HUMBER OIL TERMINALS TRUSTEE LIMITED v ASSOCIATED BRITISH PORTS [2011] EWHC 352 (Ch)

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
[2011] EWHC 352 (Ch)Case No Case No: HC10C0097 HC10C0Q894 HC10C00970 HC10C00969Venue Royal Courts of Justice, Strand, London, WC2A 2LL
Between
HUMBER OIL TERMINALS TRUSTEE LIMITEDClaimantASSOCIATED BRITISH PORTSDefendant
Before
The Chancellor of the High CourtMR J TURNER QC & MR A LINDSAY (instructed by Eversheds LLP, London) for the DefendantMR P LASOK QC & MR E WEST (instructed by DLA Piper UK LLP, London) for the ClaimantHearing dates: 1 & 2 February 2011Date 24 February 2011
[1]The Chancellor: Introduction Associated British Ports ("ABP") is, as the successor in title to the British Transport Docks Board, the freehold owner and operator of the Port of Immingham on the south bank of the river Humber. One of the facilities of the port is the Immingham Oil Terminal ("IOT"). This was constructed in the 1960s to serve two inland refineries called the Lindsey Oil Refinery and the Humber Oil Refinery, now owned by Total UK Ltd ("Total") and ConocoPhillips Ltd ("Conoco") respectively. It consists of a jetty with a number of berths, an onshore oil depot, other land used for associated purposes and substantial pipe and oil storage works. Since June 1966 the IOT has been operated by Associated Petroleum Terminals (Immingham) Ltd ("APT"), a joint venture company owned and controlled by Total and Conoco.[2]In 1970 the predecessor in title of ABP, by two separate leases, which were later supplemented by two further leases, demised the land on which the IOT is situated to Humber Oil Terminals Trustee Ltd ("HOTT"), another joint venture company of Total and Conoco, for a term of forty years expiring on 31 st December 2009 or 1st January 2010. There are four material features of those leases:(1) possession was granted to HOTT thereby excluding others from using the terminal,(2) the rent was set by reference to the historic cost of construction,(3) there was no provision for any open market rent review during the term and(4) HOTT was relieved of any obligation to pay ships or goods dues during the term.[3]In 1995 negotiations between ABP and HOTT commenced in which HOTT sought extended leases of IOT. No agreement was reached. HOTT alleges that the failure of the negotiations was due, at least in part, to the fact that ABP sought payment of excessive rent. The negotiations recommenced in 2005 and after Febaiary 2008 were conducted on a without prejudice basis. In July 2008 ABP indicated to HOTT that its preferred course was to take operational control of IOT so that it might be made available to third parties as well as HOTT.[4]In 2009 ABP served on HOTT the notices required by s.25 Landlord and Tenant Act 1954 to terminate each of the four leases and indicating, as required by s.25(6), that ABP would oppose the grant of a new tenancy to HOTT. Proceedings for the grant of new tenancies were commenced by HOTT against ABP in the Great Grimsby County Court on 21st December 2009.

(l) (g), that:

" The Defendant intends to occupy the premises (and all associated land holdings presently leased to the Defendant) for the purposes of a business to be run by it for the import and export of oil products with a view to (a) ensuring continuity of supply to Total and Conoco (and their respective refineries) and (b) exploring and implementing the supply of oil and other products which are deemed appropriate over or through the premises, to other third parties."
By order of the District Judge made on 16th March 2010 the four actions were consolidated and transferred to the Chancery Division of the High Court. In addition the District Judge ordered the trial, as a preliminary issue, of the question whether ABP intended to occupy IOT within s.30(l)(g) and stayed all other proceedings except for the issue of what interim rent should be paid.[5]On 16th July 2010 ABP applied for an expedited hearing of those two issues. The application was heard on 4th August 2010. In connection with that application a partner in the firm of solicitors acting for HOTT made a witness statement indicating that they were investigating a competition claim based on the demand by ABP of excessive rents and its reliance on s.30(l)(g). Without requiring any draft of a proposed amendment the deputy Master gave HOTT permission to serve amended particulars of claim "raising issues of competition law". The preliminary issues to which I have referred were then fixed for hearing over a five day period commencing on 11th July 2011.[6]The amended particulars of claim were served on 15th October 2010. In summary, HOTT contends that ABP is abusing its dominant position in the provision of deep-water facilities in the Port of Immingham in five specified respects, namely:(1) Demanding, in the course of negotiations, abusively high prices for the provision of those facilities by way of (a) rent under the new leases, and (b) port access charges (paras 64 and 70-80).(2) Now seeking from the court orders for abusively high rents under the new leases (see paras 65 and 81-84).(3) Relying on s.30(l)(g) as a means to force HOTT to accept abusively high rents and port charges (see paras 66 and 85-89).(4) Being unable to operate the IOT independently from and as efficiently or effectively as HOTT if its defence succeeds (see paras 67 and 90-96).(5) Using its rights as a landowner to acquire the business of APT and HOTT's equipment on site at an undervalue (see paras 68-69 and 97-101).[7]By a letter dated 28th October 2010 the solicitors for ABP set out their objections to these amendments. They were rejected by the solicitors for HOTT by letter dated 15th November 2010. On 17th November 2010 ABP issued the application now before me seeking orders(1) under CPR rule 3.4 striking out the paragraphs to which I have referred and specified parts of the relief sought because they disclose no reasonable grounds for bringing that claim, and/or(2) giving summary judgment under CPR Part 24 dismissing issues raised in specified paragraphs as having no real prospect of success. The argument before me has focused on the first of those matters but before dealing with either of them it is necessary to consider (1) the procedure for the grant of a new tenancy prescribed by Part II of Landlord and Tenant Act 1954, (2) the issues arising in connection with the proceedings under that jurisdiction,(3) the tests to be applied in considering an application to strike out under CPR Rule 3.4 with particular reference to competition issues,(4) the broad principles of competition law to be applied and(5) the factual background and the amended particulars of claim in greater detail. Part II Landlord and Tenant Act 1954[8]As the heading to that part indicates it provides for security of tenure for business, professional and other tenants. It is not disputed that it applies to the four tenancies by which the IOT was let to HOTT by the predecessors in title of ABP. S.24 provides that such a tenancy may only be brought to an end if terminated in accordance with the provisions of that part. That procedure requires the landlord to serve a notice complying with the terms of s.25, specifying, if that is the case, the ground set out in s.30 on which he opposes the grant of a new tenancy.

(l) (g) namely:

"...on the termination of the current tenancy the landlord intends to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein..."
[9]If the tenant seeks the grant of a new tenancy he is required by s.26 to serve a request setting out, amongst other matters, his proposals as to the rent to be payable and the other terms of the new tenancy. If the tenancy is not renewed by agreement, as allowed by s.28, and the landlord fails to establish the ground of his opposition to the grant of a new tenancy, the court is required by s.29 to order the grant of a new tenancy. By contrast if the landlord does establish the ground of his opposition to the grant of a new tenancy then the court is required by s.31 to dismiss the tenant's application.[10]The material terms of the new tenancy, if granted, are dealt with in ss.32 to 35. S.32 requires the court, in the absence of an agreement between the parties to designate the property to be comprised in the new tenancy to be the holding, defined in s.23(3) as the property comprised in the old tenancy, by reference to the circumstances prevailing at the time of the court's order. S.33 prescribes that the duration of the new tenancy shall be such as the court determines to be reasonable in all the circumstances but not exceeding 15 years. S.34 provides for the rent under the new tenancy to be such as may be agreed or "...in default of such agreement, may be determined by the court to be that at which, having regard to the terms of the tenancy (other than those relating to rent), the holding might reasonably be expected to be let in the open market by a willing lessor, there being disregarded the effect of the tenant's previous occupation, goodwill attached to the holding by the business carried on by the tenant and tenants' improvements. S.35 provides for the other terms of the new tenancy to be such as may be agreed or in default of agreement determined by the court "having regard to the terms of the current tenancy and to all relevant circumstances". The issues arising from HOTT's application under Part II Landlord and Tenant Act 1954.[11]The notice given under s.25 and the application of HOTT for the grant of a new tenancy have raised a number of issues. The first is the claim by ABP to be entitled to resist the grant of any new tenancy on the ground specified in s.30(l)(g). This is raised in the s.25 notice and in the defence to the claims of HOTT quoted in paragraph 4 above. There is no reply.

(g) At page 253 Asquith LI said:

"An "intention" to my mind connotes a state of affairs which the party "intending" - I will call him X - does more than merely contemplate: it connotes a state of affairs which, on the contrary, he decides, so far as in him lies, to bring about, and which, in point of possibility, he has a reasonable prospect of being able to bring about, by his own act of volition. X cannot, with any due regard to the English language, be said to "intend" a result which is wholly beyond the control of his will. He cannot "intend" that it shall be a fine day tomorrow: at most he can hope or desire or pray that it will. Nor, short of this, can X be said to "intend" a particular result if its occurrence, though it may be not wholly uninfluenced by X's will, is dependent on so many other influences, accidents and cross-currents of circumstance that, not merely is it quite likely not to be achieved at all, but, if it is achieved, X.'s volition will have been no more than a minor agency collaborating with, or not thwarted by, the factors which predominately determine its occurrence. If there is a sufficiently formidable succession of fences to be surmounted before the result at which X aims can be achieved, it may well be unmeaning to say that X "intended" that result."
If the defence succeeds then there will be no new tenancy so that no further issues will arise. If it fails then there will be issues as to the rent and, possibly, as to the other terms of the new tenancies.[12]The position in relation to rent is shown in the following table. Lease Existing rent £ New rent proposed by HOTT £ New Rent proposed by ABP £ Unit Lease 81,000 81,000 636,000 1.97 Acre 16,745 16,745 29,550 10 Acre 81,000 81,000 130,000 Jetty 4,045,334 2,850,000 23,000,000 Total 4,224,079 3,028,745 23,678,550 Thus, in the case of the rent to be paid under any new tenancy, the principal issues arise in relation to the jetty. There is some dispute as to what is the existing rent. The major issue concerns the rent to be paid under any new tenancy.[13]With regard to the other terms of any new tenancies there appears to be no dispute that they should be the same as those contained in the existing tenancies but subject to modernisation. It follows that any grant of a new tenancy of the jetty will include clause 6(a) exempting HOTT from payment of "any dues in respect of..vessels calling at or loading or unloading..oil products or goods at the demised premises or using the berths or any dues in respect of handled at the demised premises..." Strike out tests[14]The general principles to be applied on an application under CPR Rule 3.4 are well known and not in doubt. They are summarised in the judgment of Lewison J in The Federal Republic of Nigeria v Santolina Investment Corporation and others [2007] EWHC 437 (Ch) para 4. Their application to competition claims or defences was amplified in the judgment of Roth J in Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 (Ch) paras 17 and 18 in these terms:
"17. Moreover, it is important that competition claims are pleaded properly. To contend that a party has infringed competition law involves a serious allegation of breach of a quasi-public law, which can indeed lead to the imposition of financial penalties as well as civil liability. A defendant faced with such a claim is entitled to know what specific conduct or agreement is complained of and how that is alleged to violate the law. As Laddie J observed in BHB Enterprises Plc v Victor Chandler (International) Ltd [2005] EWHC 1074 (Ch) , [2005] EuLR 924 , at [43]: "
These are notoriously burdensome allegations, frequently leading to extensive evidence, including expert reports from economists and accountants. The recent history of cases in which such allegations have been raised illustrate that they can lead to lengthy and expensive trials." Subsequent experience only reinforces the accuracy of that observation. 18. This is not to adopt an over-technical approach to pleadings. It is consistent with the overriding objective to enable the case to be dealt with expeditiously and fairly. It is only through the clear articulation of each party's position in its statement of case, with appropriate factual detail, that the other side can know what case it has to meet and what issues any experts have to address, and that the court can effectively exercise its case management powers." The relevant competition Law[15]The claims made in the amended particulars of claim are founded on the provisions of Article 102 Treaty on the Functioning of the European Union and s. 18 Competition Act 1998. There is no material distinction between them. S.18 provides:
"18 Abuse of dominant position (1) ....any conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market is prohibited if it may affect trade within the United Kingdom. (2) Conduct may, in particular, constitute such an abuse if it consists in- (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) limiting production, markets or technical development to the prejudice of consumers; (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts. (3) In this section- "dominant position" means a dominant position within the United Kingdom; and "the United Kingdom" means the United Kingdom or any part of it."
Article 102 is in the same terms save that "between Member States" is substituted for "within the United Kingdom" in subsection (1) and there is no equivalent to subsection (3).[16]For the purposes of this application it is accepted by ABP that it is both an undertaking and in a dominant position in a relevant market. It is also accepted for the same purposes that if any conduct of ABP is properly to be regarded as an abuse of its dominant position then it may affect trade both within the United Kingdom and between Member States. The dispute is whether the conduct of ABP as alleged in the paragraphs of the amended particulars of claim summarised in paragraph 6 above was or is such an abuse.[17]Both parties relied on the decision of the Court of Appeal in Attheraces Ltd v BHB Ltd [2007] UKCLR 309 . In that case BHB Ltd possessed pre-race data, such as runners, riders, weights and draw number in respect of horse racing at all the racecourses in England and Wales which, in the absence of sufficient intellectual property rights, it sought to exploit by contractual means. It was not disputed that BHB occupied a dominant position in the relevant market for pre- race data. Attheraces complained that BHB had abused its dominant position by seeking to charge excessive prices and threatening to cut off supplies of pre-race data to Attheraces if it did not pay those prices, see paragraph 109. Etherton J had found that the prices BHB sought to charge were excessive and unreasonable and that it had threatened to cut off supplies to Attheraces if it refused to pay them. BHB appealed.[18]In giving the judgment of the court, Mummery LJ referred in paragraph 3 to the fact that, absent some express statutory jurisdiction, the court had no power to impose terms on parties whose negotiations for an agreement had failed. He set out the material facts of the appeal in paragraphs 54 to 95 in the course of which he said at paragraph 92:
"We repeat, however, that it is not in dispute that, as matter of both law and commercial reality, even in the absence of database or IP rights, BHB may legally seek to make a contractual charge to customers for the supply of pre-race data. The critical question in this case is whether, in the light of the restrictions of competition law, the price of the relevant product proposed by BHB, as a monopoly supplier in the relevant market, is excessive, unfair or discriminatory."
[19]Counsel for HOTT, in reliance on that paragraph, maintained that a proposal by a monopoly supplier in the course of negotiations to charge excessive, unfair or discriminatory prices is, without more, abusive conduct for the purposes of s. 18 and Article 102. But it is not helpful to select a paragraph from a lengthy judgment, particularly one appearing in a summary of the relevant facts, and treat it as a conclusion of either fact or law. It must be read in the context of the facts and the judgment as a whole. The claim of Attheraces was summarised by Mummery LI in paragraph 109 as:
"that, from about 10 February 2005, BHB threatened to cut off ATR's supply of pre-race data from PA unless ATR entered into a data licence with BHB or made the excessive payments demanded by BHB. ATR was an existing customer. The pre-race data were an essential facility for ATR. The threat to cut off access to the data was not, ATR argued, objectively justified nor were any of the demands made by BHB."
The Court dealt with the allegation of excessive pricing at some length, concluded that the judge had been mistaken and then considered whether there had been other abusive conduct.[20]Accordingly I reject the contention of counsel for HOTT that to propose, in the course of negotiations, prices which are excessive is of itself and without more abusive conduct within s.18 or Article 102. Put simply, such conduct cannot constitute any form of 'imposition' which those provisions require and the decision of the Court of Appeal in Attheraces, when properly read, does not suggest otherwise.[21]That decision is relevant in other respects in that it serves as a reminder as to the underlying purpose of s.18 and Article 102. As the Court of Appeal observed in paragraph 119:
"...the law on abuse of dominant position is about distortion of competition and safeguarding the interests of consumers in the relevant market. It is not a law against suppliers making "excessive profits" by selling their products to other producers at prices yielding more than a reasonable return on the cost of production, i.e. at more than what the judge described as the "competitive price level"
. Still less is it a law under which the courts can regulate prices by fixing the fair price for a product on the application of the purchaser who complains that he is being overcharged for an essential facility by the sole supplier of it." As the Court of Appeal pointed out in paragraph 215:
"...the principal object of Article [102] of the Treaty is the protection of consumers, in this case the punters, not of business competitors. In our judgment, this is correct, even if it is the competitors and not the consumers who are alleging abuse of dominant position. We need to look beyond ATR's immediate interests to the market served by ATR. There is little, if any, evidence that competition in the market is being distorted by the demands made by BHB upon ATR."
The relevant facts[22]Counsel for each party has taken me to a number of contemporary documents in order to demonstrate the course of the negotiations from March 2008 to the end of April 2010. No such documents for the earlier period covered by the amended particulars of claim namely 1995 to March 2008 were produced. Accordingly for the earlier period from 1995 to March 2008 there is only the allegation in the amended particulars of claim that in the course of the negotiations since 1995 ABP abused its dominant position by demanding excessive rents.[23]It is clear from the Board minutes of ABP that in July 2008 and following months ABP were in negotiations with HOTT to see whether a basis for the renewal of the leases existed "whilst retaining the option of taking back the land if this proved to be a more appropriate course of action". By the end of 2008 ABP had indicated to HOTT that it was its intention to take back the IOT when the leases expired. S.25 notices were duly served and detailed discussions in that context took place between ABP and HOTT in the earlier months of 2009. The Chief Executive of ABP justified this course to the Board of ABP on the basis that HOTT's offer of £10m per annum rent significantly undervalued the jetty in that direct operational control should yield £20m earnings before tax and depreciation. In letters dated 26th August and 3rd September 2009 the Port Director of ABP emphasised the need, from the point of view of at least ABP, to secure the seamless transfer of control of IOT without risking interruption of supplies to Total and Conoco. All parties were concerned to ensure security of supply via the IOT jetty. But in a letter dated 15th September 2009 from HOTT to ABP's Port Director the former expressed its concern whether its security of supply could be achieved under ABP's control of the facility. HOTT indicated in the same letter that it was examining the competition issues which might arise. ABP's response dated 29th September 2009 was to emphasise once again that meeting the requirements of HOTT was an operational priority for the future business of ABP at IOT. On 17th and 30th November 2009 ABP reiterated that its primary objective was to ensure that the interests of the two refineries were fully safeguarded. The response of HOTT dated 1st December 2009 repeated their view that security of supply necessitated exclusive possession of the IOT so that meaningful negotiations could only proceed on the basis of renewals of the leases.[24]Thus by the beginning of 2010 the basis for negotiations did not exist. Nevertheless on 26th March 2010 ABP submitted to HOTT a memorandum of understanding ("MOU") expressed to be subject to contract and intended to set out the principal terms to govern the operation of IOT on the footing that the leases were terminated. The terms included the grant of a 12 month period of exclusivity to HOTT renewable for a further 12 months during which any alternative proposals of HOTT would be considered by experts appointed by each party. In addition it was proposed that charges for services should be applied from the commencement of the agreement as follows:
"Combined ships dues and good dues £1.25/tonne Cargo handling £0.75/tonne The Charges for Services are inclusive of vessel berthing and mooring operations..."
[25]The MOU was considered by HOTT and ABP at a meeting held on 6th April 2010. The Chief Executive of ABP explained that it was not 'set in stone' but was put forward as a basis for discussion, negotiation and agreement. HOTT's mark up of ABP's draft note of the meeting clearly sets out the different position of the parties. It states:
"HOTT had repeatedly confirmed that their priority was security of supply of cargo to and from their refineries which they have asserted is served by retaining exclusive control of the terminal. ABP desires the opportunity to develop third party business alongside the existing (and future) volumes required by both ConocoPhillips and Total. ABP have always maintained that security of supply can be secured through robust commercial agreements without the need for an exclusive lease. HOTT however do not agree with ABP on this point."
Notwithstanding a further letter from ABP to HOTT the discussions proceeded no further before the amendments to the particulars of claim with which I am concerned were made.[26]The strike out application made on 17th November 2010 is supported by a witness statement of Mr Fitzgerald, the Port Director, and Mr Hanson, a former partner in the firm of solicitors acting for ABP. The evidence for HOTT is in a witness statement of Mr Rees, a partner in the firm of solicitors acting for HOTT. He exhibits reports from LECG and refers to another from Gerald Eve LLP described respectively as experts in assessing the economic value of assets and of the IOT jetty. In addition he refers to the preliminary view of Channoil Consulting Ltd, described as a firm with expert knowledge of the downstream oil industry, that "it is impossible for [ABP] to operate the IOT and service the needs of the refineries".[27]The LECG report was sought by the solicitors for HOTT in relation to paragraph 5.3(a)(iv) of the letter from the solicitors for ABP to those for HOTT dated 28th October 2010 I have referred to in paragraph 7 above. In paragraph 5.3(a) the solicitors for ABP complained that the allegation in paragraph 80.1 that in the negotiations to which I have referred ABP "sought to extract an excessive charge or price" was wholly unparticularised. In that connection they made four points set out in sub-sub-paragraphs (i)-(iv). The fourth set out, by reference to Sverige AB v Port of Helsingborg, four relevant considerations which the pleader of a competition claim ought to address. The conclusion of the writer of the LECG report was that:
"4.1..;when considering whether a price would be excessive in the light of the Scandlines/Helsingborg Decision the key issue is determining the economic value of the service provided, and that the other four issues raised in paragraph 5.3(a)(iv) of the Eversheds letter are matters that may be relevant to that determination. 4.2 When considering the economic value of a new 15 year tenant repairing lease over the IOT jetty infrastructure that sits on land leased from ABP, I would take into consideration each of these four issues to the extent that I consider that they are relevant."
Thus, the LECG report supports the contention of ABP that HOTT's case in respect of those considerations should be pleaded.[28]The report of Gerald Eve was sought, as set out in paragraph 3.2, "to determine the market rents of the demised premises on the assumption of a new year to year tenancy." In paragraph 5.5 the author of the report notes that the disregards for which s.34 Landlord and Tenant Act 1954 provides required him "to assess the rent, on an annual tenancy, for a jetty structure but with none of the infrastructure, which renders the jetty operational and capable of loading and unloading product, installed." In paragraph 5.7 he expresses the view that it would take 12 months and cost £64m to install that infrastructure. He concluded:
"8.12 The annual tenancy assumption and the specific disregard of all tenant's improvements means that we are required to value a jetty which will not be capable of use for a period of at least 12 months whilst the infrastructure is installed by the tenant. In this scenario ships of goods dues would not fall to be payable under to the Harbour Authority even if clause 6A were not present. 8.13 I therefore conclude that the market rent under S.24D is £1,900,000 per annum."
Neither party has suggested in the proceedings for a new tenancy that it should be a tenancy only from year to year. Accordingly this valuation has little if any relevance to any issue I have to decide. The application under CPR Rule 3.4[29]ABP contends that each of the allegations summarised in paragraph 6 above should be struck out under Rule 3.4. They fall into two groups. Those referred to in subparagraphs (1) and (2) relate to the negotiations for a new tenancy. Those summarised in subparagraphs (3) to (5) deal with the opposition of ABP to the grant of any new tenancy by relying on s.30(l)(g) and the consequences, as alleged by HOTT, if it is successful. The two groups need to be considered separately.[30]The first two complaints arise from paragraphs 64 and 65 of the amended particulars of claim. They allege:
"64. [HOTT] and [ABP] have been in negotiations regarding the renewal of the Leases since 1995. During the course of these negotiations, [ABP] abused its dominant position by demanding excessive rents in return for continued access to and use of IOT. The initial negotiations failed to make progress and recommenced in 2005. 65. Further or alternatively, [ABP]'s failure to offer and/or accept a non-abusive level of rent has led to the current proceedings in the context of which the defendant has continued to seek excessive rents for continued access to and use of the IOT."
Further details are set out in paragraphs 70 to 80 in respect of paragraph 64 and 81 to 84 in relation to paragraph 65. It is not necessary to set out any parts of any of them.[31]Counsel for ABP submits that these allegations are defective on their face for three reasons, namely(1) there is no proper pleading of the facts and matters relied on for the allegation that the rents sought are excessive in the context of an abuse of a dominant position,(2) putting forward a figure in the course of negotiation cannot amount to the 'imposition' of excessive prices for the purposes of either s.18 or Article 102, particularly in a case such as this where the final arbiter is the court applying (as in argument counsel for HOTT admitted) non- abusive principles and(3) there is no allegation that the conduct complained of has any effect on competition or consumers either in the United Kingdom or between Member States. Counsel for ABP points out that particulars have been sought in relation to the first objection but have been refused as unnecessary, in part because the allegation in question is one for expert evidence.[32]In response counsel for HOTT points out that some of the negotiations were without prejudice thereby inhibiting HOTT in proving some of the alleged demands. He contends that a mere proposal can amount to abusive conduct and relies on the decision of the Court of Appeal in Attheraces Ltd v BHB Ltd [2007] UKCLR 309 at paragraphs 3 and 92, referred to in paragraph 18 above as establishing that proposition. However he accepts that any rent fixed by the Court under s.34 could not be abusive, not least because any ransom element would be excluded from consideration, see Northern Electric Plc v Addison [1997] EWCA Civ 1854, (1999) 77 P&CR 168. He submits that it is not necessary to allege or particularise the facts and matters relied in support of the allegation of abusive pricing or effect on trade because those are matters for expert evidence. He contends that the failure of HOTT to respond constructively in the reply from its solicitors dated 15th November 2010 to the request for clarification from the solicitors for ABP dated 28th October 2010 should not be taken account of as it was not a formal request for information under CPR Part 18.[33]I have no hesitation in preferring the submissions of counsel for ABP. As I have already held in paragraph 20, the decision of the Court of Appeal in Attheraces Ltd v BHB Ltd does not establish that a proposal, made in the course of negotiations, of a rent or price which is excessive can without more constitute the imposition of an unfair rent or price for the purpose of s.18 and Article 102. Further, in a case such as this, any element of compulsion which might arise from the dominant position of the proposer is negatived by the jurisdiction of the Court, in the absence of agreement, to assess the rent or price on the basis of a statutory formula which necessarily excludes any ransom element. Even if the landlord does occupy a dominant position and even if he does seek the payment of excessive rent all the other party need do is refer the matter to the Court for its adjudication.[34]I also accept that the failure of HOTT to make any attempt at particularising the facts and matters relied on to establish either that the rents proposed were excessive to the point of being unfair for the purposes of s. 18 and Article 102 or of any effect on competition and consumers also justifies striking out these allegations. The fact that expert evidence will be required to establish the allegation, so far from being a reason not to particularise it, is a powerful indication of the opposite. For example, the report of Gerald Eve does not establish that any rent sought by ABP was so excessive as to be unfair. Further, it is essential that, for example, the matters alluded to by the author of the LECQ report are properly pleaded and particularised so that the other party may know the case he has to meet. Further the fact that the request for their production was not formally made under Part 18 is no justification for not pleading them properly in the first place. Indeed the contrary submission of counsel for HOTT appears to disregard the overriding objective prescribed by CPR Part 1.[35]In this context I should also notice a point relied on in paragraphs 78 and 80 of the amended particulars of claim. Complaint is there made about the passage in the MOU relating to harbour charges, see paragraph 24 above. But that was not a proposal for terms of a renewed lease. Indeed both parties have accepted in their pleadings that clause 6(a) of the Jetty lease exempting HOTT from any liability in respect of them should be carried forward to any renewed lease. Nor was it more than a proposal put forward in negotiations. In any event it was rejected. Whether or not the proposal, as put in the MOU, would have circumvented the appeal procedure provided by s.31 Harbours Act 1964 seems to me to be irrelevant to anything I have to decide.[36]For these reasons I will strike out paragraphs 64, 65, 70-80 (both inclusive) and 81 - 84 (both inclusive). In addition the words "in seeking to obtain an excessive rent for the renewal of the leases and/or" in paragraph 2 of the claim set out in the amended particulars of claim should also be struck out.[37]The third complaint summarised in paragraph 6 above arises from paragraph 66 of the amended particulars of claim which alleges:
"66. Further or alternatively, [ABP]'s attempted reliance on ground (g) of Section 30(1) of the 1954 is a further abuse of its dominant position."
Counsel for ABP contended that this allegation was unmaintainable. Counsel for HOTT suggested that ABP had misread this paragraph and that it was no more than a bridge between paragraphs 64 and 65 on the one hand and paragraphs 67 and 68 on the other. I accept that mere reliance on ground (g) of s.30(l) cannot of itself amount to an abuse of a dominant position. Accordingly, this paragraph is either struck out with paragraphs 67 and 68, if that is my conclusion, or should be amended by the insertion of some such words as "hereafter described" after the words "attempted reliance".[38]I turn then to paragraphs 67 and 68 in the context of the allegations summarised in paragraphs (4) and (5) of paragraph 6 above. They are in the following terms:
"67. Further or alternatively, [ABP]'s professed intention to take over the operation of the IOT is abusive because die IOT cannot be operated as a business unit independently of the refineries and [ABP] lacks the knowledge and resources to operate IOT efficiently, effectively, or at all. 68. In the further alternative, [ABP]'s conduct is abusive in that it is exercising its rights as owner of the land on which the main part of the IOT is situated as a means of acquiring all or that part of the business of APT concerned with the IOT, SKJ, and the IGJ. As a consequence of occupying the land, ABP, through such abusive conduct, would, in practice, acquire all of [HOTT]'s equipment used for operating that part of the terminal on terms entirely suited to its commercial self-interests."
[39]These allegations are amplified in paragraphs 69 and 85 - 100 (both inclusive). The alleged conclusion is set out in part of paragraph 101 in these terms:
"If..[ABP] is successful in reliance on ground (g) of s.30(l) of the 1954 Act, then it seeks to obtain the business of APT and, on the current proposal, an additional £40m in dues and fees per annum in circumstances where [HOTT] does not have any practical or economically viable alternative but to rely upon the IOT for the import and export of crude and refined products."
[40]Finally I should note that in paragraph 102 HOTT indicates that it intends to rely on the allegations made in paragraphs 90 to 96 "...in order to negative any intention on [ABPJ's part to occupy the holding for the purposes, or partly for the purposes, of a business to be carried on by him therein." In the light of the statement of principle in Cunliffe v Goodman [1950] 2 KB 237 referred to in paragraph 11 above HOTT are entitled to rely on the allegations contained in those paragraphs for that purpose. But then they are proper matters for reply not for particulars of claim. Accordingly, those paragraphs in the amended particulars of claim stand or fall with the claims made in paragraphs 67 and 68.[41]In paragraphs 90 to 96 HOTT sets out at some length the various features of the operation of IOT on which it relies for the allegation made in paragraph 67 and repeated in paragraph 88. They are, in summary:(1) 'As it stands' the IOT could not accommodate any third party traffic;(2) The operation of IOT and the refineries is dependent on the use of the common pumping station on other land of Conoco;(3) The operation of IOT by APT cannot be separated from that of the refineries;(4) The IOT can only be operated with the skill, know-how, personnel and assets of APT;(5) The current use of the berths on the jetty would not admit of additional use by third parties;(6) Accordingly ABP could not itself operate the IOT.[42]Counsel for ABP observes that such facts and matters largely depend on the acts and omissions of HOTT in that they depend on the controllers of HOTT, Total and Conoco, refusing to co-operate with ABP and preventing APT from doing so either. He contends that the self-harming conduct of HOTT cannot give rise to abusive conduct on the part of ABP.[43]Counsel for HOTT relies on the decision of the European Court of Justice in Merci Convenzionali porto di Genova v Siderurgica Gabrielli [1991] ECR I-5889 . In that case an importer of goods into Italy via the Port of Genoa was obliged by Italian law to use specific organisers of dock labour. The importer claimed compensation from those organisers for sums it had been obliged to pay the dockers for services for which it had not asked and for damage arising from the delay in delivery. The court noted that the creation of a statutory monopoly was not necessarily incompatible with Article 86 (now article 102). It continued:
"17 However, the Court has had occasion to state, in this respect, that a Member State is in breach of the prohibitions contained in those two provisions if the undertaking in question, merely by exercising the exclusive rights granted to it, cannot avoid abusing its dominant position (see the judgment in Case C-41/90 Hoefner, [1991] ECR I-1979 , cited above, paragraph 29) or when such rights are liable to create a situation in which that undertaking is induced to commit such abuses (see the judgment in Case C-260/89 ERT, [1991] ECR I-2925 , cited above, paragraph 37). 18 According to subparagraphs (a), (b) and (c) of the second paragraph of Article 86 of the Treaty, such abuse may in particular consist in imposing on the persons requiring the services in question unfair purchase prices or other unfair trading conditions, in limiting technical development, to the prejudice of consumers, or in the application of dissimilar conditions to equivalent transactions with other trading parties. 19 In that respect it appears from the circumstances described by the national court and discussed before the Court of Justice that the undertakings enjoying exclusive rights in accordance with the procedures laid down by the national rules in question are, as a result, induced either to demand payment for services which have not been requested, to charge disproportionate prices, to refuse to have recourse to modern technology, which involves an increase in the cost of the operations and a prolongation of the time required for their performance, or to grant price reductions to certain consumers and at the same time to offset such reductions by an increase in the charges to other consumers. 20 In these circumstances it must be held that a Member State creates a situation contrary to Article 86 of the Treaty where it adopts rules of such a kind as those at issue before the national court, which are capable of affecting trade between Member States as in the case of the main proceedings, regard being had to the factors mentioned in paragraph 15 of this judgment relating to the importance of traffic in the Port of Genoa."
[44]Counsel for HOTT contends that the activities of ABP, if its defence to the claim for a new tenancy fails, will constitute an abuse by "imposing on the persons requiring the services in question unfair purchase prices or other unfair trading conditions, in limiting technical development, to the prejudice of consumers". But I see nothing in that case or in s.18 or Article 102 which requires an undertaking, even if in a dominant position, in order to be efficient, to employ any particular sub-contractor or to continue any particular trading system.[45]Counsel for ABP points out that there is no pleading of any necessary anti competitive effect. Counsel for HOTT submits that such an effect is self-evident. I do not agree. The dictum of Roth J in Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 (Ch) paras 17 and 18 which I have quoted in paragraph 14 above shows that proper pleading is needed.[46]In my view the allegations made in paragraphs 67 and 85 to 96 should be struck out for a number of reasons. First, there has been inadequate distinction drawn between the reply to ABP's reliance on s.30(l)(g) and the alleged competition claim. Many of the factual points made in those paragraphs may be relevant to the issue presently before the court whether ABP has the relevant intention as explained by Asquith LJ in Cunliffe v Goodman [1950] 2 KB 237. But if and to the extent to which they are so relevant they have no place in amended particulars of claim. They should be asserted, if at all, in a reply to ABP's defence. This is not mere pedantry. The confusion between the two issues, so apparent from the amended particulars of claim, will, if continued, increase costs, lengthen the hearing, confuse the issues and unduly complicate matters.[47]Second, the issues raised in paragraph 67 and other associated paragraphs is not a present question. Unless and until the defence of ABP to the claim for a new tenancy succeeds this competition claim cannot arise. Third, if the defence of ABP does succeed so that these issues then arise, then, as the dealings between the parties since the end of 2008 and the pleading of the defence under s.30(l)(g) quoted in paragraph 4 above clearly demonstrate, there are bound to be further negotiations in which ABP is willing to participate. The upshot of those negotiations cannot now be foreseen. I do not see how the past negotiations can amount to the abuse of a dominant position in such unknown future circumstances.[48]Fourth, even if the competition claim was a present issue and even if it could be assumed that there would be no further negotiations there is no proper pleading of the anticompetitive effect of what is alleged. The combined effect of all these considerations is, in my view, that the facts now relied on cannot come within s.18 and Article 102 on the basis of the decision of the European Court of Justice in Merci Convenzionali porto di Genova v Siderurgica Gabrielli or otherwise.[49]Finally, I turn to the allegation in paragraph 68, quoted in paragraph 38 above. This is amplified in paragraphs 97 to 100. In summary, those paragraphs assert that:(1) ABP as freehold owner will expropriate part of the refining facilities of HOTT by retaking possession of the land;(2) ABP threatens in the MOU to introduce ships and goods dues beyond the normal economic value of the facilities offered. The conclusion expressed in paragraph 100 is that ABP's actions as freeholder of the land constitute a further abuse of its dominant position.[50]Counsel for ABP submits that these allegations should also be struck out on the ground that the exercise of its property rights by ABP cannot amount to abusive conduct and there is nothing in Merci Convenzionali porto di Genova v Siderurgica Gabrielli or elsewhere to suggest that it could. He points out, as the documents clearly establish, that the MOU was a negotiating document. He submits that even if HOTT is correct in estimating that any such liability for dues as it proposes would create an annual liability of £40m that does not begin to establish the imposition of unfairly excessive charges. Counsel for HOTT disputes each of these submissions. He relies on the fact that on the hypothesis that ABP is in possession of the IOT HOTT will have little alternative but to agree with ABP's proposals.[51]In my view paragraphs 68 and 97 to 101 should also be struck out. First, unless and until the defence of ABP to the claim of HOTT to a new tenancy has succeeded this issue cannot arise. Second, if that defence does succeed, the exercise of ABP's property rights, without more, cannot constitute an abuse of a dominant position for the purposes of either s.18 or Article 102. Third, HOTT and APT will also have property rights in relation to tenant's fixtures, such as pipework, and similar matters and the common pumping station to which ABP has no claim. They will necessarily trigger further negotiations if the intention of ABP, as pleaded in its defence, is to be implemented. Accordingly the position as it is now cannot be treated as demonstrating what it will be if and when the defence of ABP has succeeded. As I have said before, I do not see how the present situation can amount to the abuse of a dominant position in unknown future circumstances. Finally no proper particulars have been given of how, why and in what respect any such conduct would affect customers or be anti competitive. Conclusion[52]For all these reasons I will strike out all the so-called competition claims. As the amended particulars of claim were served for the purpose of pleading the competition claims for which the deputy master had given permission the simplest course is to strike out the whole of the amended particulars of claim and direct that the original particulars of claim be reinstated. I recognise that that would go some way beyond the relief sought by ABP. If it is to be regarded as excessive then I will simply strike out all the paragraphs specified in the application notice. In this event I do not need to deal with the claim for summary judgment.[53]I have recognised that some part of the amended particulars of claim may be relevant to the case of HOTT in resisting the defence of ABP under s.30(l)(g). To that extent it should be pleaded, if at all, in a reply properly directed to that issue. Accordingly I will give leave to HOTT to apply, within 21 days, to a judge of the Chancery Division for leave to serve a reply out of time. The application must be made in respect of a fully pleaded draft of which a copy has been served on ABP not less than 7 days before the application is made.[54]I will hear further argument on any matters consequential on this judgment. Subject to that I invite counsel to agree a minute of order for giving effect to my conclusions.

Cited in 4 later judgments