileage could and was made about the change of case, Mr Fearns’ team were not taken by surprise by it and were prepared for it subject, possibly, to one point to which I shall return.

Findings of the judge

[13]The history of the trading and negotiations including each side’s versions of what occurred between 2000 through to June 2005 are to be found in paragraphs 18 to 50 of the judgment. It is sufficient for the purposes of this judgment to set out key features of that history and key findings.

[14]De Beer supplied Mr Fearns with Autopaint products both for his shops and his franchisees. The paint was supplied in special Autopaint tins which were of a certain size, made so as to accommodate paddles to mix tinters into the paint. They could not supply his franchisees directly with Autopaint products without infringing the Autopaint trade mark. They would have been entitled to supply their own brand, Octoral, a paint they supplied to others but Octoral was marketed as a superior quality paint.

[15]Mr Fearns had other suppliers of Autopaint but De Beer were his major supplier.

[16]Mr Fearns was regularly indebted to De Beer in amounts in excess of credit terms from 2000. In January 2003 De Beer took Mr Fearns off open account status meaning that goods had to be paid for before they were shipped, Mr Fearns owing at this stage some 700,000 Euros. By March 2004 the high level of debt was a matter of concern, and in so far as De Beer had produced products ordered by Mr Fearns but undelivered because of lack of payment, De Beer had a stock which they could not move. At the same time Mr Fearns’ franchisees were not receiving supplies which they needed.

[17]On 11th March 2004 at a meeting at Schipol Airport to discuss the level of debt, attended by Mr Fearns and Mr Jongsma and Mr Welch for De Beer, a payment plan was tabled. Under that plan De Beer were suggesting payment by Mr Fearns of 20,000 Euros a week, half to be used to reduce the overdue debt and the other half to go toward the payment of new orders. The judge thought this plan was accepted by Mr Fearns, although nothing turned on that. Mr Fearns did pay figures of 20,000 Euros in a number of weeks between 11 March and 1st June 2004, as appears from appendix 9 to De Beer’s expert accountant’s report (appendix 9).

[18]It was also suggested at the meeting that if Mr Fearns did not stick to the plan De Beer would have to implement a different scheme in which De Beer would sell direct to Mr Fearns’ franchisees. Under this scheme De Beer would charge a marked-up price the difference being used to discharge Mr Fearns’ debt, subject to a small handling charge. Although Mr Jongsma said this was in fact agreed by Mr Fearns, the judge accepted Mr Fearns’ evidence, supported as it was by Mr Welch, that it was not. Indeed the meeting had ended in heated disagreement.

[19]On 24th May 2004 a further meeting was held in Liverpool, attended by Mr Fearns and again Mr Welch and Mr Jongsma for De Beer. This was the meeting at which it was originally pleaded agreement was reached but the judge accepted Mr Welch’s evidence at trial (contrary to his witness statement) that the meeting was “another round of disagreement between Mr Jongsma and Mr Fearns”.

[20]As regards the telephone conversation at the end of May 2004 the judge’s findings were as follows and here I should quote in full:- “29. Mr Jongsma says that towards the end of May 2004 there was a telephone conversation with Mr Fearns. In his witness statement he says that Mr Fearns agreed to pay 35,000 Euros to release an order, and in addition eight payments of 50,000 Euros per week starting on 17th June 2004. He says it was also agreed that where Autopaint could not supply his dealers with the required products, De Beer would supply them from Doncaster. De Beer would supply products to Autopaint to the full value received against the 50,000 Euros payments – not just half for goods and half to reduce the debt as suggested at the March meeting.30. Here there is a straight conflict of evidence between Mr Jongsma and Mr Fearns. Mr Fearns categorically and repeatedly denied having reached any such agreement. Mr Jongsma’s account is consistent with an email or draft email bearing a date of 1st June 2004 to be sent to Mr Fearns and due to be copied to Mr Welch as well. There is no independent evidence of this email having been sent. It was not found on Mr Welch’s computer and Mr Fearns denies receiving it. Despite Mr Jongsma’s evidence to the contrary I find that it was not sent. Other emails from Mr Jongsma which are in evidence have the usual date and time of sending on the header. Although emails were not without precedent, the normal method of confirming oral agreement with Mr Fearns was by fax.

31. The fact that the 1st June 2004 email was not sent does not of course resolve the question of whether the email accurately records an agreement made on the telephone between Mr Jongsma and Mr Fearns. It was not suggested to Mr Jongsma that the email was a litigation-inspired forgery: so the issue is whether it accurately records what was said. The email ends with the suggestion that, if anything is inaccurately recorded, Mr Fearns should say so, thus at least implicitly recognising that there may have been a misunderstanding. As I have said, Mr Fearns strenuously denies that there was any such agreement: but I must be cautious about accepting that evidence for the reasons I have given. Mr Jongsma, whose somewhat vague grasp of the difference between discussion and agreement I have already noted, says that there was. Again I cannot simply prefer his evidence without more. Both sides look to subsequent events to support their version, or undermine that of their adversary. To these events I now turn.”

[21]The judge then traced events thereafter. He noted matters inconsistent with there having been an agreement e.g. no immediate implementation of direct sales, the first shipment occurring on or about 30th June 2004; the lack of record of any agreement to any other De Beer executive; the making of a list of franchisees which Mr Welch had contacted and those he had not of which two were identified as “too close to Gary, will call him later”. [This list was made in July 2004 and on the appeal there was a suggestion that the judge was placing it wrongly somewhat earlier, but I would reject that criticism having regard to the way the judge dealt with the matter in the paragraph I am about to quote].

The judge summarised the points against there being any agreement in these words:

[22]- “53. Mr Lissack QC and Mr Fernando for Mr Fearns argue:(a) that the agreement alleged would be commercial suicide for Autopaint;

(b) the pleaded case about the agreement, although supported by a Statement of Truth, is abandoned by amendment. Why, asks Mr Lissack forensically was the agreement now relied on not mentioned to De Beer’s solicitors before?

(d) there is no explanation of why Mr Fearns would have changed his position only a few days after a heated exchange in which he refused to countenance direct supply;

(e) the uncertainties about when the agreement was struck (Mr Jongsma’s evidence wavered on this);

(f) the delay before the direct supply was started: if there was an agreement in place by June 1st, why did De Beer/Anglo-Dutch wait at least a further month before making supplies when all the arrangements had been in place – something for which Mr Jongsma had no explanation;

(g) the fact that De Beer/Anglo-Dutch were apparently still nervous about letting Gary Fearns know what they were doing even in July 2004: the “too close to Gary” comment and the fact that they did not check with Autopaint before supplying a franchisee as to whether Autopaint could supply.”

[23]In tracing the history after the end of May the judge also identified points which in his view supported the making of an agreement. His summary of those was in paragraph 52 in the following terms:- “52. The principal matters advanced by Mr Moody-Stuart for the Defendants are:(a) there is a contemporaneous record of agreement in the form of the draft email of 1st June, even if it was not sent to the Claimant;

(b) Autopaint did make the payment of €35,000 and started making the weekly payments of €50,000 referred to in the agreement;

(c) the discussion with Mr Fearns at the meeting of 1st October at which the method of calculating the credits was discussed shows he was aware of what was being done, and hence the agreement;

(d) the failure to comment on the credit notes, likewise;

(e) the failure to comment on the fax recording the meeting in February 2005, likewise;

(f) that there was advantage for Autopaint in agreeing to this version of the direct sales proposal: all Autopaint’s payments would go towards stock, rather than only half as under the March proposal. But in return Anglo-Dutch/De Beer did not have to wait for a default before proceeding to make direct sales.” (a) there is a contemporaneous record of agreement in the form of the draft email of 1st June, even if it was not sent to the Claimant; (b) Autopaint did make the payment of €35,000 and started making the weekly payments of €50,000 referred to in the agreement; (c) the discussion with Mr Fearns at the meeting of 1st October at which the method of calculating the credits was discussed shows he was aware of what was being done, and hence the agreement; (d) the failure to comment on the credit notes, likewise; (e) the failure to comment on the fax recording the meeting in February 2005, likewise; (f) that there was advantage for Autopaint in agreeing to this version of the direct sales proposal: all Autopaint’s payments would go towards stock, rather than only half as under the March proposal. But in return Anglo-Dutch/De Beer did not have to wait for a default before proceeding to make direct sales.”

The judge then reached his conclusion in the following terms:

[24]- “54. Despite the considerable force of many of the forensic points advanced by Mr Lissack, I conclude that Mr Jongsma’s account is more credible than that of Mr Fearns and is the one which can be more readily reconciled with the documents. Accordingly I find there was an agreement reached orally at the end of May 2004 between Mr Fearns on behalf of Autopaint and Mr Jongsma for De Beer/Anglo-Dutch that De Beer could sell direct to franchisees where Autopaint was unable to supply the product. Such an arrangement, contingent as it was on Autopaint being unable to supply, did make commercial sense. Such funds as Autopaint was able to send to De Beer would be applied in their entirety to stock rather than only as to 50%. That would explain why Mr Fearns would have been persuaded to change his position from that which he made clear at the earlier meetings. The contemporaneous material – the draft email, the credit notes and the February 2005 fax – point heavily in favour of Mr Jongsma’s account unless some explanation can be found for them. 55. I am of course troubled by Mr Jongsma’s tendency, pointed out above, to confuse discussion and agreement and I have carefully considered whether that could explain the draft email and the 2005 fax. In other words was Mr Jongsma merely inaccurately recording an agreement in much the same way as he recorded the March 2004 discussion in his email to his colleagues and his witness statement as if direct sales had been agreed? In favour of this view is the communication from Mr Van Der Woude dated 24th December 2004, which describes the sales as having taken place “without objection” rather than with express agreement. In the end I have rejected that theory. The preponderance of evidence is in favour of the existence of a concluded agreement.”

[25]Mr Wilson QC (who represented Mr Fearns on the appeal) submitted that the critical factors so far as the judge was concerned were(1) the commercial justification identified by the judge for Mr Fearns being persuaded to change his position i.e., as the judge thought, the agreement by De Beer to supply 100% against payments of 50,000 Euros, whereas previously they were insisting on only 50% against 20,000 Euros;

(2) the existence of the draft e-mail;

(3) the failure by Mr Fearns to protest at the credit notes at the meeting on 1st October 2004;

(4) the failure to comment on a fax in February 2005. Mr Wilson sought to demonstrate that the judge had erred in relying on any of the factors, and sought to put before the court documents not put before the judge in the court below to support his arguments.

Commercial justification

[26]Mr Wilson submitted that the commercial justification found by the judge took those representing Mr Fearns by surprise at the trial. It was not pleaded as a term of the agreement granting consent. He suggested that it was not thought to be in dispute that over a considerable period prior to May 2004 products to at least 90% of any payment were being supplied. He pointed to Mr Wemmers’ witness statement indicating that from January 2004 De Beer would wait until they had the value plus 10% then “we would ship the order and apply the whole amount of the payment received from Mr Fearns to the earliest account”. He sought to demonstrate that prior to the end of May when the telephone conversation was said to have taken place, De Beer were already supplying products to the value of more than 50% of payments by Mr Fearns. His primary source for so arguing was appendix 9 to the expert’s report filed by De Beer by reference to which he could point to a fairly consistent pattern of payments of 20,000 Euros during March, April and May and could then, by adding up the figures for the respective months, suggest that with what he described as “a glitch” in March delivery of products to the value of about 90% were being delivered.

[27]He also in this regard wished to put in evidence an e-mail not in evidence before the judge dated 15 April in which Mr Jongsma was instructing Mr Wemmers and others “Never send more products than he pays. Always stay at least 10% below the amount he pays”.

[28]Thus, he argued as at the end of May, De Beer were not simply supplying goods to the value of 50% as the judge thought and there was no variation of benefit to Mr Fearns which would have justified him changing the position he had so vehemently rejected.

[29]The justification for seeking to put in the telex as fresh evidence was that it had not been appreciated that the variation payment plan would become an important ingredient of what was alleged to have been agreed on the telephone and, until judgment, the significance had not been appreciated.

[30]Mr Moody Stuart accepted that the amendment did not plead this variation in the payment plan, but he pointed out that what the judge ultimately found as terms of the agreement was consistent with what Mr Jongsma stated in his witness statement. The important passage is in these terms:- “38 . . . .With the debt that he owed to us, we had serious concerns about the stability of his business and that he would ever pay back his debt. At the end of May 2004, I had a discussion with GF during which he agreed to transfer €35,000 to De Beer before 7 June 2004 to release an order and after that he would make eight payments of €50,000, on a weekly basis, starting 17 June 2004 and ending on 5 August 2004. This means that he should have paid €435,000 by 5 August 2004. In fact, he only paid €190,000. It was also agreed that where Mr Fearns could not supply his dealers with the required products, De Beer would supply them with products from ADPCC in Doncaster. In consideration of the payments of €50,000, De Beer would supply products to the full value of the payment received, and would not withhold any sums.”

[31]He also took us to passages in the cross examination of Mr Wemmers in which he was accepting that at the 11th March 2004 meeting an obligation was placed on Mr Fearns to pay 20,000 Euros a week of which 50% would be used to pay off the debt.

[32]Furthermore when Mr Jongsma came to give evidence it seems it was an important part of his evidence that Mr Fearns was offering to pay 50,000 Euros in order to get 100% because he was so short of stock [e.g. Day 4 page 481].

[33]I accept that the amendment did not plead the commercial justification relied on by the judge. But I do not accept that Mr Fearns’ team were taken by surprise by the relevance given by the judge to the fact that as part of that conversation it was being asserted by Mr Jongsma that Mr Fearns should now pay 50,000 Euros and receive products to 100% of that value.

[34]We would not accept that Mr Fearns was entitled to put in the 15th April e-mail as fresh evidence on the appeal. By reference to the Ladd v Marshall criteria (too familiar to need full citation) this e-mail could have been identified as relevant with reasonable diligence. But, perhaps of more importance, it would not have had an important influence on the result of the case. It did not really alter the picture so far as the judge was concerned. Appendix 9 to which Mr Wilson referred shows a payment of 50,000 Euros was made on 17th June and that supports some variation in the payment plan having been agreed by Mr Fearns. If, as the judge accepted, Mr Fearns was offering to pay more than 20,000 Euros per week but wished to be clear that if he did De Beer would deliver 100% value, that would be of considerable significance to him in the context of the 11th March meeting where, undoubtedly, De Beer were seeking to impose a payment plan of 20,000 Euros a week, with only 50% value being credited to products. Whatever calculations Mr Wilson can do by reference to appendix 9, there is no suggestion that at any time after 11th March some other payment plan had actually been agreed between Mr Fearns and De Beer. All that could be said is that there had, as a fact, been some relaxation of the 50% value payment plan, but nothing to suggest De Beer could not insist on what they proposed as at 11th March.

[35]On this aspect therefore, I do not think there is any real substance in the criticism of the judge’s commercial justification.

The draft e-mail

[36]I had some concern as to whether the judge relied on this document as providing some independent evidence to support or corroborate Mr Jongsma’s assertion that an agreement was made in the terms recorded. Since the document itself is no more than an assertion by Mr Jongsma, uncommunicated to Mr Fearns, its only relevance can be as a contemporaneous statement against which to test Mr Jongsma’s consistency.

[37]It is right to stress that it was and is not suggested that any adverse inference is to be drawn against Mr Jongsma. An adverse inference would have been drawn if it could have been established that the document was a “litigation inspired forgery” – produced at a later date than appears on it to support the making of an agreement that Mr Jongsma knew not to have been made; or if it could have been established that, even if produced contemporaneously, Mr Jongsma deliberately did not send it because he knew that Mr Fearns would reject it. But no such allegations were made, let alone established.

[38]Thus the document helps in considering Mr Jongsma’s consistency. The judge does not explain precisely how the draft was of assistance, but it is difficult to think that the judge was putting more weight on this document than I have indicated would be appropriate. But in the light of what I say hereafter (even if he was) I do not think that can have any effect on the result of this appeal.

Credit notes and 1st October meeting

The judge dealt with the detail in paragraphs 38 and 39 in the following terms:

[39]- “38. By about the last week in September it appears that Autopaint were running very short of stock. On 1st October 2004 there was a meeting in Liverpool attended by Mr Wemmers, Mr Jongsma and Mr Fearns. Mr Wemmers says that at this meeting he discussed the shipments being made by Anglo-Dutch to the franchisees and the method of calculation of the credits. He said that credit notes would be sent on a monthly basis going forward. The first credit note dated 30th September 2004 was sent shortly after this meeting and covered the 3 month period July to September. It was suggested to Mr Wemmers that he had got the date of this meeting wrong, and that he intended to refer to a meeting in 2005, but I accept his evidence, as it is supported by documentary evidence, despite Mr Fearns’ denial. Monthly credit notes were sent thereafter until July 2005. 39. Mr Fearns accepts that the credit notes were received by his company, but says that he was not aware of this at the time. I am unable to accept this evidence. The level of debt between his business and De Beer must have been very high, if not the highest item on Mr Fearns’ agenda at the time. The first credit note of 28,500 Euros is not likely to have passed unnoticed. In any case he knew about the credit notes from the meeting in Liverpool in October.”

[40]We were taken by Mr Moody Stuart to the transcript of Mr Wemmers’ evidence. He was a witness that the judge said gave his evidence fairly. The transcript records an interchange between Mr Lissack and the witness in the following terms:- “Q. So would it be fair to summarise the position this way and take half an hour off my cross-examination of you? That it is Mr Jongsma who you relied upon completely in this matter. You made no independent investigation, for example with Gary Fearns yourself? A. That is correct. Q. So it is to Mr Jongsma that I should be addressing questions about the terms of the agreement, how reached and that sort of thing, is it; not you? A. At that moment in time it is Mr Jongsma. However, on 1st October, I was with Mr Jongsma in Liverpool with Gary Fearns and it definitely was re – what do you call it? Q. Discussed, revisited? A. Well, I had the confirmation from Gary as well, personally to me. Q. Yes, so you say. If we take this ---- A. No, that is the truth. Q. ---- in chronological order, at the time that you say this all started. Sorry, that is a loose question. At the time that you say in late June or early July 2004 the products were supplied, that was done with your knowledge? A. Yes. Q. And your consent? A. Yes. Q. And based upon you being told by Mr Jongsma that Mr Fearns had agreed to this? A. Correct.”

[41]Thus, having got an answer about what happened on 1st October 2004, Mr Lissack did not challenge that answer at that stage and went back to the position in June/July. When he came to the 1st October chronologically, Mr Wemmers clearly wished to deal with that meeting, but the interchange was as follows:- “Q. Can we move on, please, into December and come in the same bundle to 1367. A. Do we not skip the October 1st meeting? Q. Yes, because we say that occurred in February, actually, and you have got the wrong date. A. Sorry? Q. We say it occurred in February, not in October. A. No, no, it was both a meeting on October 1st and February 1st. Q. We will come back to that if needs be. I have an eye to the clock. A. I have been twice in my life in Liverpool. Q. I beg your pardon? A. I have been in Liverpool twice in my life: October 1st 2004 and February 1st 2005. December?”

[42]In the result the evidence would seem to go further than the judge recorded in that Mr Wemmers was supporting the confirmation to him of a previous agreement in addition to providing to Mr Fearns credit notes consistent with a supply of products to franchisees.

[43]Mr Wilson sought to explain away a possible confirmation as suggested by Mr Wemmers as something that might have given rise to an estoppel – consistent, he submitted, with Mr Fearns’ behaviour in failing to refute inaccurate statements by De Beer (e.g. statements as to the royalties due for sales in Australia). But this was a submission built on speculative foundations. Mr Fearns’ case at the trial was that the credit notes were not discussed at the 1st October meeting. Mr Wemmers’ evidence was of revisiting and of Mr Fearns confirming that consent had been given.

[44]This evidence of Mr Wemmers, and the supply of credit notes, provides the strongest indication and support for the conclusion of the judge that Mr Fearns did give his consent to the direct supply to his franchisees if he was unable to supply them himself.

Fax of 9th February 2005

[45]The judge’s findings in relation to this fax were as follows:- “42. There was a further meeting in February 2005, again involving Mr Wemmers, Mr Jongsma and Mr Fearns. The meeting was followed by a fax dated 9th February 2005 from Mr Jongsma and Mr Wemmers to Mr Fearns which Mr Fearns accepts he received. This fax attempts something of a potted history of the dealings between Autopaint and De Beer over the debt. The fax contains this paragraph:

“In order to increase the speed in paying off the overdue amount we agreed in 2004 that De Beer Lakfabrieken B.V. can sell Autopaint International brand directly to the agents (franchise shops) that are not owned by Autopaint International, the Maltese Autopaint distributor and other distributors. The extra margin that De Beer Lakfabrieken B.V. makes on this sale minus 10% for handling charges will be used to decrease the overdue amount and will continue until all outstanding invoices are paid for. This together with the agreed royalty of ½% over the sales of the Autopaint brand from De Beer Lakfabrieken B.V. to Australia has reduced the overdue amount in 2004 with €45,000” 43. On receipt of this fax Mr Fearns claims to have sent a reply fax asking, as a single question “What is this all about?”

. He claims to have tried to contact De Beer repeatedly. So far as this is concerned, Mr Fearns’ telephone records do not support him. Mr Jongsma said he received no reply and assumed that Mr Fearns agreed with him. I do not accept that Mr Fearns responded in this way. Equally I do not accept that the fax accurately records the detail of all the agreements. 44. The fax record of the 1st February 2005 meeting goes further than the alleged agreement of May 2004. There is now no limitation to “products you cannot supply from Doncaster”. But other evidence suggests that the Defendants were observing this restriction, as I describe below.” “In order to increase the speed in paying off the overdue amount we agreed in 2004 that De Beer Lakfabrieken B.V. can sell Autopaint International brand directly to the agents (franchise shops) that are not owned by Autopaint International, the Maltese Autopaint distributor and other distributors. The extra margin that De Beer Lakfabrieken B.V. makes on this sale minus 10% for handling charges will be used to decrease the overdue amount and will continue until all outstanding invoices are paid for. This together with the agreed royalty of ½% over the sales of the Autopaint brand from De Beer Lakfabrieken B.V. to Australia has reduced the overdue amount in 2004 with €45,000”

[46]The judge’s finding that telephone records did not support Mr Fearns’ evidence that he sent off a fax saying “what is this all about” and that he repeatedly tried to contact De Beer, gave rise to another aspect of the application to put in fresh evidence. So far as the alleged fax was concerned one point made by those acting for De Beer in the court below was that the telephone records indicated a fax from Mr Fearns to De Beer at or about the relevant time but the precise time for the sending of the same was before the 9th February fax was sent, therefore it could not have been a response to that fax.

[47]Mr Wilson wished to introduce evidence by reference to which he said it could be established that a different fax at De Beer’s offices was set one hour out. If, his submission was, one fax could be an hour out, it followed the relevant fax could also be an hour out and if that was so the records would have supported Mr Fearns in relation to having sent a fax.

[48]If this type of evidence was going to be produced there is no reason why it should not have been produced at the trial. In any event no fax of the character described by Mr Fearns was found in the documents of either Mr Fearns or De Beer, and the records still do not support constant attempts to communicate with De Beer.

[49]We refused to admit the evidence both because it could with reasonable diligence have been produced at the trial and because we did not think it would have had an important impact on the result of the case.

[50]I should perhaps add that, even putting this evidence at its highest, Mr Wilson could not submit it established that a fax was sent and that we should reverse the judge’s finding. Even if he could have persuaded us to admit it in evidence, the only action the Court of Appeal could have taken would have been either to hold (as we have) that it made no difference or that a retrial would have to be ordered. Neither party wanted a retrial and, on that basis alone, it would have been wrong to admit this evidence.

[51]I now return to the fax of 9th February itself. Because it did not spell out the agreement alleged to have been concluded by Mr Jongsma in full as the judge noted, this fax was clearly not the most powerful point in favour of the agreement Mr Jongsma said had been concluded in the telephone conversation. However, when taken with Mr Wemmers’ evidence of what occurred on 1st October 2004, it certainly supports the assertion that Mr Fearns had given consent to deal directly with his franchisees. Other points raised in support of appeal Actions contrary to terms

Other points raised in support of appeal

[52]It is submitted that the fact that De Beer did not act after the end of May in accordance with the terms of the agreement is some evidence that the agreement was never made. To support this argument there was the third aspect of the application to put in further evidence. In this instance leave was sought to rely on certain invoices evidencing sales by De Beer direct to certain franchisees in July 2004. It is submitted that, if one looks at these invoices and then at invoices as between De Beer and Autopaint in May 2004, one can see the same type of products being supplied in May by De Beer to Autopaint. This, it is submitted, establishes that Autopaint had in stock these products. If one looks then at the invoices sought to be put in evidence, it can be seen it is said that De Beer was supplying direct to the franchisees. The conclusion to be drawn is that De Beer were supplying in breach of the agreement. To be acting inconsistently with the agreement alleged supports the argument (so it is submitted) that the agreement as asserted was not in fact made.

[53]The excuse for not producing these invoices at the trial is that resources were stretched and some tasks were given to Mr Fearns personally and he simply did not appreciate the significance of these documents or have time to complete the task before the trial.

[54]Finality in litigation is important and there is no room for allowing a party to “do its best” for the trial and then “have another attempt” for an appeal. On that basis alone the application to introduce these documents must fail. But in any event I cannot accept that the mere existence of invoices as between De Beer and Autopaint in May 2004 establishes that these items were in stock at Autopaint in July 2004. On 12th July 2004 De Beer faxed franchisees saying “Please order your products from Autopaint Liverpool as normal. If they send you short supply then pleases contact our distribution centre in Doncaster to top up your order.” Sending invoices to franchisees in July after this fax is just as consistent with complying with the agreement as non-compliance. It would need much more evidence as to the state of Autopaint’s stocks before one could conclude actions were being taken contrary to the term of the agreement.

[55]Finally, the judge was aware that De Beer were acting outside the terms of the agreement. He found that to be so. There is no reason to think that he did not have that in mind in reaching his conclusions as to whether an agreement was made.

Failure to inquire of Autopaint whether they could supply

[56]This was a powerful forensic point but was expressly mentioned as such by the judge in paragraph 53(g) quoted above.

Out of date lists of prices and franchisees

[57]There is no reason to think the judge did not have these points in mind when dealing with De Beer being nervous about letting Mr Fearns know what they were doing even in July 2004 and the “too close to Gary” comment (paragraph 53 (g) again).

Contemporaneous documents

[58]It is suggested that the judge’s reference to “contemporaneous material – the draft e-mail, the credit notes and the February 2005 fax . . .” showed a flawed approach. The only truly contemporaneous document it is said was the draft email. Credit notes were four months afterwards, and the fax of 9th February 2005 eight months afterwards. The criticism is that the judge worked backwards.

[59]I do not accept this criticism. If, at a meeting some four months after an alleged oral contract, the matter is as Mr Wemmers said “revisited” and credit notes are supplied consistent with consent having been given previously, those are powerful factors in support of consent having been given.

Conclusion on consent

[60]The judge had to make up his mind as to whether Mr Jongsma’s evidence was to be accepted or whether Mr Fearns adhered to the position he had taken up at the previous meetings. He recognised the forensic points which could be taken on behalf of Mr Fearns but having weighed up the competing points was entitled to hold in favour of De Beer.

[61]Mr Fearns’ position at this time was very difficult, he having ordered products which he needed for his franchisees but which he could not obtain unless he paid. He was offering to make 8 payments of 50,000 Euros in order to get 100% and thus obtain more deliveries. If that still did not enable him to satisfy his franchisees, he had the choice between losing their goodwill and possibly his business, or keeping their goodwill by allowing De Beer to deliver Autopaint products they had in stock, and in that way pay off part of his debt. It is understandable for him to have taken the option which the judge found he did.

Causation

[62]This aspect I can take quite shortly. There was no direction that there should be a split trial. Furthermore, if the judge had the evidence on which he could deal with one aspect of causation, the loss of the franchisees, there is no reason why he should not have dealt with it. So much indeed was clearly conceded by Mr Lissack quite properly at the trial.

[63]The problem, as it seems to me, is that, until the court knows the extent of any infringements of Mr Fearns’ trade marks and the extent of any breaches of the consent agreement reached in May 2004, the court cannot finally rule as to their effect.

[64]It seems to me most unlikely that Mr Fearns will be able to establish that, if the agreement made in May had been adhered to by De Beer, he would have been able to maintain his business, including supplying his franchisees. But until the extent of the breaches are clear it does not seem to me that he should be prevented from seeking to establish that, if the agreement had been complied with by De Beer, he would have been able to survive and survive with his network of franchisees intact.

Conclusion on causation

[65]I would allow the appeal to the extent it prevents Mr Fearns establishing loss of his business flowing from breaches of the agreement reached in May 2004. But I stress that, in the light of what I have said in paragraph 64, Mr Fearns should not feel too encouraged by that decision.

[66]I agree.

[67]I also agree.