P & S Amusements Ltd v Valley House Leisure Ltd & Anor [2007] EWHC 1494 (Ch)

[2007] EWHC 1494 (Ch)

Case No 4MA70064

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue MANCHESTER DISTRICT REGISTRY, Royal Courts of Justice

Date 22 June 2007

Strand

London WC2A 2AA

Before

MR JUSTICE SILBER

Between

P & S AMUSEMENTS LTDClaimants

Nigel Gerald (instructed by Turner Parkinson LLP of Manchester) for Claimants

Stephen Cogley (instructed by Shammah Nicholls of Manchester) for both Defendants

Hearing Hearing dates: 23 to 25 and 30 April 2007 and further written submissions submitted on 3. 4, 21 and 22 May 2007

JUDGMENT

I. Introduction

[1]P & S Amusements Limited (“the claimants”) have been the tenants of Gaiety’s bar and night club, which is situated at 169 Promenade, Blackpool (“the premises”) and which is on Blackpool’s “Golden Mile”. By an underlease dated 24 July 1991 (“the underlease“), the claimants demised the premises for a period of 20 years less 10 days to Findextra Limited (“Findextra”). On 27 January 1992, the underlease was initially assigned to Mr. and Mrs. Peter Valentine by Findextra when that company fell into financial difficulties. By an assignment dated 8 May 1998, the underlease was later assigned by Mr. and Mrs. Valentine to their company Valley House Leisure Limited (“the first defendants”). The license to assign contained the usual direct covenants by the first defendants to observe the tenant’s obligations under the underlease. The second defendant is the guarantor of the liabilities of the first defendants under the underlease.

[2]The underlease contained beer-tie provisions which entitled the claimants to nominate suppliers (“the nominated suppliers”) to the premises of certain specified kinds of beers (“the Designated Beers”) from whom the first defendants as the tenants had to purchase the Designated Beers. From 1991 until August 2002, Scottish & Newcastle Breweries plc (“S&N”) was the nominated supplier of Designated Beers and it paid discounts by means of a rebate to the claimants as the landlords; these discounts were calculated by reference to the barrelage purchased by the first defendants as the tenants and were in the region of £65 per barrel. Much smaller rebates in the region of £ 15 per barrel were paid by S & N to the first defendants and these rebates were also calculated by reference to the barrelage of the Designated Beers purchased by the first defendants. S&N traded under a number of different names such as John Smith and Mathew Brown.

[3]On 1 August 2002, the first defendants negotiated with S&N to ensure that all the rebates on the Designated Beers from those brewers were no longer paid to the claimants but were instead paid to the first defendants. In consequence on 8 November 2002, the claimants nominated Carlsberg-Tetley (“CT”) as the new suppliers of the Designated Beers to the first defendants after the claimants had received a letter from CT dated 22 October 2002 which set out the rebates which CT would pay the claimants in respect of each barrel of the Designated Beers purchased by the first defendants. The first defendants refused to purchase the Designated Beers from CT and instead they continued to purchase its supplies of the Designated Beers from S &N.

[4]On 19 February 2004, the claimants commenced the present action against both the first defendants and their guarantor the Second Defendant in order to enforce the beer-tie. The defendants denied that the beer-tie was enforceable on various grounds, including that it breached United Kingdom competition law. On 31 March 2005, Master Bowles ordered that there be a split trial of “all issues of liability excluding all issues of competition law and quantum”.

[5]On 2 February 2006, after a trial of the preliminary issues, Park J. gave judgment [2006] EWHC99 (Ch) (“the first judgment”) in which he held (subject to the competition law issues) first that the beer-tie was enforceable and second that the first defendants had been in breach of the beer-tie by not purchasing its supplies of the Designated Beers from the claimants’ nominated supplier CT since the nomination took effect in November 2002. The judge also dismissed the counterclaim.

[6]On 26 June 2006, on the claimants’ strike out application in the present action, the Chancellor of the High Court (“the Chancellor”) gave judgment

[2006] EWHC 1510

Ch (“the second judgment”) first striking out the competition law issues and second granting a permanent injunction restraining the first defendants “from purchasing from any person other than the supplier nominated for the time being by the Claimant … of any Designated Beers … for sale at the demised premises”. The Chancellor also gave the claimants permission to amend and he ordered an enquiry as to damages following from Park J’s decision that the first defendants were in breach of the beer-tie and his decision that the claimants were successful on the competition issues. I am now conducting this enquiry which relates to the first defendants’ breaches of the beer-tie from November 2002 until February 2006. I should record that the second defendant is adopting the same stance as the first defendants and so the cases against each defendant stands or falls together.

[7]As I have explained, the claimants also claim by amendment in the present action that the first defendants have acted in breach of express and implied terms of the underlease since February 2006 onwards (“the post-February 2006 claim”) and that is the second issue which I am trying. Thus, the disputed claims which have to be resolved on this application are:(a) the sums(if any) due to the claimants on the enquiry in respect of the damage suffered by them as a result of the first defendants’ breach of the beer-tie from November 2002 to February 2006 ;

(b) in the post-February 2006 claim whether the first defendants have been in breach of implied terms of the beer-tie from February 2006 onwards by obtaining the rebates on the first defendants’ sales of the Designated Beers which should have been paid instead to the claimants; and

II. The Facts

[8]In 1991, Mr Peter Stefani was a Blackpool businessman, who together with other members of his family, owned the premises, which were then in poor condition. Another Blackpool businessman, Mr. Trevor Robbins, who was experienced in the licensed premises industry, thought that the premises were suitable for conversion into a bar and a nightclub. Because the conversion was going to be expensive, Mr Robbins could not finance it himself. It is and was well known in 1991 that breweries might or could be prepared to lend money for the construction or improvement of pubs and clubs. A beer-tie is always, or at least usually is, an integral part of the package which breweries want in return for providing such a loan. Neither Mr Robbins personally nor any company owned by him were borrowers who would have been acceptable to brewers

[9]The same was not true of Mr. Peter Stefani (who was advised by Mr Robert Collins, a licensed trade consultant) and so it came about that in the words of Park J in paragraph 8 of the first judgment, which I gratefully adopt, that an “arrangement was made of which the following were the salient features. i) Peter Stefani and the other owners of the premises granted a headlease of them to [the claimants]. I am not sure how precisely the shares in [the claimants] were owned, but Peter Stefani was the person who ran its affairs. ii) [The claimants] borrowed a total of £185,000 from Scottish & Newcastle. A condition of the loan was that there was to be a beer tie requiring the supplies of beer and certain other drinks for the bar and night club to be purchased from a Scottish & Newcastle company. iii) The money borrowed was used by [the claimants] to renovate the premises and to convert them into what became Gaiety's. If I understand correctly there is a bar on the ground floor and a club in the basement. Henceforth I refer to the two parts of the premises together as the bar. iv) The bar was subleased by [the claimants] to Findextra Ltd, a company controlled by Mr Robbins, for a term of 20 years. The sublease was dated 24 July 1991. Findextra paid a premium of £60,000, and there was an annual rent of £65,000 a year subject to rent reviews at three-yearly intervals. (Henceforth in this judgment I refer to the sublease simply as 'the lease', following the way in which it was referred to in the trial; but the lease referred to is not the headlease from the Stefani family to P&S – the headlease plays no further part in the case; rather it is the sublease which was originally granted to Findextra.) v) Findextra, as the lessee in possession, carried on the trade of operating the bar. Mr Robbins and his colleague Mr Crowson were the individuals who in practice were in charge at the premises. vi) The lease to Findextra contained the beer tie provisions around which this case revolves… vii) [The claimants] nominated Matthew Brown as its nominated supplier. Findextra established a regular trading relationship with Matthew Brown whereby it purchased its supplies of beer (and other drinks covered by the beer tie provisions) from Matthew Brown. viii) By letter from Scottish & Newcastle to [the claimants] Scottish & Newcastle undertook to pay to [the claimants] discounts calculated on the prices which the tenant paid on the invoices issued to it by the landlord's nominated supplier (originally Matthew Brown) for supplies of beer and other drinks covered by the tie. As I shall explain in more detail below, there is a dispute over whether Mr Robbins, or others who were involved at later stages in the business of operating the bar, knew about these payments.”

[10]As I have explained, the underlease was assigned originally to Mr and Mrs Valentine, who had made a loan to Findextra in 1991 when Findextra was starting its bar trade. On 8 May 1998, the lease was assigned by Mr. and Mrs. Valentine to a company controlled by the Valentine family, namely the First Defendants. Thus, the position since 1998 has been first that the first defendants have been the owners and operators of the trade carried on in the premises as Gaiety's bar and second that Mr Robbins and Mr Crowson have continued to be involved, and indeed they have always been and continue to be the persons, who have managed the business on a day to day basis. The second defendant Mr. Peter Valentine and his son Gavin have been directors of the first defendants since 1998 and they have each also been involved in its operations.

[11]During the years from 1991 to 1998 and indeed until 2002, the basic structure put in place in 1991, which I have summarised in paragraph 9 above, remained in operation. The tenants of the premises from time to time (namely Findextra, then Mr and Mrs Valentine and more recently the first defendants) continued to purchase the bar's supplies of the Designated Beers, which were covered by the beer-tie from a S& N group supplier originally Matthew Brown and later John Smith's- but the change was only one of name as in practice the supplies came from the same S&N source throughout. Findextra, Mr and Mrs Valentine and the first defendants as the tenants of the premises continued to be invoiced by the appropriate S&N company for the supplies and they continued to pay the invoices. S& N continued to pay rebates to the landlord namely the claimants, which were calculated upon the barrelage of the purchases made by whoever from time to time was the owner of the bar trade.

[12]It is appropriate now to explain that in the first judgment, Park J found that the tenants of the premises (meaning in practice and for most purposes Mr Robbins and Mr Valentine) did not know about the discounts which S& N was paying to the claimants until a discussion which took place in mid-2001.No cogent reason have been put forward to show why I should not accept that finding which I do accept.

[13]This discussion took place in mid-2001 between, on the one hand, Mr. Peter Stefani and his son Leon and, on the other hand, Mr Robbins (presumably on behalf of Mr Valentine and the first defendants) about whether the first defendants might 'buy out the tie'. In the first judgment, Park J explained that the commercial background must have been the widespread understanding in the licensed trade (which has now been a feature of so many recent cases in the courts and which is not disputed in this case) that beer prices to publicans charged by breweries are considerably higher for tied purchasers than for free of tie purchasers. The reason is that breweries offer generous discounts to free of tie purchasers, but not to tied purchasers. They may allow some discounts to tied purchasers (as it appears that in later years S &N’s subsidiary John Smith's did to the first defendants) but these discounts are invariably much lower than those extended to purchasers, who are not burdened with beer-ties.

[14]The discussion about buying out the tie took place over lunch at a Blackpool restaurant. It seems that Peter Stefani said that in order to waive or lift the beer-tie, the claimants would require the sum of £250,000, which was an unacceptable figure to Mr Robbins, and also to Mr Peter Valentine when he was told of this demand. This conversation was the only discussion relating to the first defendants buying out the tie. However, one matter which did emerge in the course of it was that the claimants were receiving discount or a rebate payments from S& N calculated on the first defendants' purchases from that brewery of the Designated Beers. Thus the Valentines realised that claimants had been receiving discounts in respect of the purchases by the first defendant of the Designated Beers. 15A. Before the Valentines could do anything substantial to give effect to their concerns about the rebates payable to the claimants by S &N on the sale of the Designated Beers, Mr. Peter Stefani sadly and unexpectedly died in September 2001. Thus there has been no oral or written evidence adduced from him in the present or in any of the previous hearings. His son Leon was a witness in the present action but he had only been involved to a limited extent in the affairs of the claimants but he did not have personal knowledge of the issues with which the hearing in front of me has been concerned. Peter Stefani's other son, Marcus, became a director after his father's death, and he is now the principal figure in the claimants but significantly he had had no relevant personal involvement with that company in the earlier years. Indeed all that he could state in evidence was in the main to recount as best he could what he remembers of what his father told him over the years before his father’s unexpected death in September 2001. Peter Stefani’s widow gave evidence but she was only able to give a limited amount of evidence and to which I will refer later. 15B. All the members of the Stefani family were trying to be helpful when they gave evidence. Nevertheless I have concluded for five reasons that I cannot accept their evidence in relation to matters occurring before the death of Mr Peter Stefani unless it is corroborated by evidence not from their family members. First, none of the Stefani family members was involved personally with the commercial dealings with the defendants with which this hearing is concerned. Second, they were each dependant on what Mr Peter Stefani had told them at a time when they were unlikely to have been particularly interested in or concerned with what they were told. Third, there is the evidence of Mr Mills of John Smiths which I accept as accurate and which was (as I will explain in paragraph 80 below) that Mr Peter Stefani did not want Mr Mills to discuss his matters personally to Mr Stefani with Mr Stefani’s own family. This suggests that Mr. Stefani regarded the claimants’ business dealings with the defendants as somehow confidential or at least not the concern of his family. Fourth as I will explain in paragraph 148 below, Park J found that Mr. Stefani has granted a release from the beer tie in respect of Budweiser beer even though his sons and accountants were not aware of this and this is another reason why I should treat the evidence of the Stefani family with caution when it suggested by them that they knew of what Mr. Stefani had agreed with the defendants.. Finally in contrast with the claimants’ evidence on these issues, the evidence of the defendants’ witness was invariably very cogent and very credible with the consequence that I should and do accept it.

[16]The Valentines were concerned when in the summer of 2001, they had learned that the landlord, the claimants, had been receiving rebates from S &N in respect of the beer purchased by the first defendants but they did not do anything about it until the following year probably because those involved in the hospitality and in the entertainment business in Blackpool are likely to go away when the summer season comes to an end.

[17]In 2002, after a letter from Marcus Stefani to Mr Robbins asserting that the first defendants had been making purchases outside the tie, correspondence developed between the solicitors for the claimants and for the solicitors for the defendants about the discounts and rebates which the claimants as landlords had been and were receiving from S & N and to which the tenants took exception. On 16 July 2002, Mr Valentine raised the matter in a letter to the relevant officer of the John Smith's North Sector of the S&N group with responsibility for the trading relationship with the first defendants. Mr Valentine wished to discuss a package of discounts or rebates to be paid only to the tenant, with no discounts or rebates being paid to the claimants, the landlord. The Valentines made it clear to the officers of S & N that they were exceedingly dissatisfied. It is very significant that S & N (and thus John Smith's) then took the decision first to stop paying any rebates to the claimants in respect of sales of the Designated Beers and second instead to pay the full amount of the rebates to the tenants, the first defendants.

[18]On 1 August 2002, Mr Murray of John Smith's, who was that company’s representative with whom the first defendants regularly had its dealings, duly wrote to Marcus Stefani stating that: '… the commitment made by Mr P Stefani on behalf of P & S Amusements with John Smith's Ltd, has now ceased. … On this basis any agreements between ourselves and P & S Amusements are now concluded'’

[19]Since then, S&N have paid no discounts to the claimants but have paid them instead to the first defendants, who continued to buy supplies of the designated beers from John Smith's until it moved its custom to CT in the circumstances, which I will describe in paragraph 22 below.

[20]The claimants received a letter from CT dated 22 October 2002 in which it offered the claimants rebates on the sale of the Designated Beers by the first defendants. In a letter dated 8 November 2002 from the claimants’ solicitors to the first defendants’ solicitors, the first defendants were notified that:

'…the "Nominated Supplier" referred to in the lease of the above premises dated 24 July 1991 has been changed to Carlsberg-Tetley Brewing Limited. … Please ensure that under the terms of the lease full cooperation is given to Carlsberg-Tetley Brewing Limited as the Nominated Supplier and that purchases of all Designated Beers as defined in the lease are obtained exclusively from this source.'

[21]Notwithstanding that letter, the first defendants did not immediately follow that notification to make its purchases of the Designated Beers from CT, but, as I have explained, they continued to make its purchases from S&N from whom they, but not the claimants, received rebates on the purchases of the Designated Beers.

[22]In the first judgment, Park J held that this failure of the first defendants to purchase the Designated Beers from the nominated brewery, namely CT, constituted a breach of the beer-tie and in this judgment I am seeking to quantify the claimants’ loss caused by this breach.Meanwhile unbeknown to the claimants, the defendants had been negotiating with CT so as to ensure that all the rebates on the sale of the Designated Beers would thereafter be paid solely to the first defendants and not to the claimants. When the first defendants achieved CT’s agreement to this suggestion, they then agreed to purchase their supplies of the Designated Beers from CT. In consequence, the claimants therefore sought permission to amend their pleadings in order to plead first that the agreement between the partied contained implied terms preventing the tenant from seeking to obtain rebates from the nominated supplier of the Designated Beers and second that the first defendants had acted in breach of those terms by obtaining such rebates from CT after February 2006. This second claim is what I have called “the post-February 2006 claim”.

[23]After the claimants became aware of the rebates payable solely to the first defendants on the purchases of the Designated Beers, the claimants set about finding new nominated suppliers and on 5 September 2006, they nominated Coors Breweries Limited (“Coors”). The defendants complained about this nomination and contend that it will be highly detrimental to their business as that had only recently changed suppliers. The first defendants have continued to buy the Designated Beers from CT from whom they (and not the claimants) continue to receive all the rebates in respect of the barrelage of the Designated Beers purchased by the first defendants but the claimants contend that this is in breach of implied terms of the arrangements between the parties which I will set out in paragraph 34 below.

III. The Underlease

[24]The relevant provisions are set out in clause 2 (11) C of the underlease and I will refer to those provisions in that clause by merely referring to any provision in that clause by its position in that clause (such as clause 1(a)) and thereby by omitting recurring the invariable references to clause 2 (11) C of the underlease. The first relevant part of the beer-tie provision is set out in clause 1 which provides in so far as is material to this judgment that :

"(1) The Tenant agrees (a) to purchase only from the landlord or its Nominated Suppliers all the Tenant's requirements for the Designated Beers for sale on the Demised Premises (b) not to sell or make available for purchase or bring on to the Demised Premises for the purpose of resale any Beer other than the Designated Beers unless such other Beer is of a different type from any of the Designated Beers … (2) The Landlord will to the best of its ability supply the Tenant with or will procure the supply by its Nominated Suppliers to the Tenant of all the Tenant's requirements for the Designated Beers and in the event of the Landlord and its Nominated Suppliers being unable to supply for any reason the Landlord on application from the Tenant will release the Tenant from the Tenant's exclusive purchasing obligations under this clause to such extent as shall be appropriate having regard to the nature and likely duration of that inability to supply"

[25]The critical provision is clause (3) (a) and it consists of two parts of which the second part is the more important. Park J in the first judgment and counsel in the present application have referred to that second part as “the tailpiece” and I will adopt the same terminology. I, like Park J, will indicate the commencement of the tailpiece by inserting double asterisks but I stress that the double asterisks do not appear in the original underlease. The draftsman has not put any punctuation marks in the lease, but if he had, then I suspect that there would have been a comma or a semi-colon where I have placed the double asterisks. "(3) The Tenant agrees: (a) to pay trading accounts and statements from the Landlord or its nominated suppliers within 14 days of the same being rendered by standing order from the Tenant's bankers to the credit of the Landlord's or its nominated suppliers' bankers as shall be designated from time to time or [in] such other manner as the Landlord may require ** all goods to be charged at the prices on the Landlord's or its nominated suppliers current standard trade price list for the region in which the Demised Premises are situate … (7) The expression 'Designated Beers' shall mean such Beers as are more particularly specified in the Fifth Part of the Schedule hereto. … (9) The expression 'nominated suppliers' shall mean such undertakings entrusted by the Landlord with the distribution of Beers and Liquors as the Landlord may nominate from time to time"

[26]As clause (7) indicates, “Designated Beers” are specified in the Schedule. The specifications there are by type, not by brand. Thus for example they include 'Light Pale or bitter ale' and 'Lager' but they do not specify particular brands of bitter or lager. They do not include alcopops, wine or spirits although they do include cider.

IV. The Issues

[27]In the post-February 2006 claim, the claimants contend that since February 2006, the first defendants have been receiving to the exclusion of the claimant’s rebates from CT on the sale of the Designated Beers which should have been paid to the claimants. The thrust of the complaint of the claimants is that these rebates were received as a consequence of the first defendants acting in breach of implied terms (“the alleged implied terms”) that the first defendants would not:

“(a) seek to negotiate or negotiate with the Nominated Supplier to be charged less than the prices shown in the current standard trade price list for the region in which the premises are situate and/or (b) act so as to prejudice the interest of the [claimants] in relation to the Nominated Supplier”

[28]In response, the defendants deny that the agreement with the claimants contained the alleged implied terms and in the alternative, they contend that (if contrary to the first defendants’ main case the agreement contained the alleged implied terms) the claimants cannot rely on such implied terms because the claimants knew through Mr. Peter Stefani that the first defendants were seeking and were receiving rebates from the suppliers of the Designated Beers but that they did not object; in consequence, the case for the defendants is that the claimants have waived the alleged implied terms or are estopped by convention from relying on these alleged implied terms. The riposte of the claimants is that the defendants cannot rely on the fact (which they dispute) that Mr. Peter Stefani knew that the first defendants were seeking and receiving rebates from the suppliers of the Designated Beers because of a contrary finding by Park J in the first judgment. In other words, the claimants’ case is that the defendants are themselves estopped by this finding in the first judgment from alleging that the claimants knew that the first defendants were seeking and receiving rebates from the suppliers of the Designated Beers.

[29]In respect of the enquiry ordered by the Chancellor, there are issues on the appropriate way of calculating the damages and also whether the claimants are entitled to claim for rebates in respect of Budweiser lager in the light of Park J’s findings in the first judgment. Much depends on whether it is correct to imply the alleged implied terms.

[30]Thus the issues to be resolved are:a. A. whether the alleged implied terms are to be implied (see paragraphs 33 to 64 below);

b. B. if the alleged implied terms are to be implied, whether the claimants have waived them or are estopped from relying on them (see paragraphs 65 to 82 below);

c. C. whether the claimants can succeed in establishing liability on the post-February 2006 claim (see paragraph 83 below);

d. D. whether the underlease obliges the tenant to pay the current standard trade price list and if the tenant does not do so, is the tenant liable in damages (see paragraphs 84 to 87 below)

e. E. what damages (if any) the claimants are entitled to on the enquiry as to damages if the alleged implied terms are not to be incorporated into the agreement (see paragraphs 88 to 131 below);

f. F. what damages (if any) the claimants are entitled to on the enquiry as to damages if the alleged implied terms are to be incorporated into the agreement (see paragraphs 132 to 146 below);

g. G. what damages the claimants are entitled to if successful on the post-February 2006 claim (see paragraph 147 below); and

h. H. what damages (if any) are the claimants entitled to on the Budweiser claim (see paragraphs 148 to 157 below).

[31]Mr. Nigel Gerald counsel for the claimants and Mr. Stephen Cogley counsel for the defendants have made very detailed oral and written submissions before and after the hearing for which I am grateful. I should add that as the claimants did not have as long as they wished for their closing oral submissions, I gave counsel for the claimants the opportunity to put in detailed written submissions and he availed himself of that opportunity.

[32]In order to understand the submissions, it is necessary to explain some of the background and in particular that:(a) the premises in question comprised of a ground floor bar in which the major attractions were karaoke and cabaret performers while there was lap-dancing in the basement;

(b) when a new brewer becomes the supplier of the Designated Beers to the first defendants, it becomes necessary for that brewer to arrange for their nomination to be shown both inside and outside the premises. So new signs showing the name of the new designated beers and promotions have to be put up while fliers and posters have to be produced and displayed. The new brewers have, for example, to produce staff uniforms, ashtrays and other items of bar furniture with their names displayed while the all the tills and karaoke equipment has to be altered so as to show the name of the new brewer; and

(c) the premises are only open and therefore only operate in the holiday seasons in Blackpool. Thus they are closed when tourists do not come to Blackpool which means that they are open from about Easter until about November in each year but they are then closed for the rest of the year. V Issue A.

(i) Introduction

[33]In order to show that the first defendants acted in breach of contract after February 2006, the claimants contend that the exclusive purchasing obligations in the underlease contained the alleged implied terms, which I have set out in paragraph 27 above. The claimants also rely on the incorporation of the alleged implied terms as being relevant in assessing their damages payable to them.

[34]The claimants’ case is that these terms were to be implied:(a) “as being the obvious intention of the parties and/or as necessary to give business efficacy to the exclusive purchasing obligations” of the tenants (paragraph 5 of the Amended Particulars of Claim); and

(b) that they were to be “implied in the context of the background facts and circumstances at the time and set out in paragraph [9 above] (excluding sub-paragraph (viii)” (paragraph 6 of the Amended Particulars of Claim)

[35]The defendants dispute the contention that the alleged implied terms can be implied as they submit that the conditions which have to be satisfied before such terms can be implied have not been met in this case. (ii). The Claimants’ Submissions

[36]The case for the claimants is that:(a) the original tenant (Findextra) signed up to the underlease which expressly contemplated that it would be paid the nominated supplier’s current standard prices (namely the full list prices) for the duration of the underlease and any extension to it;

(b) this obligation on the tenants would continue if and when the landlord nominated a new supplier as was expressly contemplated by clause (9);

(c) any failure by the tenants to pay for the Designated Beers at the full list price would constitute a breach of the underlease as against the claimants;

(d) the commercial purpose behind a beer-tie was to secure to the landlords a commercial benefit and so tied premises paid higher prices for beer than free houses did. In cases such as the present where the landlord was not the supplier of the beer, the beer-tie was intended to secure to the landlord the same commercial benefit for discounts and profit margins on supplies which would be otherwise available when the landlord was also the supplier (see first judgment at paragraph 40);

(e) the commercial purpose of the tailpiece was achieved by requiring the tenants to pay the full list price because unless that was so, there was no commercial purpose to the beer-tie;

(f) if the tenants were entitled first to pay less than the standard list price for the Designated Beers and second to negotiate to pay less than the standard list price, the tailpiece would have no contractual effect when the landlords are not also the suppliers. The claimants’ case is that the parties could not have intended that the tenants having agreed to purchase at the full list price would be free to go to the nominated supplier and negotiate to pay less than the full list price;

(g) such a conclusion would in then words of the claimant’s skeleton “frustrate the parties’ intent, undermine the commercial integrity of the beer-tie and also drive a coach and horses through the tailpiece. Further it would make the lease unworkable”; and

(h) the alleged implied terms will have to be implied so as to give efficacy to the underlease and to make it workable in such a manner as the original parties ([the claimants] and Findextra) would clearly have done if they had applied their mind to the question”. (iii). The Defendants’ Response

[37]The case for the defendants is that the alleged implied terms sought by the claimants should not be implied because:(a) they were not the kind of terms which could be implied by common-law;

(b) “they are not necessary to give business efficacy to the contract; in fact they render the contract inefficacious” (see the defendants’ comments on the Synopsis of Issues);

(c) “they are not so obvious to go without saying” (see Synopsis of Issues) and it cannot be readily inferred that the terms formulated are the only contractual solution to what the claimants contend to be a problem;

(d) “they are not reasonable” (see the defendants’ comments on the Synopsis of Issues);

(e) the underlease was a detailed and comprehensive document which had been carefully negotiated between the parties with the result it should be presumed that the parties have set out all the material terms; and

(f) the alleged implied terms are imprecise, uncertain, and unworkable and render the underlease inefficacious. Mr Cogley relies on what was stated by Park J in paragraph 25 (iv) of the first judgment where he said of the tail piece that:- “….It purports to say what the prices for the tenant's purchases from the nominated supplier are going to be. That works perfectly well in a case where the landlord and the supplier are the same person, but is not so suitable in a case, like this one, where they are not. The nominated supplier is not a party to the lease, and is not bound by the beer pricing provisions in the tailpiece. If it is willing to sell beer to the tenant at prices which are discounted below its 'current standard trade price list for the region', there is nothing in the lease to stop it doing so. There could conceivably be a separate agreement between the landlord and whichever brewery is the nominated supplier under which the brewery promises to the landlord that it will invoice the tenant at its full list prices without any discounts, but there was no such agreement in this case. If the brewery was willing to invoice the tenant at prices discounted below the list prices it would be ridiculous to suggest that, because of the wording in the tailpiece, the tenant was bound to pay the brewery prices greater than those invoiced to it. In theory there is nothing to stop the brewery notifying the tenant that it (the brewery) is not even willing to supply beer to the tenant at its list prices, but only at prices above the list prices. In practice that is an unreal example, and would not arise in practice. ..” .

[38]Mr. Cogley stresses that the case for the claimants fails to take account of the facts that:(a) there is no requirement for the tenants to buy any specific amount of Designated Beers so that it would be open to the tenants not to buy any of the Designated Beers but instead to buy alcopops, wine and spirits;

(b) the tenants are not prevented from receiving an unsolicited rebate or discount as there is nothing in the underlease relating to this and it is not suggested that there should be an implied term to that effect; and that

(c) the tailpiece does not state that that the Designated Beers are to be paid for at the prices on the claimants’ current standard price list but merely that “all goods are to be charged at the prices on the claimants’ current standard price list”.

[39]I will have to return to consider the significance of these points but it is convenient to consider first in paragraphs 40 to 62 below the contention that these terms were implied “to give business efficacy to the exclusive purchasing obligations” and then in paragraph 63 below the further submissions that these terms are to be incorporated as being “the obvious intention of the parties”. In considering the rival submissions, I will bear in mind that as the Chancellor explained in paragraph 40 of the second judgment, “the question of implication must be judged in relation to both parties in July 1991”. On occasions, I will assume but only when it is correct to do so that some factor which emerged at a later stage would also have been apparent when the apparent when the underlease was entered into.

[40]In my view, there are four reasons which individually and cumulatively lead me to the conclusion that neither of the alleged implied terms should be implied “to give business efficacy to the exclusive purchasing obligations” and I will now set them out in no particular order of importance. (iv). Were the arrangements between the parties effective without the alleged implied terms?

[41]As I will now explain, it seems clear that the arrangements between the claimants and their tenants were effective without the incorporation of the alleged implied terms. This is of critical importance because it is settled law that “ no term will be implied if the contract is effective without it” ( per Lord Simon of Glaisdale in giving the judgment of the majority of the Privy Council in B.P. Refinery (Westenport) Pty Limited v Shire of Hastings (1978) 51 A.L.J.R. 20) .

[42]In this case, the contract could and did work effectively without the need to imply the terms contended for by the claimants for six main and overlapping reasons, which I will set out them again in no particular order of importance and which individually and cumulatively support that conclusion..

[43]First, the alleged implied terms would prevent or preclude brewers from accepting a nomination to supply the Designated Beers. This is an important point as there was very persuasive evidence adduced to show that any brewer nominated to supply the Designated Beers would be keen to enter into any negotiations with the seller of the beer, namely the claimants’ tenants so as to do everything to encourage that party to maximise its sales. Thus the supplier would be keen to please the tenants of the premises and to offer them incentives. It was noteworthy that Mr. Richard Mills, who was an employee of a subsidiary of S& N with 35 years of experience in the brewing trade, explained how important it was for a brewer to negotiate with the seller of his company’s goods. I accept this evidence and also his conclusion that:

“if I was now working for another brewer and the claimants nominated my company as nominated supplier and asked me to supply [the premises] on the basis that I could not have negotiations and discussions with the customer, I would not enter into such an agreement. I would rather walk away from the trade”

[44]In addition Mr. David Murray, the Regional Director of Scottish Courage explained that he did not believe that his company would have entered in to an arraignment which would have “prevented an actual operator of an outlet obtaining or negotiating with us for any discounts”. This evidence and that of Mr. Mills was not challenged or undermined by the claimants, who did not adduce any contrary evidence. Of course the alleged implied terms do not prevent the suppliers of the Designated Beers from offering unsolicited rebates to the tenants but the evidence I have quoted shows the importance to such suppliers of the tenants being able to negotiate and to solicit rebates. In any event, all this evidence was very cogent and it reinforces my view that I should conclude that the alleged implied terms are unworkable and so the arrangements between the parties would not work with the alleged implied terms. Indeed it is not contended by the claimants that the tenants were obliged by the express or by the implied terms of the underlease to ensure that the claimants received a rebate or discount.

[45]Second, is clear that the agreement was not only effective without the implied terms but also significantly that the agreements between the claimants and their tenants might well be ineffective with those alleged terms implied as there is the powerful trade evidence which I accept from Mr. Richard Mills of John Smiths to the effect that his experience in the brewery trade for more than 35 years had led him to the conclusion that preventing tenants in the position of the first defendants from soliciting rebates from a brewery:

“could simply not work. To say that it would give business efficacy to the agreement is in my view nonsensical. You simply cannot have a situation where the brewer has to supply to an outlet when he cannot discuss on a day to day basis the requirements for an outlet which would also include financial matters, promotional matters and the like..”

[46]These important features of the arrangements between the parties and the evidence of Mr. Mills which I found convincing show that the alleged implied terms might well make the arrangements between the parties ineffective if the tenants were prevented from soliciting rebates or discounts.

[47]Third, there is no reason why an arrangement between the parties would not be effective if the claimants received the rent and that they together with the tenants could then each seek rebates for themselves from the nominated brewers. The claimants were in the strong position when the underlease was entered into as it must have been in the contemplation of the parties that they could then have sought an agreement from the brewers to pay them a specific sum by way of rebate as the price for obtaining the nomination. Indeed this is precisely what they did as soon as the underlease was entered into and it must have been contemplated that this would have occurred. Indeed the evidence of Mr. David Murray of S& N was that the claimants’ rebates were about £40 a barrel until 1999, when it increased to £62 before further increasing later to £65. Similarly, the claimants had the sanction that if a nominated brewer ceased paying them an acceptable rebate, the claimant could nominate another brewer instead. I cannot see why the alleged implied terms are needed.

[48]Fourth, as the claimants’ case for incorporating the alleged implied terms was based on financial factors, it must not be forgotten that the payments due to the claimants under the underlease were sufficiently large so that from the claimant’s position, the agreement was effective and was workable even if the claimants were unable to receive any rebates. I accept the evidence of Mr. Peter Valentine that the annual rental income for the claimants of £65,000 was more than enough to pay the sum of £22,500 in the first year needed by the claimants to repay the capital and the interest on the loan made to it by the brewery; in addition these repayments would reduce each year as the capital on the loan was repaid.

[49]Furthermore, I also accept as accurate the evidence of Mr. Richard Garside, who is a Chartered Surveyor with more than 35 years of experience in the Lancashire, who concluded that the rent payable to the claimants under the underlease was “excessive particularly having regard to the trading restrictions contained in the lease”. This conclusion was fortified by the obligations of the tenants to make “very substantial capitol expenditure in fitting out the premises before trading could commence”. [please see post-judgment note]

[50]Mr. Garside also made the powerful point first that the underlease provided for an upwards-only rent review which could only lead to an increase in the rents with such reviews taking place at three yearly intervals and second that it was significant that as at March 2007, the rent reviews had not led to an increase in the rent payable to the claimants in the period of 16 years from when the underlease was granted. The claimants have not adduced any contrary evidence and this factor shows that a high rent was payable to the claimants by their tenants from the outset of the underlease.

[51]Thus the arrangements under the underlease could work effectively with the claimant receiving the high rents payable while both parties could each seek to obtain rebates for themselves from the suppliers of the Designated Beers.

[52]Fifth, there was always the prospect that under the underlease, there would have been no rebates payable as it must have been clearly envisaged by the parties to the underlease that the tenants might either have bought none of the Designated Beers or alternatively the tenants might have only purchased such small amounts of them so that no rebates would have been payable. It must not be forgotten that it was quite possible that the tenants would not have purchased any of the Designated Beers as there was no contractual obligations on the part of the tenants to buy any of the Designated Beers but merely a restriction on them from buying the Designated Beers from anybody other than the nominated supplier. As I have explained in paragraph 32 (a) neither part of the premises consisted of a conventional bar. Further, as I will explain in paragraph 142 below, there was cogent evidence of the increasing demand for alcopops which together with wine and spirits were not Designated Beers and that these sales of alcopops were at the expense of the sale of the Designated Beers.

[53]Finally, the alleged implied terms only prevent the tenants from soliciting rebates and there is nothing to prevent them from receiving an unsolicited rebate. It is difficult to see why an agreement which permits tenants to receive an unsolicited rebate is not effective without the alleged implied terms which prevent the tenants from soliciting for rebates.

[54]So in conclusion, in the words of Lord Simon which I have quoted in paragraph 41 above, the arrangements between the parties were “effective” without the alleged implied terms and this conclusion is fatal to the claimants’ case as “no term will be implied if the contract is effective without it”. (v). Were the alleged implied terms “so obvious that “[their inclusion] goes without saying?

[55]The second reason why the proposed terms cannot be implied is that they fail to satisfy another of Lord Simon’s conditions in the BP case (supra) which was that “for a term to be implied … (3) it must be so obvious that “it goes without saying’”. Sir Thomas Bingham M.R. (as he then was) explained in Phillips Electronique Grand Public S.A. v British Sky Broadcasting Ltd [1995] EMLR 472 at 481 that there was a high threshold for implying the alleged terms as: “… it is not enough to show that had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred” (with my emphasis added)

[56]I have emphasised the words “without doubt” as they show the high threshold that has to be reached before a term can be implied. In my view, if the parties to the underlease had foreseen the possibility of the nominated brewer being approached by the tenants with a request for a rebate or a discount, there was clearly two contractual solutions which they could have adopted; the first would have been that that such an approach was lawful and second would have been, as is now contended for by the claimants, that the tenants were not entitled to make such an approach. It is impossible to say that the second solution would, in Sir Thomas Bingham’s words, “without doubt” have been preferred because:(a) of the impressive evidence of Mr. Mills and Mr. Murray to which I have referred in paragraphs 43 and 49 above and which shows the very serious problems which would arise if alleged implied terms were incorporated into the working relationship between the parties;

(b) the underlease was in itself effective without the need to have the terms implied for the reasons set out in paragraphs 42 to 53 above;

(c) there is nothing in the contemporaneous documentation or any other evidence which shows in Sir Thomas Bingham’s words set out in paragraph 55 above and with my emphasis added that “had the parties foreseen the eventuality which in fact occurred they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred”; and

(d) there is no evidence of any trade or other custom or any other material relevant to the relationship between the parties to show that parties in the tenants’ position should be precluded from seeking a rebate or discount from the brewery which supplied it with the Designated Beers. (vi). Were the alleged implied terms “reasonable and equitable”?

[57]The third reason why the proposed terms cannot be implied is that they fail to satisfy the requirement that they should in the words of Lord Simon in the BP case (supra) be “reasonable and equitable”, which means that they must be fair for both parties. The proposed implied terms meant that one party to the contract, namely the tenants, was to be prohibited from seeking discounts from a third party namely the brewer, although they were entitled to receive unsolicited rebates or discounts. The claimants have failed to show why this prohibition on the negotiating powers of the tenants is fair or “reasonable and equitable”, bearing in mind that;(a) the inclusion of the alleged implied terms would prevent many brewers from accepting the nomination to supply the Designated Beers for the reasons which I have explained in paragraphs 43 to 45 above;

(b) if the first defendants were prevented from seeking rebates from suppliers of the Designated Beers, this would inevitably have led to an increase in the price which the first defendants would have had to charge their customers for the Designated Beers. Indeed , as I will explain in paragraph 136 to 139 below, such increases a the present time would have led to the prices of the designated beers rising to £4.62 for lager and £4.19 for bitter respectively and such prices would have made the beer unsaleable. ;

(c) the rent for the premises was high as I have explained in paragraph 50 above. It enabled the loan to be repaid. This undermines the contention that the claimants had to be allowed for commercial reasons to seek rebates from the nominated brewers without allowing the tenants to compete for it;

(d) there was no trade or other custom which precluded from tenants soliciting rebates from brewers and this omission supports the argument that there was no need for such terms to be implied;

(e) there is no reason why an arrangement between the parties would not be reasonable and equitable if the claimants received the rent and they together with the tenants competed for rebates from the nominated brewers. The claimants were in the strong position as they could endeavour to require the brewers to agree to pay them rebates as the price for obtaining the nomination. Similarly, at the time when the agreement was made, the claimants had the sanction that if a nominated brewer ceased paying them an acceptable rebate, the claimant could nominate another brewer instead; and

(f) in contrast to what is said in (e), the inclusion of the alleged implied terms would preclude the tenants from seeking inducements and there is no good reason why they should be unable to compete with the claimants in seeking rebates.

[58]Thus my conclusion is that the terms sought by the claimants and set out in paragraph 27 above cannot be implied in order to give business efficacy to the agreement between the claimants and their tenants.

[59]In reaching these conclusions, I have borne in mind and considered Mr Gerald’s submission that the existence of the beer-tie meant that the alleged implied terms should be implied as otherwise the beer-tie would have no purpose. In my opinion, this submission is incorrect as the beer-tie would or could still fulfil a useful function from the claimants’ point of view even without the alleged implied terms being incorporated because as at the time when the underlease was entered into, the claimants, for example, could:(a) have obtained (as they in fact did in this case) a loan on advantageous terms from the supplier of the Designated Beers. I have no doubt that if there had not been a beer-tie the claimants would not have obtained such a loan or such favourable terms from the suppliers of the Designated Beers as they obtained from S & N;

(b) have selected a brewer who would agree with it to pay rebates to it for purchases of the Designated Beers by the tenants. That is what the parties to the underlease (or at least the claimants) must have had in mind when they entered into it because as I have explained in paragraph 47 the claimants immediately obtained rebates from the suppliers of the Designated Beers to the tenants; and

(c) also have tried to persuade a brewer to enter into an agreement to pay the claimants a specific rebate perhaps for a specific period of time as a condition for the claimants nominating that brewer to supply the Designated Beers.

[60]In any event, the claimants must have been prepared to enter into a beer-tie which only gave them limited benefits because they were prepared to enter an underlease which contained no positive obligations on the tenants to buy any specific quantity of the Designated Beers nor any restrictions on the tenant receiving unsolicited rebates. (vii). The detailed nature of the underlease and the fact that it was negotiated.

[61]Fourth, if (which is not the case) I had been in any doubt about my conclusion that the alleged implied terms should not be implied, I would have reached the same conclusion because the critical starting points for considering whether these or any other terms who could be implied into written contacts are that:(a) “the general presumption is that the parties have agreed every material term which they intended should govern their agreement, whether oral or in writing” (per Lord Wright in Luxor (Eastbourne) Ltd v Cooper

[1941] AC 108

at 137); and that

(b) “the more detailed and comprehensive the contract the less ground there is for supposing that the parties have failed to address their minds to the questions of issue” (per Mason J in Codelfa Construction Pty Ltd v State Rail Authority New South Wales [1982] 149C.L.R. 337 at 346.

[62]In this case, the provisions in clause 2 (11) (c) of the underlease are, as I have explained in paragraphs 24 and 25 above, very detailed and very comprehensive. The terms in the underlease had been negotiated carefully and in some detail by the solicitors, who were then acting for the parties to the underlease. In consequence, these factors provide cogent additional grounds for concluding that I should reject the claim that these terms should be implied. (viii). Discussion on the contention that the alleged implied terms were incorporated “as being the obvious intention of the parties”

[63]Mr. Gerald submits that the alleged implied terms can be incorporated as “as being the obvious intention of the parties” becauseif the parties had been asked if the agreement should contain the proposed implied terms, they would have answered in the affirmative. As I have explained in paragraphs 55 and 56, I am unable to accept that submission. In any event if I had been in any doubt about this, which is not the case, I would have reached the same conclusion because of the reasons set out in paragraphs 61 and 62 above namely, where as was the case here, there has been a detailed agreement negotiated between the parties, there is a presumption that the agreement contains all the relevant terms. (ix). Conclusions on the incorporation of the alleged implied terms.

[64]The agreement between the claimants and the tenants did not contain either of the alleged implied terms set out in paragraph 27 above. This conclusion means that I must dismiss the claim for damages in respect of the period after February 2006 because as Mr Gerald accepts his claim in respect of this period is dependant of establishing that the alleged implied terms were incorporated. VI. Issue B.

(i) Introduction

[65]As I have already explained, the first defendants have contended not only that the alleged implied terms were not included in the agreement between the parties but even if they were, then they have two further arguments as to why the alleged implied terms are no longer incorporated in their agreement with the claimants. First, the first defendants submit that the claimants are estopped from relying on the alleged implied terms because the claimants through Mr. Peter Stefani knew from at least early in 1993 that the first defendants were receiving rebates and that the claimants did not complain but instead they were content for the first defendants to solicit and to negotiate rebates from the suppliers of the Designated Beers. It is said that the first defendants acted to their detriment in reliance on this conduct by the claimants. Second, it argued that the terms of the underlease have been varied by conduct so that the alleged implied terms are no longer incorporated. As I have concluded in paragraph 64 above that the alleged implied terms were not incorporated, the estoppel and waiver issues are now academic. So I will deal with them more briefly than I would have done if they had been of critical importance.

[66]The riposte of the claimants to these contentions is that the defendants are estopped from relying on these two points because of a finding by Park J in the first judgment where he said at paragraph 17 with my emphasis added;- “for some years (I do not recall the evidence revealing how many) Scott & Newcastle had been allowing small discounts to [the first defendants] on its purchase of beers (discounts of which [the claimants] knew nothing)...”

[67]In response, the defendants contend first that they are not estopped by this comment of Park J and second that in any event there is clear evidence that the claimants thorough the late Mr. Peter Stefani did know that S & N had been allowing discounts to the first defendants.

[68]At the outset of the present trial and in the light of this comment of Park J, Mr Gerald sought an order striking out the allegations in Paragraphs 3 and 4 of the Defence and Counterclaim to the effect that the claimants knew that the first defendants had been receiving rebates with the result that they were estopped from relying on the alleged implied terms or that the alleged implied terms have been waived. I was concerned as to whether it was appropriate to hear that application at the start of the present trial and so I suggested to Mr. Gerald that it would be better for this matter to be dealt with in closing submissions because whatever view I took on the claimants’ application, it would still be desirable, if not necessary, for me to make findings of fact as to whether the claimants knew that S & N were paying rebates to the first defendants. Mr Gerald agreed with this course so I now have to consider his application which entails considering the impact and consequences of Park J’s comments which I have set out in paragraph 66 above. (ii). Are the defendants estopped by the comments in paragraph 17 of the first judgment from contending that the claimants knew that they were receiving rebates from S & N?

[69]The case for the claimants on this is that the matter is very clear in the light of Park J’s comment set out in paragraph 66 above and that this statement creates an issue estoppel as against the first defendants.

[70]In response, the defendants contend that the claimants’ knowledge about the discounts being paid to the first defendants was not an issue in the proceedings before Park J. Mr Cogley points out that the matters in issue in front of Park J were the first defendants’ knowledge because it was relevant to the argument that the claimants had derived a secret profit and that this formed the subject matter of the counter-claim. This counterclaim was dismissed in the first judgment because it was held that no fiduciary relationship existed between the parties. It is true that Mr David Murray said in his original statement:

“I wish to make it clear that we never discussed with Peter Stefani or anyone else at the claimant any basis for trading with the defendants”

[71]The circumstances in which an issue estoppel of the kind contended for by the claimant can arise are limited and Halsbury’s Laws of England (4th Edition Re-issue) Volume 16 (2) states at paragraph 980 (with my emphasis added) that:

“Issue estoppel means that a party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty been determined against him”

[72]Lord Bingham of Cornhill explained in Johnson v Gore Wood & Co

[2002] 2 AC 1

at page 31f how a court should approach a contention that an issue estoppel arises by a previous judgment when he said that: “it is in my view preferable to ask whether in all the circumstances a party’s conduct is an abuse rather than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances”.

[73]It follows that the mere fact that a judge makes a comment about any matter in a judgment does not automatically mean that a party is estopped from putting forward a different case on that matter in a subsequent case. The approaches of Lord Bingham and of Halsbury which I have just quoted show the need for careful scrutiny of the circumstances in which the original judicial comment was made in order to ascertain if the act of subsequently making a contrary assertion in a subsequent action constitutes an abuse. A useful starting point must be to ascertain how germane the original comment was to any contested or any relevant issue or an order in the first proceedings. Thus, if I were, for example, to make a comment in this judgment in the present proceedings about the state of decoration of the premises, that would not create an estoppel in a subsequent action because the state of decoration of the premises is not an issue in the present action nor has it been the subject of any submissions or of evidence.

[74]Applying those principles, I conclude that the defendants are correct and that there was no issue estoppel as a result of paragraph 17 of the first judgment bearing in mind first that the knowledge of Mr Peter Stefani concerning the receipts of rebates by the tenants was not a matter which, in the words of Halsbury, was one “having once been distinctly put in issue”. There was no issue in the hearing before Park J relating to what the claimants knew of the rebates received by the first defendants from S &N. The learned judge was dealing essentially with the validity of the beer tie, the right of the claimants to nominate certain parties as the suppliers of the designated beers, the claim in respect of Budweiser and the validity of the counterclaim which related to alleged fiduciary duties on the part of the claimants. None of these issues nor the relief claimed or granted in the first action was concerned with or related to Park J’s comments in paragraph 17 of his judgment, which I have set out in paragraph 64 above.

[75]Second, Lord Bingham’s test means that the conduct of the defendants in raising in the present case the issue of Mr. Peter Stefani’s knowledge of the rebates paid to the first defendants was not “in all the circumstances ... an abuse” essentially because this matter had not been put in issue in front of Park J. The basis of the abuse is that the court is being asked to reconsider a matter which had been relevant in an earlier action in which it had been considered and resolved. The comment made by Park J in paragraph 17 of his first judgment on which the claimants now rely does not fall into that category.

[76]If, which is not the case, I had been in any doubt on this issue, I would have found against the claimants because the onus of proof of showing an issue estoppel is on them and they have failed to discharge it. So I dismiss the claimants’ application to strike out the claims based on issue estoppel and I now turn to consider how , if at all, this conclusion assists the defendants (iii). What did Mr Peter Stefani know about the rebates being paid to the first defendants?

[77]In considering this issue, I bear in mind the fact that the claimants are unable to rely on any evidence of Mr Peter Stefani as he has sadly died and so in those circumstances, I have considered the evidence of the defendants on this issue with special care especially as the discussions took place many years ago. Nevertheless, I have come to the clear conclusion that Mr Peter Stefani knew full well that the first defendants sought and obtained discounts or rebates from S & N. Mr Trevor Robbins a director of the first defendants and Mr Peter Valentine were both clear in their evidence that they mentioned from time to time to Mr Peter Stefani that they were receiving rebates from S& N. Mr. Robbins for example recalls that during their weekly discussions with Mr. Peter Stefani he mentioned that the first defendants were receiving a rebate of £15 per barrel and some free stock from the suppliers of the Designated Beers. Mr. Peter Valentine spoke of meetings prior to 1995 at which there was a discussion of the rebates being paid from those suppliers to the first defendants as well as one particular occasion on which he told Mr. Peter Stefani that the first defendants were receiving retrospective discounts and that on no occasion did Mr. Peter Stefani say that he was unhappy about this.

[78]I fully accept this evidence as well as the further evidence first that Mr. Peter Stefani’s office was very close to the offices of the first defendants and second that they had regular discussions in which they had some discussions on what the tenants could do. For example, as I will explain in paragraphs 148 and 149 below, Mr Peter Stefani allowed the first defendants to buy Budweiser beer outside of the beer-tie and, Park J found in the first judgment that this constituted a release from the beer-tie for that beer. Indeed Mr Robbins said that he had known Mr Stefani for a long time and that there were no secrets between them. It is not surprising that they cannot remember the precise locations or events as these discussions took place many years ago.

[79]For the purpose of completeness, I should add that Mr. Gerald points out that Mr Peter Valentine suggested for the first time in evidence that there had been some discussion with Mr Stefani between Christmas 1991 and January 1992 when Mr Stefani wanted Mr Valentine to take over the lease after Findextra had experienced financial difficulties. Mr Valentine’s evidence is that it was made quite clear to Mr Stefani that the tenants were seeking rebates from the nominated brewery. In considering the truthfulness and reliability of this evidence, I have taken into account the fact that it does not appear to have been properly pleaded. Nevertheless, no objection was taken by Mr Gerald when the evidence was adduced as a result of his cross-examination and he has not suggested, let alone shown, that he has been prejudiced by the admission of this unpleaded evidence. It is however unnecessary for me to decide if I should accept this evidence as I have already concluded on the basis of the findings in the last few paragraphs that Mr. Peter Stefani knew full well that the tenants were receiving rebates from the suppliers of the Designated Beers and that they did not object to this.

[80]In reaching this conclusion, I have taken into account the evidence of Mr Peter Stefani’s widow and sons. None of them contend or indeed have satisfied me that they were present at all the discussions which took place between Mr Peter Stefani and, for example, Mr Peter Valentine and Mr Trevor Robbins. So they would not have known what was being discussed at those meetings. In any event, it is very unlikely that Mr Peter Stefani would have considered these discussions on rebates payable to the first defendants of such importance that he would have wanted to mention them or indeed that he would have mentioned them to his wife and sons especially as none of them were then actively engaged in working full-time in the claimants’ business or the part of it dealing with the tenants of the premises.. Indeed Mr. Peter Stefani’s son Leon said that it was his father who took the decisions on how the business operated while Mr. Mills who dealt with the claimants when he was employed by a subsidiary of S&N said that Mr. Peter Stefani had said to him that he did not wish Mr. Mills to discuss matters personal to Mr. Peter Stefani or the claimants with anyone or indeed Mr Stefani’s family. I have already explained in paragraph 15B above why I do not accept the evidence of members of the Stefani family unless it is corroborated by the cogent evidence of somebody other than their family members; that has not occurred on this issue.

[81]I am satisfied that Mr. Peter Stefani knew that the first defendants had solicited and had obtained discounts or rebates from S & N. It has not been suggested that Mr. Peter Stefani objected to this practice and I consider that there would have been no reason for the first defendants or any tenants to believe that they were not allowed to solicit rebates from the suppliers of the Designated Beers. (iv). The consequences of Mr. Peter Stefani knowing of and not objecting to the tenants soliciting rebates from the suppliers of the Designated Beers.

[82]The case for the claimants is that even if Mr Stefani had agreed to the tenants soliciting rebates from the nominated brewers, this does not amount to an estoppel or agreement to vary. Although I have had the benefit of full argument on the other issues raised in this case, the argument on the estoppel and waiver issues was much briefer. It is for that reason and also because these issues are now academic that I do not propose to reach any conclusions on these issues other than to say that it seems to me that the defendants have powerful arguments on each of these issues. VII Issue C .Can the claimants can succeed in establishing liability on the post-February 2006 claim?

[83]The claimants accept that their post- February 2006 claim is dependent on them establishing that the alleged implied terms were incorporated into the agreement with the first defendants. As I have explained those terms were not be implied and so the post- February 2006 claim must be rejected.

VIII. Issue D. The Payment Issue

[84]There are disputes between the parties first as to whether the underlease obliges the tenants to pay the current standard trade price list and second if the tenants did not do so, whether the tenants are then liable in damages to the claimants. The claimants contend that that the answers to both these questions are in the affirmative while the defendants disagree as they submit that both answers are in the negative.

[85]The claimants rely on the provisions of clause 2 (11) (c) of the underlease which I have already set out in paragraph 25 above but it is significant that that the carefully drafted underlease states (with my emphasis added) that “all goods are to be charged at the prices on the…nominated suppliers’ current standard price list”. What is important is that this provision does not refer to the prices which will be paid or which have to be paid by the tenants.

[86]In my view, there are three reasons why the words of this provision are not to be construed so that the tenant was obliged to pay the current standard trade price list. First, the use of the words “to be charged” are clear and they show that the parties did not wish to include a provision requiring that the goods were to be paid on the basis of the “nominated suppliers’ current standard price list”. Second, no reason has been put forward to explain why the word “charged” should be read as meaning “paid”. Third, if the parties to the underlease had wanted toensure that the tenants wouldonly be obliged to be charged for - but not to pay- the “nominated suppliers’ current standard price list”, they would have used the language which they actually did.

[87]Finally, I should also add that I am content to have reached this conclusion because of Park J’s comments in paragraph 25 (iv) of the first judgment which I have quoted in paragraph 37(f) above that it would be “ridiculous” to suggest that if the supplier wished to charge less than this price, he was unable to do so. Thus I reject the claim that the first defendants are liable in damages to the claimants for failing to pay the “nominated suppliers’ current standard price list”. VII. Issue E.

(i) Introduction

[88]In respect of the period November 2002 to February 2006, the claimants have stated in an e-mail sent to me after the hearing that their claim for damages has now increased from the figure previously claimed at the hearing to £185,413 which includes their claim in respect of the purchases of Budweiser Beer or for £173,315 if the Budweiser claim is excluded. I interject to explain in the light of my conclusions that the claimants are only entitled to nominal damages, it is unnecessary to analyse the quantification of this claim further. The thrust of the claimants’ case is that:(a) in the first judgment, the first defendants were held by Park J to have been in breach of the beer-tie by failing to purchase the Designated Beers from CT; this is not in dispute;

(b) this breach caused loss in the sense that the claimants did not receive rebates from CT even though there was in existence an agreement between the claimants and CT (which is the offer contained in CT’s proposal of 22 October 2002 referred to in paragraph 20 above and which was then accepted by the subsequent nomination of CT as the new suppliers of the Designated Beers for the first defendants) and this would have resulted in rebates being paid to the claimants in respect of the first defendants’ purchase of Designated Beers from CT;

(c) the measure of the claimants’ loss is to be calculated in respect of the volume of the purchases of the Designated Beers made by the first defendants from S&N (and not CT) in the period from November 2002 to February 2006;

(d) the calculation of the claimants’ damages should be on the assumptions that: (i) the first defendants would have purchased the same quantities of the Designated Beers as it had actually purchased from John Smith’s; (ii) CT would have continued with the nomination; and (iii) CT would have given all the rebates (or at least some of the rebates) to the claimants and none to the first defendants (this assumption is particularly strongly disputed by each of the defendants); and that

(e) the court should take note of the fact that the first defendants did not seek any rebate from CT during the period from November 2002 until February 2006 and therefore it follows that in assessing the damages payable to the claimants, it is necessary to ignore the fact that if the defendants would or might have been offered or sought a rebate form CT if they had taken deliveries from them. In other words, “the court cannot take into account what [the defendants] could have done but did not do [viz stop buying Designated Beers and/ or negotiate with CT to cut out the claimants and buy from CT]” (Paragraph 12 of the counsel for the claimants’ closing submissions).

[89]Mr Cogley takes issue with steps (b) to (e) in the claimants’ submissions and a major dispute between the parties concerns step (d) (iii) and (e). His case is that if the first defendants had taken deliveries from CT during the period from November 2002 until February 2006, they would have received all the rebates and that the claimants would not have received any rebates . Thus he submits that the claimants are not entitled to anything other than nominal damages.

[90]Mr Cogley points out that central to the claimants’ case are their assumptions or contentions that CT and Coors would have paid to the claimants and not to the first defendants all the available rebates on the sale of the Designated Beers. He contends that no evidence has been called from any of the nominated suppliers or from any other brewer to show that the claimants would have received such rebates or indeed any rebates. This omission according to Mr Cogley presents difficulties for the claimants as the burden is upon them to show what loss (if any) they have sustained as a result of the first defendants’ failure to observe or perform the beer-tie and purchase the Designated Beers from CT. Mr Cogley proceeds to submit that the claimants have further difficulties because the evidence adduced on this issue all came from the defendants’ witnesses and that it undermines, if not destroys, the claimants’ case. This evidence, according to Mr Cogley, shows that no rebates would have been paid to the claimants in respect of the period in question even if the defendants had complied with the beer-tie and even if they had bought the Designated Beers from the nominated sellers, who were CT.

[91]So the case for the defendants is that my task is to ascertain what rebates would have been received by the claimants if the first defendant had purchased supplies of the Designated Beers from CT from November 2002 up till the time when the nomination of CT was accepted and acted upon in February 2006. Mr Cogley says that the answer to that inquiry is that if the first defendants had acted upon the nomination of CT in November 2002 and if they had purchased the Designated Beers from CT , then in that event no rebates would have been paid to the claimants by CT. Mr Cogley says the reason for that is that all the rebates would have been paid by CT solely to the first defendants and he says that the proof of that point is that this was precisely what actually happened when the first defendants did subsequently order the Designated Beers from CT after February 2006. The case for the defendants is that the best guide to who would receive rebates before February 2006 is to look to what happened after that date which was that CT paid all the rebates to the first defendants and none to the claimants. It must be stressed that the focus of my attention has to be on matters between November 2002 and February 2006. (ii). What approach should be adopted to ascertaining what losses of rebates were suffered by the claimants from November 2002 until February 2006?

[92]I must now consider the fundamental issue between the claimants and the defendants which is(a) whether the claimants are right in contending that “the court cannot take into account what [the defendants] could have done but did not do [ viz stop buying Designated Beers and/ or negotiate with CT to cut out the claimants and buy from CT]” (Paragraph 12 of the claimants’ closing submissions) and that it should be assumed that CT would have given all rebates to the claimants or

(b) whether the defendants are correct in contending that that the court must carry out an exercise to ascertain what the claimants would have received by way of rebates if the first defendants had purchased the Designated Beers from CT.

[93]My starting point is that this is an enquiry into damages suffered by the claimants and that this is not an account of sums received by the first defendants. That is what was ordered by the Chancellor in the second judgment. The principles on which such damages have to be calculated for breach of contract are not in dispute and in Werthheim v Chicoutimi Pulp Company

[1911] AC 301

, Lord Atkinson referred at page 307 to: “.. the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed” (cited with approval inGolden Straight Corporation v Nippon Yusen Kubiska Kaisha

[2007] 2 WLR 691

at paragraph 30 per Lord Scott of Foscote and also at paragraph 37 per Lord Carswell)

[94]Thus the focus of my enquiry has to be on ascertaining the sums which the claimants would have received as rebates if the first defendants had purchased the Designated Beers from CT during the pre-February 2006 period and not what rebates the first defendants actually received from CT in this period when they were not buying the Designated Beers from CT. Such an inquiry as advocated by the defendants meets the requirement of Lord Atkinson in placing the claimants “in the same position as [they] would have been in if the contract had been performed[ namely that the first defendants had purchased the Designated Beers from CT between November 2002 and February 2006]” It follows that the fact that the first defendants did not receive rebates from CT when they were not buying the Designated Beers from them does not necessarily mean or even indicate that if the first defendants had been buying the Designated Beers from CT first what rebates (if any) the first defendants would have received from CT or second what rebates (if any) the claimants would have received .

[95]I cannot accept the claimants’ submissions first that “the court cannot take into account what [the defendants] could have done but did not do [ viz stop buying Designated Beers and/ or negotiate with CT to cut out the claimants and buy from CT]” (Paragraph 12 of the claimants’ closing submissions) and second that it should be assumed that CT would have given all rebates to the claimants. There are four overlapping factors which lead me to that conclusion. .

[96]First, as I have explained, the obligation of the courts in assessing damages in this kind of case is to ascertain the position which in Lord Atkinson’s words “ the claimants would have been in if the contract had been performed”. This entails considering what rebates would have been paid if the first defendants had accepted and acted upon the nomination of CT as the nominated supplier of the Designated Beers.

[97]That enquiry means that it is necessary to ascertain what rebates (if any) would actually have been paid by CT to the claimants in respect of the purchase by the first defendants of the Designated Beers. More specifically it requires focussing on what would have happened if the first defendants had honoured the beer-tie by buying the Designated Beers from CT and then consideration of first whether the first defendants would have approached CT for rebates and second what rebate (if any) would have been given to the first defendants by CT in response to that request and what would have been given to the claimants. I cannot understand how this could be an irrelevant or incorrect exercise in the light of Lord Atkinson’s universally accepted approach.

[98]Second, no case or judicial comment has been put forward which limits the principle explained by Lord Atkinson and quoted in paragraph 93 above. Indeed Lord Bingham of Cornhill very recently explained in paragraph 9 of the Golden Straits case that “the damages recoverable by the injured party are such sum that will put him in the same financial position as if the contract had been performed”

[99]Mr Gerald, however, seeks to derive assistance from the statement of Lord MacNaugton in Bwllfa and Merthyr Dare Stream Collieries (1891) Limited v Pontypridd Waterworks Company

[1903] AC 426

when he asked at page 43, about the judicial role : “Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him why should he shut his eyes and grope in the dark?

[100]In my view, this approach supports the first defendants’ case because it shows that I can derive assistance in determining what the first defendants would have done if they had accepted the nomination of CT in 2002 from what actually happened when they accepted the nomination of CT in February 2006.

[101]This approach is consistent with the decision in the Golden Straits case (supra), which is another case relied on by Mr Gerald because in that case, the House of Lords has recently held by a majority that it is correct to take into account matters which arose after breach in assessing damages for loss of charter hire. The relevant post- breach development in that case were the outbreak of hostilities in what was described in that case as “the second Gulf war” in 2003 but the reason for the majority in reaching their conclusion was the application of the principle of placing the claimants in the position which they would have been in if there had had been no breach of the charter. This is supportive of the approach advocated by Mr Cogley, which is that it is permissible, if not necessary, to look at subsequent events in order to ascertain what loss the claimants would have suffered. In the present case, the relevant subsequent events are the first defendants’ subsequent dealings with CT and in particular their successful attempts to obtain all the rebates from CT in February 2006 to which I have already referred in paragraph 22 above.

[102]Third, the principle relied upon by the claimants has no place when the ability of a claimant to obtain a benefit which it is claimed has been lost depends first on the prospect of a defendant approaching a third party (namely CT) for a rebate and second on the attitudes of this third party to such an approach. In such a case, the court has to assess first the prospect of the first defendants approaching CT for rebates and second the chances of CT granting rebates to the claimants . I will return to consider these matters in paragraphs 108 to 126 below.

[103]Finally, in accepting as correct Mr Cogley’s approach and in rejecting Mr Gerald’s approach, I have not only borne in mind the established principles but also the disturbing consequences of accepting Mr Gerald’s submission, which can be shown by the following example. If, in the present case, the claimants had nominated X as the suppler of the Designated Beers and X was a company which the claimants were entitled to nominate under the terms of their agreement with the first defendants. Nevertheless let us assume that the first defendants refused to deal with X because they were involved in such a continuing and very bitter long-running dispute with X and they would have never ordered any of the Designated Beers from X .

[104]Instead the first defendants ordered the Designated Beers from Y from whom they received substantial rebates. It would be very strange and contrary to common sense if in those circumstances when assessing the damages due from the first defendants, the claimants were entitled to recover the rebates which had been paid to the first defendants by Y even though the first defendants would under no circumstances have ordered any of the Designated Beers from X. The law would not have allowed such an absurd situation to arise and the reason is that those sums would never have been paid if the first defendants had complied with their contractual obligation and had accepted the nomination of X.

[105]I am fortified in accepting the defendant’s submissions and rejecting those of the claimants by the statement quoted in the Golden Straits case of Lord Wilberforce in Miliangos v George Frank (Textiles) Ltd

[1976] AC 443

at 468 when he explained that:

“… it is for the courts… to work out a solution in each case best adapted to giving the injured party that amount in damages which will most fairly compensate him for the wrong which he has suffered”

[106]In my view, I must follow the approach of Mr. Cogley underpinned as it is by Lord Wilberforce’s approach and Lord Atkinson’s statement which I have quoted in paragraph 93 above. I therefore also reject Mr. Gerald’s submissions as they are based on incorrect and false assumptions and in particular for the reasons which I will explain in greater detail in paragraphs 108 to 126 below the assumption that CT would have given all the rebates (or some rebates) to the claimants and none or only limited rebates to the first defendants is in correct and without any foundation. I do not accept that I should make award on those false and incorrect assumptions and thereby turn a blind eye to what actually happened when the first defendants sought all the rebates in February 2006 as Mr. Gerald wants me to. In my view, the task of the court in assessing damages requires it not to make assumptions which are fanciful and totally without any proper factual foundation. In the light of my conclusions in paragraphs 126 to 131 below, I must reject as totally without merit the assumption put forward by the claimants that CT would have given all or most or any of its rebates to the claimants.

[107]Thus it follows that my task in ascertaining the “position as [the claimants] wouldhave been in if the contract had been performed” entails considering what would have happened if the first defendants had accepted the nomination of CT as the claimants’ nominated supplier of the Designated Beers from November 2002 until February 2006. The three questions which then have to be considered in the event that the first defendants had accepted the nomination of CT in 2002 are(i) would the first defendants then have sought a rebate from CT as the suppliers of the Designated Beers?;

(ii) if so, what would the response of CT have then been and would they then have paid any rebate to the claimants?; and

(iii) if so, what total rebates would then have been paid to the claimants by CT . I will consider each of these questions in turn but I must first consider the terms of the letter of 22 October 2002.. (iii). Would the claimants have received the rebates set out in the letter of 22 October 2002 if the first defendants had accepted the nomination of CT as suppliers of the Designated Beers in November 2002?

[108]It is correct that in the letter of 22 October 2002 sent to Mr Bob Collins (who was an agent of the claimants), CT stated that the claimants would receive certain specified amounts of rebate in respect of the Designated Beers purchased by the first defendants. The claimants contend that this was offer from CT, which was then accepted by them when they subsequently nominated CT as the suppliers to the first defendants of the Designated Beers. So Mr. Gerald submits that that the claimants were entitled to these rebates as from the date of the nomination of CT but I am unable to agree with this contention for three main reasons.

[109]First, I do not consider that the letter of 22 October 2002 was sufficiently certain and complete as to be capable of forming a binding agreement as it merely sets out prices. There was for example no agreement about the minimum quantities which had to be ordered to trigger payment of the rebates and I do not believe in the light of the evidence in this case that these rebates would have been payable if only say five or ten barrels were ordered. It is noteworthy that all the other agreements which the claimants entered into or were considering entering into with the suppliers of the Designated Beers were detailed documents which contrast sharply with the benefit of the letter of 22 October 2002. Thus the offer letters of S& N and Mathew Brown respectively of 16 April 1991 and of 10 March 1994 both contain many more terms than the letter of 22 October 2002.

[110]Second, the letter of 22 October 2002 was an initial response of CT, which would have to been the subject of further investigations and negotiations as is shown by the evidence of Mr. Anthony Nelson, a Manger of CT whose evidence at the present trial was adduced under the Civil Evidence Act 1996 because he was unfortunately unwell. I appreciate that the claimants have therefore been prevented from cross-examining him but his evidence is very clear and it is unlikely to have been undermined in cross-examination. It was to the effect that:

“there was no form of contract or legal agreement entered into by or on behalf of CT with the claimant, or indeed anybody on the claimant’s behalf. Bob Collins was trying to find out the terms on which we would supply.”

[111]Mr. Gerald points out that Mr. Nelson then proceeds to state that:

“I was quite happy to confirm that discounts would be paid to [ the claimants], I had not applied my mind in any way to the extent to which [the claimants were] actually operating the outlet at all”

[112]Mr. Nelson did however also explain that the interest of CT was:

“…simply in supplying as much beer as it possibly can to an outlet. The idea obviously is that it will encourage the pub operator to purchase much as possible of our product, as opposed to a competitor”

[113]This statement is consistent with what happened that when the first defendants asked CT to supply the Designated Beers because CT was only too willing to supply the first defendants and to give them all the rebates with none going to the claimants. It also shows that what was indicated in the letter from CT of 22 October 2002 was not an offer but an invitation to treat which would be reconsidered when, in his own words, Mr. Nelson: “had applied my mind … to the extent to which [the claimants were] actually operating the outlet at all” because then CT would “ encourage the pub operator [namely the first defendants] to purchase much as possible of our product, as opposed to a competitor”.

[114]Third, even if contrary to my views, the letter of 22 October 2002 was sufficiently certain as to be capable when accepted of forming a binding contact between the claimants and CT, then such an agreement was not in my opinion to remain in force for any specific period of time as it could always have been terminated at any time without notice. It is quite clear from the way in which S & N immediately and without notice stopped making rebate payments to the claimants and instead immediately made them to the first defendants that the way in which this trade operated is that any agreement or promise made by brewers to pay rebates was terminable without notice. This also explains that when the first defendants negotiated with CT, who were the suppliers of the Designated Beers, that company immediately and without notice altered the existing arrangements and thereafter paid all the rebates to the first defendants and none to the claimants . There has been no suggestion that these decisions by S & N and CT to cease to pay any rebates to the claimants were wrongful or in breach of contract or even that the claimants have indicated an intention to sue either of these companies for breach of contract. It is also noteworthy that the claimants have not contended (let alone established) that the rebates offered by CT would apply indefinitely or for a specified period or be subject to any notice period. Thus even if there was a binding agreement between CT and the claimants, it was terminable without notice. In consequence the claimants did not have a contractual right to receive rebates from any nominated supplier of the Designated Beers other than perhaps at its highest one terminable without notice. So the rebates which would have been paid to the claimants would have depended on whether the first defendants would have solicited rebates from CT and that is the issue to which I now turn. (iv). Would the first defendants have sought rebates from CT as the suppliers of the Designated Beers and if so, how much?

[115]I am sure that if the first defendants had accepted the nomination of CT in November 2002, they would immediately have made requests and demands of CT that they (and not the claimants) should receive all the rebates before they would have placed any orders for Designated Beers. After all the first defendants dealt with S & N in the period from 2002 up to 2006 on the basis they would receive all the rebates. Again when in 2006 the first defendants decided to order Designated Beers from CT they immediately approached CT for rebates and thereafter they received the full rebates amount. Mr. Gavin Valentine explained that when he met Mr. Anthony Nelson and Mr. Paul Little of CT in February 2006, they agreed to give all the rebates to the first defendants as “we were in effect his customer”. I have no doubt this is what the first defendants wanted and what they would have demanded in November 2002 if they had accepted the nomination of CT.

[116]I can think of no reason why the first defendants would not have done likewise in late 2002 and onwards until February 2006 if they had been purchasing the Designated Beers from CT. It is appropriate for me to state that I found both Mr Gavin Valentine and his father to be honest and reliable witnesses who emerged unscathed from characteristically skilful cross-examinations. The clear impression given by each of them is that they were tough business men who were determined to maximise their profits and that neither of them would have been in the slightest way inhibited from seeking to negotiate for the maximum rebates from their suppliers of Designated Beers whether they were S& N or CT. Indeed, from 2002 onwards the first defendants sought maximum discounts from whoever was supplying them with Designated Beers and I have no doubt that they would have done so if they had honoured the nomination of CT in 2002. In other words, they would have sought all the available rebates and that would have included any rebates which might other wise have been paid to the claimants. (iv). If the first defendants had sought rebates from CT as the suppliers of the Designated Beers in 2002 after CT ‘s nomination, what would the response of CT have been?

[117]The answer to this question would depend upon what rebate (if any) CT would have been prepared to pay to the first defendants. In other words, this is a situation to which a party not involved in the present litigation (namely CT) would have had a determinative role if not a crucial role, because the rebates (if any) which the claimants and the first defendants would have received from CT would depend on what CT was prepared to pay. In other words, this is a situation in which a third party namely CT would have a determinative or crucial role.

[118]The proper approach to showing what a claimant has to prove in such situations was explained by Stuart-Smith LJ in Allied Maples Group v Simmons & Simmons

[1995] 1WLR 1602

at pages 1609- 1610 when he spoke of three different situations. He explained them in this way:

“In these circumstances, where the plaintiffs’ loss depends upon the actions of an independent third party, it is necessary to consider as a matter of law what is necessary to establish as a matter of causation, and where causation ends and quantification of damages begins. (1)What has to be proved to establish a casual link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act of misfeasance, or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant’s act, for example the careless driving, caused the plaintiff’s loss consisting of his broken leg. Once established on balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the judge considers that the balance is only just tipped in favour of the plaintiff; and the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury”

[119]Having considered this first situation, he said later in his judgment at page 1610 when considering a second situation that:

“(2) If the defendant’s negligence consists of an omission, for example to provide proper equipment, given proper instructions or advice, causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if the equipment had been provided or the instruction or advice given? This can only be a matter of inference to be determined from all the circumstances. The plaintiff’s own evidence that he would have acted to obtain the benefit or avoid the risk, while important, may not be believed by the judge, especially if there is compelling evidence that he would not… Although the question is a hypothetical one, it is well established that the plaintiff must prove on balance of probability that he would have taken action to obtain the benefit or avoid risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour...”

[120]Finally, he said that there was a third situation at page 1611 which was that:

“(3) In many cases the plaintiffs’ loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it. In such a case, does the plaintiff have to prove on balance of probability, as Mr Jackson submits, that the third party would have acted so as to confer the benefit or avoid risk to the plaintiff, or can the plaintiff succeed provided he shows that he had a substantial chance rather than a speculative one, the evaluation of the substantial chance being a question of quantification of damages? Although there is not a great deal of authority, and none in the Court of Appeal relating to solicitors failing to give advice which is directly in point, I have no doubt that Mr Jackson’s submission is wrong and the second alternative is correct…”

[121]Mr Gerald contends that this case does not “really” fall into Stuart Smith LJ’s third category “because [the claimants’] loss is a matter of historical fact, which does not depend on the hypothetical action of CT”. So he contends “it falls more into the first category”. He contends that the matter has to be determined on a balance of probabilities as was also explained in Davies v Taylor

(1974) AC 207

, 213.

[122]In my provisional view, this case falls within Stuart-Smith L J’s third category because it depends upon the hypothetical actions of a third party, namely CT. I need not come to a definite conclusion on this issue as it does not really matter into which category this claim falls because in my view the claimants are unable to show on a balance of probabilities that they would have obtained a rebate from CT or that there was a substantial or indeed any realistic chance that they would have done so. In my view, I am quite sure and satisfied beyond any reasonable doubt that CT would have given the first defendants all the rebates and that none would have given to the claimants if the first defendants would have requested all the rebates as I am sure they would have done.. In other words, the claimants would lose on this point irrespective of which of Stuart Smith LJ’S three categories this claim falls or even if it did not fall into any of the categories..

[123]The main reason why I have reached this conclusion is that when after the hearing in front of Park J, the first defendants approached CT for a rebate they received the rebates in full and no rebates went to the claimants. The reason for that decision of CT was because of the need of CT to offer the maximum rebates to “the pub operator” as was explained by Mr. Nelson in the passages which I quoted in paragraph 122 above There is no valid reason for believing that a different course would have been adopted if the first defendants had taken their supply of the Designated Beers from CT in and after November 2002. Indeed as I have explained in paragraph 115 above, the evidence of Mr. Gavin Valentine shows that this is precisely what occurred when the first defendants agreed to order the Designated Beers from CT. I am fortified in coming to that conclusion by the evidence of Mr. Anthony Nelson of CT whose evidence was, as I have explained, adduced under the Civil Evidence Act 1996 because he was unfortunately unwell. I appreciate that the claimants have therefore been prevented from cross-examining him but his clear evidence was that the interests of CT were to supply as much beer as it could possibly could to the retail outlet (which in this case was the first defendants) and they would offer it incentives by providing discounts so as to ensure that the first defendants as the seller of their products “is as happy as possible with our products and is therefore incentivised to sell them”.

[124]It is very unlikely that this or any other part of Mr. Nelson’s evidence would not have survived a cross-examination especially as similar evidence was given by employees of S & N about the need for the brewer to offer maximum incentives to the bar owners. In my view, the history of the first defendants’ dealings with brewers shows that any of the suppliers of Designated Beers would have been interested solely in offering all possible rebates to the end user, namely the first defendants. These suppliers showed no interest in giving incentives to the claimants once the first defendants demanded all the rebates. Thus, I conclude that if, as was inevitable, CT would have been approached by the first defendants for rebates, then CT would certainly have given all the rebates to the first defendants and none to the claimants.

[125]In summary, I am convinced that the first defendants were conducted by determined businessmen who would have demanded all the rebates from CT and who for their part would have given all the possible rebates to the first defendants and none to the claimants. (v). What total rebates would have been paid to the claimants by CT?

[126]For the reasons which I sought to explain in the previous paragraphs, I do not consider that any rebates or discounts would have been paid to the claimants by CT. It is now appropriate to consider a further submission of the claimants which is that if the first defendants could have negotiated successfully to ensure that the claimants did not receive any rebate, then in the word of the claimant’s skeleton, “this still does not work because [the claimants] would simply have nominated a new supplier who had paid a discount”

[127]There are problems with this submission which have led me to rejecting it. First, the claimants have not adduced any evidence that any brewer would have been prepared to accept the claimants’ nomination to supply Designated Beers upon the basis that they would not agree to pay all or indeed any of the available rebates to the first defendants. The claimants have had a long period to find a brewer who would accept this arrangement but none has been forthcoming. The claimants sought without success to reach an agreement with Coors which included provisions which would have ensured that the first defendants would not receive a rebate. The arrangement proposed by the claimants with Coors makes the claimants the nominated supplier of the Designated Beers to the first defendants. The draft agreement which the claimants wished Coors to sign placed a number of obligations on Coors not to deal directly with the first defendants but this agreement was not acceptable to Coors. I accept the evidence of Mr. Gavin Valentine which was not rebutted by any evidence and which was that Mr. Philip Nicholson of Coors told him that:

“..the system proposed by the claimant is simply unworkable. By the claimants wanting all the discounts, Coors’ hands are tied as they simply have nothing left to provide to us as their customer...”

[128]Second, it is very unlikely that the claimants would have been able to find another supplier who would have agreed to pay any rebates to the claimants and would have continued to pay such rebates after the first defendants would have sought to obtain all the rebates for themselves. . History has shown that the first defendants approached the suppliers of the Designated Beers for rebates and that, the claimants received none of them but that the first defendants received all of them.

[129]Further, there was clear evidence that brewers would not agree and become a party to any agreement which prevented them from negotiating with the retail outlet, which in this case was the first defendants .This evidence came from(a) Richard Mills of John Smiths which had been part of S & N that he had been in the brewery trade over thirty years. He said he was now working for another brewer and if the claimants nominated his company as a supplier of the Designated Beers and asked him to supply the first defendants on that basis that his brewery employers could not have any discussion and negotiations with the first defendants “I would not enter into any such agreement. I would rather walk away form any such potential trade”;

(b) Mr.Anthony Nelson of CT, who explained that CT is “concerned to ensure that the operator of the outlet is able to pay for our products and is as happy as possible with our products and is therefore incentivised to sell them”; and

“I have been asked whether or not to my knowledge Scottish Courage would enter into a practice which prevented an actual operator of an outlet obtaining or negotiating with us for any discounts. I do not believe we would. It makes sense to me that the person we are delivering to and the person who is paying the account should be happy and encouraged to buy our products . This is why we offer discounts”

[130]I accept all this evidence as being accurate . So my conclusion is that the claimants would not find any brewer who was prepared to distribute the Designated Beers but who would also agree not to respond to approaches by the first defendants to give them all the rebates and incentives. Furthermore, I consider it to have been highly probable that even if a brewer had agreed or would agree to be the nominated supplier of the Designated Beers to the first defendants, then irrespective of any contractual obligations owed to the claimants they would inevitably have subsequently succumbed to the inevitable requests by the first defendants to receive all the rebates. The experience with S &N and CT demonstrates that whatever may have been agreed originally on nomination with the claimants, these suppliers of the Designated Beers would be and are easily persuaded to give all their rebates to the first defendants as the purchaser of the Designated Beers and the ultimate retail outlet.

[131]For all these reasons, I conclude that if (as I believe to be the position) the alleged implied terms were not incorporated into the agreement, the claimants would not have received any rebates if the first defendants had complied with the beer-tie. . VIII. Issue F.

(i) Introduction

[132]I am now considering what damages would be payable if I am wrong and if the alleged implied terms were incorporated into the agreement between the parties. The case for the defendants is that if the alleged implied terms were incorporated in the agreement so that the first defendants could not negotiate and receive rebates, then;(a) in the words of paragraph 4.8 of the defendants’ written skeleton argument of 19 April 2007 “there is not a shred of evidence preferred by the claimant/no sufficient evidence from which the Court can conclude that even if [the first defendants[ could not “seek” such discounts, the Nominated Supplier would not , of its own volition, grant them in any event ; the overwhelming evidence is that the Nominated Suppliers would not, of its own volition, grant them in any event; the overwhelming evidence in this case is that the Nominated Suppliers are keen to incentivise the actual operator of the outlet so as to maximise throughput” (“The no-rebate for the claimants point”); and/or

(b) this would have had a substantial and critical effect on the price which the first defendant would have had to charge for the main Designated Beers, namely lager and bitter. The case for the first defendants is that in order to obtain the desired level of gross profits, then without being able to solicit rebates from the suppliers of these Designated Beers then they, that is the first defendants, would have had to sell lager and beer at £4.62p and £4.14p respectively (“ The increased price effect point”). (iii). The no-rebate for the claimants point

[133]This point is explained in the words of paragraph 4.8 of the defendants’ written skeleton argument of 19 April 2007 in this way:

“there is not a shred of evidence preferred by the claimant/no sufficient evidence from which the Court can conclude that even if [the first defendants[ could not “seek” such discounts, the Nominated Supplier would not , of its own volition, grant them in any event ; the overwhelming evidence is that the Nominated Suppliers would not, of its own volition, grant them in any event; the overwhelming evidence in this case is that the Nominated Suppliers are keen to incentivise the actual operator of the outlet so as to maximise throughput”

[134]The claimants dispute this point and I have stood back and I have considered the evidence relating to how keen the suppliers of the Designated Beers would have been to give all the rebates to the first defendants and none to the claimants. Significantly, Mr. Nelson of CT indicated the need for discounts was to “encourage the pub operator to purchase as much as possible of our products… and is therefore incentivised to sell them”. Mr. Murray of Scottish Courage (which is part of S&N) similarly indicated that the primary objective of the brewer would be to deal with the customer (i.e. the first defendants) and that the customer “should be happy and encouraged to buy our products”. He also explained his concern about the decline in volume because in 2002, 40% of the sales of the Designated Beers had been lost to alcopops.

[135]I have concluded that any supplier of the Designated Beers would have been extremely keen to encourage the first defendants to sell as much of the Designated Beers as possible and they would not have been concerned if they did not give any of the rebates to the claimants. There was no cogent evidence to show otherwise certainly in respect of the period from 2002 onwards. So my conclusion is that even if the alleged implied terms were not incorporated, the suppliers of the Designated Beers would still have given all the rebates to the first defendants. I add that surprisingly the claimants did not produce any cogent evidence to the opposite effect. The consequence is that the claimants would only be entitled to nominal damages. (iii). The increased price effect point

[136]The defendants’ evidence on this issue was given by Mr Gareth Woodward their forensic accountancy expert who explained that the first defendants had aimed for a 70% gross profit as had appeared in their 2006 accounts and in each of the accounts for the years from 2002 which he had examined. Each of these accounts showed the first defendants receiving gross profits between 65% and 70% on the items which had sold.

[137]Mr Gerald disputed that this evidence as being admissible for the first time in his closing address. He pointed out that the claimants had sought discovery of many of the financial documents of the first defendants but that this application has been refused by District Judge Needham. I am not persuaded that Mr Gerald’s objection to this evidence is valid. First, if Mr Gerald needed to consider any further documentation before cross-examining Mr Woodward or if he thought that it was inadmissible, he could and should have applied for disclosure or an adjournment or a ruling that it was inadmissible before cross-examining him. Then if Mr Gerald had a valid point, I would have acceded to that request or perhaps determined that this evidence of Mr Woodward was inadmissible. Second, much of the information on which the gross profits of the first defendants has been calculated appeared in their accounts, which are and were, of course, available from Companies House. Third, in any event, a complaint of the kind made by Mr. Gerald for the first time in a final speech is not persuasive when an appeal against the earlier order of the District Judge refusing disclosure had not been pursued and I had not been asked to rule on the admissibility of Mr. Woodward’s evidence. A party cannot sit on his hands when evidence is being adduced and then complain about its admission in a closing speech.

[138]It is also said by the claimants that when the defendants received the rebate from S & N, they did not reduce their prices. The first defendants’ explanation was that as a result of receiving the rebate, they had held the price of the Designated Beers in spite of increasing costs first of utilities and second of wages on account of the minimum wage regulations. I accept this explanation as accurate.

[139]In my view, the critical factor on this issue was the gross profit margin of about 70% which the first defendants were aiming for. There is no reason that they would not have sought to achieve this figure in relation to the Designated Beers if they were not entitled to receive the rebates. This would have led according to Mr Woodward to the prices increasing to £4.62 and £4.14 for lager and bitter respectively. I accept the evidence of Mr Woodward, who was an impressive witness and whose evidence was cogent. The claimants had instructed an accountancy expert, who had produced a report but he was not called as a live witness. I should add that Mr. Woodward’s evidence on the first defendants’ level of gross profits was supported by Mr Robbins whose evidence was accurate and reliable and which I also accept.

[140]The consequence of these increased prices would have been that the sales of bitter and lager by the first defendants would have been greatly reduced. I agree with Mr. Gareth Woodward in paragraph 41 of his report that such prices “would clearly not be viable in an extremely competitive market”. This factor would inevitably have discouraged brewers from accepting the nomination to supply the Designated Beers. There is evidence that Coors in those circumstances would not have accepted the nomination which does not surprise me in the light of the costs involved in accepting a nomination for the reasons set out in paragraph 32(g) above. I also accept the evidence of Mr Gavin Valentine that if the prices had been raised to £4.62 and £4.14 respectively for lager and bitter, the first defendants would not then have required more than 100 barrels. There is evidence from Mr. Murray, who as I have explained had much experience in this area, that such sales would not have produced any rebates for any party from the sellers of the Designated Beers. This statement has to be considered and accepted in the light of the fact that an outlet such as the premises in question could have been conducted without selling Designated Beers but by selling instead wine, spirits and that, as I have explained, Alco pops which were becoming increasingly popular.

[141]It is noteworthy that Mr David Murray indicated that as far back as 2002, he had lost 40% of his barrelage to alcopops. This clearly demonstrates that Alco pops competed successfully with a designated beer. I accept as correct the suggestion of Gavin Valentine that if the first defendants had been unable to receive rebates, they would not have purchased any Designated Beers. He agreed with the statement in the pleadings that if discounts were not available to the first defendants, it would not have purchased any of the Designated Beers but would have traded by selling the non-designated beers Budweiser (which I will explain in paragraphs 147 to 152 below is excluded from the beer-tie) or Alco pops and similar products. This suggestion makes commercial sense. Indeed I found Mr. Gavin Valentine like his father to be a reliable witness whose evidence I accept as accurate on this issue.

[142]In this connection, I must add that it must not be forgotten that the ground floor of the premises comprised a bar in which the major attractions were karaoke and cabaret performances whilst in the basement there was a lap-dancing bar. Thus, many of the visitors to either part of the premises would be attending them not merely for a drink but primarily for entertainment.

[143]Mr Cogley argues convincingly that the claimants have not called any evidence from nominated suppliers or from anyone else to indicate that the first defendants could not have survived or functioned satisfactorily without selling Designated Beers or that the customers of the premises would be prepared to pay £4.62p and £4.14p respectively for Carlsberg lager and Tetley Bitter. I conclude that the first defendants’ premises could and would have been conducted satisfactorily without selling the Designated Beers. That would suggest no rebates would have been paid to anyone. 144.I must also consider what would have occurred if the first defendants had only ordered 100 barrels of the Designated Beersand this raises the question of what rebates would have been paid to the claimants and the first defendants if the first defendants could only sell 100 barrels of the Designated Beers per annumThere is clear evidence that if the first defendants would have only required 100 barrels per year (which is what I believe that their maximum requirements would have been if the alleged implied terms were to be incorporated into the agreement), this would have been of little interest to brewers and so no rebates are likely to have been payable to any party.

[145]It is noteworthy that according to Mr. Gavin Valentine, Mr. Nicholson of Coors explained that purchases of 100 barrels for the season would have meant that it would not have been or be worthwhile for Coors to accept the nomination to supply the Designated Beers. Similar evidence was given by Mr. David Murray who said that John Smith’s would not accept a nomination if there were only to be purchases of 100 barrels of the Designated Beers. I find this evidence convincing.

[146]I conclude that the claimants would have suffered no loss if the agreement contained the alleged implied terms as there would have been no supplier able to accept nomination to supply the Designated Beers to the first defendants or able to pay any rebates on such sales to the claimants or to the first defendants. Thus the claimants would only be entitled to nominal damages. IX. Issue G. What damages would the claimants have been entitled to if they had been successful on the post-February 2006 claim?

[147]I have explained in paragraph 64 why I have had to dismiss this claim. If I am wrong and the claimants had been successful on this claim, they would have not been entitled to anything other than nominal damages. I would have reached the same conclusions on the post-February 2006 claim as I have done on the claim pre- 2006 claim as I have explained when dealing with issues E and F above.

Issue H. The Budweiser Claim

[148]The claimants contend that they are entitled to be compensated because the first defendants purchased Budweiser, which was one of the Designated Beers. In response, Mr Cogley contends first that there has been a release from the beer-ties granted by the claimants which entitled the first defendants to purchase Budweiser and second that this release had been agreed orally between Mr. Peter Stefani on behalf of the claimants and Mr. Robbins on behalf of the defendants. In support of this submission, Mr Cogley relies on the findings in the first judgment of Park J that:

“54 Mr Gerald accepts that, if Peter Stefani did in fact agree orally that the tenant could buy Budweiser from Fylde Wines outside the tie, there could be no breach of the tie as respects any consequential purchases, and thus no damages. He invited me, however, to reject Mr Robbins' evidence and to find positively that the tenant had made purchases of Budweiser from Fylde Wines in conscious breach of the tie. Mr Gerald might be right, but I ask myself whether I am sufficiently convinced to find that, notwithstanding Mr Robbins' evidence, P&S has established this part of its case sufficiently for me to find that, on the balance of probabilities, the claim for damages has been made out. The answer is that I am not. Mr Robbins was a somewhat erratic witness, but he did not strike me as in any way a devious or mendacious witness. Maybe he was lying about this, but I think that he probably was not. 55. The other part of the claimants' case on this issue was evidence from Peter Stefani's sons and his accountant that Peter Stefani never told them that he had agreed with Mr Robbins that the tenant could buy Budweiser outside the tie. That is a factor which carries some weight, but not a lot. I do not think that it is enough to get the claimant home on the issue. 56.The matters which I have described in the previous paragraphs are my reasons for not directing an enquiry as to damages for purchases of Budweiser in breach of the tie”

[149]The fact that the first defendants purchased Budweiser beer was not in dispute before Park J but the judge’s reasons for refusing to direct any enquiry was very significant because he came to the conclusion that there was an agreement to allow for the purchase by the first defendants of Budweiser even though it fell in the category of being a Designated Beer. It is noteworthy that Park J came to this conclusion because he explained that:

“53 (iii)… Mr Robbins continued by saying that a time arose when the tenant needed some new freezer cabinets but could not afford them. Fylde Wines had said that it would provide the money for the cabinets if the bar would buy its supplies of Budweiser from it. Mr Robbins asked Peter Stefani about this on one of his visits to the bar. Mr Stefani agreed to it straightaway, orally and wholly informally 150 It follows that Park J found that there had been a release of the beer-tie in respect sales of Budweiser by the first defendants and indeed he excluded those sales from the enquiry which I am conducting. Park J made this point clear when he said in paragraph 56 of the first judgment that he had explained that : “his reasons for not directing an enquiry as to damages for purchases of Budweiser in breach of the tie”

[151]Mr Gerald contends that the release from the beer-tie for the purchases of Budweiser was of limited duration. I am unable to accept this submission for four reasons. First, the release was in 2000 and by the time the matter came in front of Park J in December 2005, the first defendants had admitted and had positively stated that they had been purchasing Budweiser for many years after the repairs had been carried out and the acquisition of the refrigerators. There was no suggestion and certainly no finding that by this time, that there had been any variation of the beer-tie so that the release so as to permit the sale of Budweiser had ended or been reversed . In any event Park J clearly excluded it from the inquiry as to damages, which I am now conducting as I have just explained in paragraph 150. Second, nothing in the second judgment changes that finding. Third, no new point has been taken by the claimants in the present trial to show that the beer-tie now covers Budweiser beer. Finally issue estoppel precludes the claimants from contending the present enquiry should embrace the Budweiser purchases.

[152]In reaching this conclusion I have also borne in mind that the injunction granted by the Chancellor restrained the purchase of “allDesignated Beers”, which the claimants say included purchasing Budweiser from anyone other than a nominatedsupplier but I do not think that the terms of this injunction assist the claimants as the second judgment was not concerned with Budweiser sales but with the competition matter left for decision by Park J in the first judgment. In order to understand the definition of “Designated Beers” in the Chancellor’s order, it is necessary to remember what was then covered by the beer-tie. The decision of Park J in the first judgment was that Budweiser ceased to be a “Designated Beer”.

[153]There was nothing said in the second judgment by the Chancellor to show that he was varying in any way the finding of Park J in the first judgment relating to Budweiser. In those circumstances, the injunction granted by the Chancellor would not have had any effect in respect of the purchase by the first defendants of Budweiser beer. In any event the inquiry which I am conducting is pursuant to the finding in the first judgment, which excluded Budweiser beer. Thus I reject all claims made in respect of Budweiser.

[154]In any event, even if the analysis is wrong and the claimants are entitled to damages for a breach of the beer-tie in respect of the Budweiser sales, then in those circumstances, claimants are not entitled to any damages as:(a) there is no evidence that the first defendants would have been able to sell any Designated Beers in substitution for Budweiser and the onus of proving loss is on the claimants; and

(b) even if the first defendants had been able to sell designated beers in substitution for the Budweiser, the claimants would not have received any rebate for the reasons set out in sections VII and VIII above.

X Conclusions

[155]In spite of the sustained and extremely detailed submissions of Mr Gerald, I conclude that:(a) the alleged implied terms were not to be incorporated into the claimants’ agreement with the tenants of the premises because (i) the agreement between the parties was effective without it (paragraphs 41-54); (ii) the implied terms were not “so obvious” that their inclusion goes without saying (paragraphs 55-56 ); (iii ) the implied terms were not “reasonable and equitable” (paragraphs 57-60 ) and (iv) there is a strong presumption that where (as in the present case) there had been a detailed agreement which had been subject of negotiations that it was complete in itself and terms should no be implied(paragraphs 61-62);

(b) even if that conclusion is wrong and the alleged implied terms were to be incorporated into the agreement with the tenants, the defendants are not estopped by the comment in paragraph 17 of the first judgment from contending that Mr. Peter Stefani of the claimants knew from at the latest September 2001 that the first defendants were receiving rebates from the suppliers of the Designated Beers (see paragraphs77 to 81 above) .Further there are powerful arguments that the claimant have thereby agreed to vary their agreement with the tenants so that the tenants were entitled to seek rebates from the nominated suppliers of the designated beers or that the claimants are estopped from relying on the alleged implied terms (see paragraph 82 above).

(d) as the alleged implied terms were not incorporated into the claimants’ agreement with the tenants of the premises, then (i) the claimant have suffered no loss and are only entitled to nominal damages in respect of their claim for the period from November 2002 to February 2006( see paragraphs 88 to 131 above). and (ii) the claimants’ post-February 2007 claim has to be rejected (see paragraph 147 above);

(e) even if the alleged implied terms were incorporated into the claimants’ agreement with the claimants, the claimants have suffered no loss and are only entitled to nominal damages ( see paragraph 132 to 146 above); and

(f) the claimants have no claim to damages in respect of the sale of the Budweiser beers as they are not the subject of the present enquiry in the light of the findings in the first judgement that there has been a release of Budweiser from the beer-tie.( see paragraph 148 to 154 above). Post –Judgement Note After I circulated this judgment, it was explained to me that it had been agreed between counsel that I could not take into account the expert evidence of Mr. Richard Garside set out in paragraph 49 of the judgment but I could rely on his factual evidence set out in paragraph 50. This agreement does not alter in any way my remaining reasons for concluding that there were no financial or other reasons for concluding that the arrangements between the parties were not effective without incorporating the alleged implied terms.