“19A. Prior to HOK’s involvement, Mr Darke was operating ZL by himself, from a small rented industrial unit in Irlam, and creating the recipes, mixing, bottling and labelling the drinks himself, as well as delivering them to HOK in person. Mr Darke had few industry connections, little experience of the industry, and no additional personnel resources until his brother Callum Darke joined him on a date believed to be in late 2016. During the course of 2016 and 2017 HOK worked closely with ZL, to enable Mr Darke to develop ZL’s business, and Mr Darke relied heavily upon HOK’s assistance, expertise and resources. For example:- 19A.1 HOK personnel communicated with ZL, often numerous times a day, and provided ZL with confidential information which would not normally be supplied in the course of a producer-wholesaler relationship, such as information concerning new customers and their requirements, anticipated orders and volumes, and other information relevant to ZL’s production schedules, stock availability and delivery dates. 19A.2 In March 2017, Mr Hammond advanced the sum of£27,000 to ZL by way of an EIS investment into ZL to enable ZL to purchase a new still. Pending finalisation of the investment structure, Mr Darke sent Mr Hammond an email dated23 March 2017 attaching a ‘Rough for a Loan’ which acknowledged the preference for the sum to be converted to equity with EIS “when shares are ready”; that the repayment method could be switched to “monthly instalments at a fair market rate of interest”, and that ZL “promises to make this a freaking awesome adventure and [Mr Hammond] must promise to come down and have a turn on the still otherwise this contract remains null and void.”
“ 20A by reason of the facts and matters pleaded at paragraph 19B above, by conduct and/or by necessity (to achieve the obvious intentions of the parties and/or for business efficacy), the following terms were to be implied into each Specific Supply Agreement:- 20A.1 That ZL would not directly supply or attempt to directly supply its products to customers who were the subject of the Specific Supply Agreement while the Specific Supply Agreement remained in place. 20A.2 In order to maintain the listing, that ZL would ensure that it was always able to provide sufficient stock to HOK (at the price agreed in the particular Specific Supply Agreement) to avoid the customer having any shortage of a necessary product. 20A3. That each party would provide the other with such reasonable cooperation as was necessary to the performance of that other party’s obligations under or by virtue of the Specific Supply Agreement. 20A.3 That ZL would not change the prices or specifications of the relevant products without the agreement of HOK; 20A.4 That the Specific Supply Agreement would continue until the customer no longer listed or required the product or, alternatively, until terminated by either party giving reasonable notice which, in all the circumstances of this matter, HOK alleges would have been at least 12 months’ notice; and 20A.5 That neither party would terminate the Specific Supply Agreement arbitrarily, irrationally or capriciously. 20B. Further or alternatively, each of the Specific Supply Agreements referred to at 20 above (and further particularised below and in Schedule 1) comprised a “relational contract” for the same reasons as pertained to the Master Wholesale Agreement, in respect of which paragraphs 19A and 19C above are repeated. In consequence of each Specific Supply Agreement being a relational contract the following terms were to be implied into it:- 20B.1 Each of the terms pleaded at paragraphs 19D.1 and 19D.2 above, which are repeated; and 20B.2 Each of the terms pleaded at paragraphs 20A.1 to 20A.4 above, which are repeated.”
“…shows that (a) the interpretation of a purely written contract is a matter of law, and depends on a relatively objective contextual assessment, which almost always excludes evidence of the parties’ subjective understanding of what they were agreeing, but (b) the interpretation of an oral contract is a matter of fact (I suggest inference from primary fact), rather than one of law, on which the parties’ subjective understanding of what they were agreeing is admissible.”
“The judge began his consideration of the issues by citing two well-known dicta. The first stated that no contract should be implied on the facts of any given case unless it is necessary to do so in order to give business reality to a transaction and to create enforceable obligations in circumstances in which one would expect such enforceable obligations to exist (May LJ at page 115 in The Elli 2 [1985] Lloyd's LR 107). The second expressed 3 propositions: (a) that contracts are not to be lightly implied, (b) that the court must be able to conclude with confidence both that the parties intended to create contractual relations and that the agreement was to the effect contended for, and (c) that in most cases the court must be able to answer the question ‘what was the mechanism for offer and acceptance?’ (Bingham LJ at page 1202 in Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council[1990] 1 WLR 1195 ).”
“ It is important, in my judgment, to avoid reading the helpful dicta in the cases concerning implied contracts as if they were prescriptive deeds. The most significant aspect of the consideration of whether to imply a contract is the court's consideration of all the circumstances and, in particular, of the conduct of the parties. Mance LJ gave two informative judgments on the subject in 2001 in Baird Textiles supra and in Modahl v. British Athletic Federation Ltd[2002] 1 WLR 1192 . The first principles stated in the latter judgment at paragraph 100 are valuable: "[f]or there to be a contract, there must be (a) agreement on essentials of sufficient certainty to be enforceable, (b) an intention to create legal relations and (c) consideration". At paragraph 102, Mance LJ continued by explaining the distinction between express and implied contracts: "[w]here there is an express agreement on essentials of sufficient certainty to be enforceable, an intention to create legal relations may commonly be assumed … It is otherwise when the case is that a contract should be implied from the parties' conduct … It is then for the party asserting a contract to show the necessity for implying it". In this case, the question of intention to create legal relations is, I think, the central point, because UK submits with some force that what it did was as consistent with the intention to contract directly with Services, as it was with a number of other possible scenarios. It is for this reason that the intention of the parties may be relevant in determining the existence of an implied contract (see Lord Hoffmann's speech at pages 2050-2051 in Carmichael v. National Power plc[1999] 1 WLR 2042 ). This is echoed by Bingham LJ in Blackpool Aero Club supra at page 1202, where he said that "[h]aving examined what the parties said and did, the court must be able to conclude with confidence both that the parties intended to create legal relations and that the agreement was to the effect contended for ".”
“ Occasionally, where it proves impossible to discern a clear offer or a clear acceptance then, when judged objectively, a contract may still be found to have been made since the canons of offer and acceptance are not the last word and may be incapable of precise application.”
“ … it is important to consider briefly the approach to be adopted to the issue of contract formation in this case. It seems to me that four matters are of importance. The first is the fact that English law generally adopts an objective theory of contract formation. That means that in practice our law generally ignores the subjective expectations and the unexpressed mental reservations of the parties. Instead the governing criterion is the reasonable expectations of honest men. And in the present case that means that the yardstick is the reasonable expectations of sensible businessmen. Secondly, it is true that the coincidence of offer and acceptance will in the vast majority of cases represent the mechanism of contract formation. It is so in the case of a contract alleged to be made by an exchange of correspondence. But it is not necessarily so in the case of a contract alleged to have come into existence during and as a result of performance. See Brogden v Metropolitan Railway(1877) 2 AC 666 ; New Zealand Shipping Co Ltd v A.M. Satterthwaite & Co Ltd [ 1974] 1 Lloyd's Rep 534 at p.539, Col 1;[1975] AC 154 at p.167 D-E; Gibson v Manchester City Council[1979] 1 WLR 294 . The third matter is the impact of the fact that the transaction is executed rather than executory. It is a consideration of the first importance on a number of levels. See British Bank for Foreign Trade Ltd v Novinex[1949] 1 KB 628 , at 630. The fact that the transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations. It will often make it difficult to submit that the contract is void for vagueness or uncertainty. Specifically, the fact that the transaction is executed makes it easier to imply a term resolving any uncertainty, or, alternatively, it may make it possible to treat a matter not finalised in negotiations as inessential. In this case fully executed transactions are under consideration. Clearly, similar considerations may sometimes be relevant in partly executed transactions. Fourthly, if a contract only comes into existence during and as a result of performance of the transaction it will frequently be possible to hold that the contract impliedly and retrospectively covers pre-contractual performance. See Trollope & Colls Ltd. v. Atomic Power Construction Ltd[1963] 1 WLR 333 . ”
“I consider that there is a specie of contracts, which are most usefully termed “relational contracts”, in which there is implied an obligation of good faith (which is also termed “fair dealing” in some of the cases). This means that the parties must refrain from conduct which in the relevant context would be regarded as commercially unacceptable by reasonable and honest people. An implied duty of good faith does not mean solely that the parties must be honest. ”
“[142]…“relational” contracts, as they are sometimes called, may require a high degree of communication, cooperation and predictable performance based on mutual trust and confidence and involve expectations of loyalty which are not legislated for in the express terms of the contract but are implicit in the parties’ understanding and necessary to give business efficacy to the arrangements .”
“…I consider the following characteristics are relevant as to whether a contract is a relational one or not: 1. There must be no specific express terms in the contract that prevents a duty of good faith being implied into the contract. 2. The contract will be a long-term one, with the mutual intention of the parties being that there will be a long-term relationship. 3. The parties must intend that their respective roles be performed with integrity, and with fidelity to their bargain. 4. The parties will be committed to collaborating with one another in the performance of the contract. 5. The spirits and objectives of their venture may not be capable of being expressed exhaustively in a written contract. 6. They will each repose trust and confidence in one another, but of a different kind to that involved in fiduciary relationships. 7. The contract in question will involve a high degree of communication, co-operation and predictable performance based on mutual trust and confidence, and expectations of loyalty. 8. There may be a degree of significant investment by one party (or both) in the venture. This significant investment may be, in some cases, more accurately described as substantial financial commitment. 9. Exclusivity of the relationship may also be present.”
“I hesitate to describe this as an exhaustive list. No single one of the above list is determinative, with the exception of the first one. This is because if the express terms prevent the implication of a duty of good faith, then that will be the end of the matter. However, many of these characteristics will be found to be present where a contract is a relational one. In other cases on entirely different facts, it may be that there are other features which I have not identified above which are relevant to those cases.”
“The true rule, which is not confined to contracts of employment but applies to contracts generally, is that a contract which contains no express provision for its determination is generally (though not invariably) subject to an implied term that it is determinable by reasonable notice: see Chitty on Contracts (28th Ed.) at para. 13-025. The implication is made as a matter of law as a necessary incident of a class of contract which would otherwise be incapable of being determined at all. Most contracts of employment are of indefinite duration and are accordingly terminable by reasonable notice in the absence of express provision to the contrary.”
“208. The principles are well established and may be summarised as follows: (1) Conduct is repudiatory if it deprives the innocent party of substantially the whole of the benefit he is intended to receive as consideration for performance of his future obligations under the contract. Development Inc. 66, 72; The Nanfri at pp. 778G-779D. (2) Conduct is renunciatory if it evinces an intention to commit a repudiatory breach, that is to say if it would lead a reasonable person to the conclusion that the party does not intend to perform his future obligations where the failure to perform such obligations when they fell due would be repudiatory: Universal Carriers v Citati at p. 436, The Afovos at p. 341 col 2. (3) Evincing an intention to perform but in a manner which is substantially inconsistent with the contractual terms is evincing an intention not to perform: Ross T Smyth & Co Ltd v T.D. Bailey, Son & Co[1940] 3 All ER 60 , 72. Whether such conduct is renunciatory depends upon whether the threatened difference in performance is repudiatory… (4) An intention to perform connotes a willingness to perform, but willingness in this context does not mean a desire to perform despite an inability to do so. As Devlin J put it in Universal Carriers v Citati at p. 437, to say: “I would like to but I cannot” negatives intent just as much as “I will not.” 209. …The reason why a defaulting party commits an actual breach is generally irrelevant to whether it constitutes a breach, or whether the breach is a repudiation. But the reason may be highly relevant to what such breach would lead the reasonable observer to conclude about the defaulting party's intentions in relation to future performance, and therefore to the issue of renunciation. Often the question whether conduct is a renunciation falls to be judged by reference to the defaulting party's intention which is objectively evinced both by past breaches and by other words and conduct.”
“ In this regard I would say something about the importance of contemporary documents as a means of getting at the truth, not only of what was going on, but also as to the motivation and state of mind of those concerned. That applies to documents passing between the parties, but with even greater force to a party's internal documents including emails and instant messaging. Those tend to be the documents where a witness's guard is down and their true thoughts are plain to see. Indeed, it has become a commonplace of judgments in commercial cases where there is often extensive disclosure to emphasise the importance of the contemporary documents. Although this cannot be regarded as a rule of law, those documents are generally regarded as far more reliable than the oral evidence of witnesses, still less their demeanour while giving evidence.”
“Witnesses of fact and those assisting them to provide a trial witness statement should understand that when assessing witness evidence the approach of the court is that human memory: (1) is not a simple mental record of a witnessed event that is fixed at the time of the experience and fades over time, but (2) is a fluid and malleable state of perception concerning an individual’s past experiences, and therefore (3) is vulnerable to being altered by a range of influences, such that the individual may or may not be conscious of the alteration.”
“50. In a case such as the present, where the events in question took place over 9 years before the trial and occurred in a narrow period of around 3 weeks, the salutary warnings about the recollections of witnesses in Gestmin SGPS SA v Credit Suisse UK Ltd[2015] EWHC 3560 at [22] and Blue v Ashley[2017] EWHC 1928 at [68] are pertinent. It was therefore of paramount importance for the Judge to test that evidence against the contemporaneous documents and known or probable facts if and to the extent that it was possible to do so. 51. We say, “if and to the extent that it was possible to do so”, because it is important to bear in mind that there may be situations in which the approach advocated in Gestmin will not be open to a judge, or, even if it is, will be of limited assistance. There may simply be no, or no relevant, contemporaneous documents, and, even if there are, the documents themselves may be ambivalent or otherwise insufficiently helpful. The case could be one about an oral promise which turns entirely on the word of one person against another’s, and the uncontested facts may well not point towards A’s version of events being any more plausible than B’s. Even in a case which is fairly document-heavy (as this one was) there may be critical events or conversations which are completely undocumented... 52. Faced with documentary lacunae of this nature, the judge has little choice but to fall back on considerations such as the overall plausibility of the evidence; the consistency or inconsistency of the behaviour of the witness and other individuals with the witness’s version of events; supporting or adverse inferences to be drawn from other documents; and the judge’s assessment of the witness’s credibility, including his or her impression of how they performed in the witness box, especially when their version of events was challenged in cross-examination. Provided that the judge is alive to the dangers of honest but mistaken reconstruction of events, and factors in the passage of time when making his or her assessment of a witness by reference to those matters, in a case of that nature it will rarely be appropriate for an appellate court to second-guess that assessment.”
“• Full Strength Gin - such as Gordons and Bombay Sapphire - is juniper-based, typically dry and served with a low sugar/regular Indian Tonic Water and a simple garnish over ice. This more traditional “serve” is popular with both the Baby Boomer (born between 1946– 1964) and Generation X (born between 1965-1980) consumer classifications. • Flavoured Gin - such as Gordons Pink Gin - fruity and flavoursome, these are a relatively new introduction to the gin category, with sales volumes only starting to register from 2014 onwards. Typically served with more challenging tonic variations such as Elderflower, Clementine, Mediterranean or Rosemary, with a fresh fruit garnish such as grapefruit or strawberry, over ice. Flavoured Gin appeals to consumers who wish to trade up from the more traditional serve and experiment, have more disposable income and are prepared to spend a little more on their night out or at-home-affordable treat. Flavoured Gins can be further distinguished between “standard”
“ Q. As compared to a discount, what is the difference? A. Some customers like to receive a retro because it goes into a pot. Q. Right. A. They want that separately. Q. Yes. A. You would say: “Oh, we can give it you off invoice” and they will say: “Oh no, no, no, we would prefer to have that separately. We will invoice you for it.”
“ Next door were Kingsland Drinks Ltd (“KDL”), operating one of Europe’s largest bottling facilities and a supplier of wines and spirits to supermarkets. We made contact with KDL and we learnt a lot about the spirits and wine world and how it functions from them. In collaboration with KDL we got our brand into supermarkets such as Marks and Spencer (“M&S"). KDL were wholesaling and promoting our brand to supermarkets before we started to supply product to HOK .”
“I told Aaron that his products would fit in well as one of our “Agency Brands”
“ We agreed that [AD] would continue looking after the small accounts he already had. For us it would have been more trouble than it was worth having to deliver the odd bottle here and there, so he was happy to carry on doing that. But apart from those few accounts, we agreed that all other sales would go through us.”
“It was agreed between the Claimant and the Defendant that the Defendant would be the exclusive wholesaler of the Claimant’s Zymurgorium products in the sense that all Zymurgorium products (with the exception of a few small accounts) would go through the Defendant, and the Defendant would then sell on those products, including to other wholesalers.”
“1. That HOK was [ZL]’s main wholesaler for the UK; 2. That where arrangements for distribution of [ZL]’s products via HOK were agreed between us in relation to specific products and/or specific customers, such as for Wetherspoon/MC, those arrangements would not be materially changed by [ZL] without [HOK’s] consent; and 3. That neither party would terminate the Agreement without first giving the other reasonable notice of termination .”
“From our perspective, you are one of a few companies we feel we have an extra special relationship with, and are enjoying working closely with. With yourself, you are a new supplier, but we are looking forward to the future, of many years enjoyment in developing our business together, and hoping you have keep having confidence in us to be your Master Wholesaler.”
“We’d therefore like to know more about your process of listing products as I’m sure you hear many product offers every day. We supply wholesale-wholesale through Hammonds… 59.5 On16 July 2016 , AD emailed a business called Beers of Europe, a beer superstore, stating, “ … our beers are available through Hammond’s of Knutsford as our primary wholesaler…”
“…our primary wholesaler is Hammond’s of Knutsford who probably have the best gin selection of any UK wholesaler so hopefully you might be able to find other products from Jon (CC’d) that you’re [18] customers have been longing for! ”l 59.9 In response to an email from Ancoats General Store seeking to order two bottles of ZL’s vodka dated, AD said in an email dated9 December 2016 , “ The order has to go through Hammond’s of Knutsford.”
“… The UK agency side of Hammonds of Knutsford has developed quickly in 2016, and I feel we have a portfolio of products that stands apart from its peers. Your product has certainly enabled us to do this, and in it’s own right are unique and desirable. As you will have seen from our repeat orders, there has been good growth, that we carry in to 2017 with great optimism. Working alongside each other we feel we should all benefit and that there remains many exciting opportunities in 2017, with some planned and I am sure some that will just present themselves!!! I believe our respective businesses are perfectly aligned for the continued development of your product in the UK market, and should you ever need to speak to me then please always feel free to pick up the phone. Developing an even closer relationship remains part of my 2017 strategic plan, and I am sure as we continue to work more and more together we will all reap the rewards… Just to let you know, we have some high profile customers we are either already speaking with, or have contacted, with a view of hoping they will wish to stock your product. Once again I want to thank you for having the confidence in us to distribute your product, exclusively in the UK, and wish you all the success for 2017...”
“ Q: … Now, you accept, do you, sorry, do you accept that HOK was promoting 33 Zymurgorium as one of its 20 agency brands? A. My Lord, yes, I admit that there is this agency brochure, but this is not something that was proposed to us the very beginning. Q. What I am suggesting to you is that HOK was, to your knowledge, sending out material promoting you as one of its agency brands. A. Yes. Q. You never disagreed with that, and said: “Why are you doing this? What is all this agency brand stuff?” did you? A. Well, because there was never any talk of any exclusivity of any sort. This is something that came in and was developed later, as you can see, by 2017. In 2015 this was not a thing .”
“Contractual Agreement on Loan from Jon Hammond to Zymurgorium Ltd. Reason for Loan: purchasing of equipment (Istill NextGen 2000) Total Sum Required:£27,000 Requirement date:01/04/2017 (not a prank I promise … ) Payments schedule for equipment:06/04/2017 = 16275 euros Before delivery= 13950 euros Conditions on loan: Preferable form of repayment from payer is convertible equity via EIS when shares are ready. If the Zymurgorium Ltd becomes insolvent Aaron Darke MD of Zymurgorium Ltd will become guarantor for the amount owed to Jon Hammond. The payer may if suits them switch repayment method to monthly instalments at a fair market rate of interest. Repayment terms will be discussed and amended at a later date or the moment if the Zymurgorium Ltd becomes insolvent (if capital has yet been transferred). Zymurgorium Ltd also promises to make this a freaking awesome adventure and Jon must promise to come down and have a turn on the still otherwise this contract remains null and void ...”
“Paragon would be an importer-distributor. It would be given the sole rights to sell products by their brand-owners, mostly based outside the UK. It would sit above wholesalers, and all other trade buyers, and act like the brand-owner in the market, handling all marketing, sales and brand development. Anyone wanting to purchase these brands would source them from Paragon. Paragon would utilise the HOK order and invoicing system, taking its profits from the transaction after processing of payment. Jonathan and I agreed to form Paragon as a company owned 50/50 by the two of us.”
“41. At the meeting I used a board on my office wall to illustrate the key points I wanted to get home to Aaron. A photograph taken by me on24 November 2017 shows a Paragon sales team member, Marcus Baxendale, in my office at HOK’s premises and, on the right-hand wall, the whiteboard in question. The diagrams on the whiteboard, which I had left there since the meeting, illustrate: (a) my view as to how Aaron/Zymurgorium’s business focus - as a percentage of their time and efforts - should be split between Sweet Violet (Sweet Violet), Turkish Delight (TD) and everything else (EE). I sketched a pie chart to illustrate my view that 80% or more of Aaron/Zymurgorium ’s time and efforts should be devoted to Sweet Violet; (b) the difference between Zymurgorium’s capacity to produce Sweet Violet and my projection of its potential sales - I sketched a graph on which projected sales were shown with a solid line and Zymurgorium’s current production capacity with a dotted line, to illustrate its significant lack of capacity; (c) what the division of labour within Zymurgorium should be to hit the required production volumes - distinguishing between skilled and unskilled - Skilled (i.e. Aaron and his Callum) should focus on design, flavour mixing and bottling - Unskilled, e.g. Aaron’s mum - and any others - should deal with wax dipping, applying labels, boxing finished products and so on; (d) my suggested mission statement for Zymurgorium - HOW DO WE MAKE AS MUCH SWEET VIOLET AS POSSIBLE? [24] 42. Danny and I talked all the above through with Aaron, who appeared to embrace and accept it. We emphasised that if HOK/Paragon succeeded in getting listings with large scale customers who operated nationwide, then Aaron/Zymurgorium would have to be able to meet the orders that were obtained. At that point first production by H&A was planned for February/March 2018, so it would be necessary to get through the next five months, and Christmas 2017, without letting any new customers gained go short. Shortages would jeopardise the listings and damage both HOK and Zymurgorium . 43. I recall this meeting very well. Aaron was an active participant. During the meeting Danny and I discussed a number of things with him and it was very much a conversation between all three of us We talked about workload scheduling, he explained that the skillsets of his mother, brother and father, and that formed the basis of the detail that went onto the whiteboard. We also discussed in some detail the continuity of supply that would be required in order to fulfil the requirements of large national accounts such as Stonegate and JD Wetherspoon - we both again made it very clear to him that we would be unable to pitch for this business without guaranteeing consistent supply, and again I believe he understood and accepted that.”
“I spoke to Aaron about this, and asked him to explain why. He said he had been approached by the customer, who said that if he could not buy direct he would de-list Zymurgorium’s products. He said he believed he had no choice but to supply them or risk losing their listing. I said I was very disappointed (a) that Aaron had fallen for this, and (b) that he had chosen not to discuss it with us, and left us to find out this way. He was embarrassed and apologetic. He knew that I was not pleased and acknowledged that the correct thing to do would have been to call me to discuss this. I put it down to his inexperience and naivety and did not make a fuss about it. Having raised it with him, I was confident that from what he said he would be straight and honest with us in future if this happened again.”
“ I told him I was nervous of being involved in anything which could damage the relationship with Zymurgorium, and that it was not something I was interested in pursuing in view of how things were really beginning to take off with Zymurgorium at that time and the huge sales potential I believed there was for Zymurgorium products .”
“If you can’t get enough of fancy cocktails that remind you of retro childhood sweets, then you can also get one that tastes exactly like Parma Violets”, there being an adjacent image of ZL’s Sweet Violet gin liqueur. It continued: “As you‘d imagine, it’s bloody delicious, and really does provide the hit of nostalgia that it promises. Zymurgorium Manchester Sweet Violet Gin Liqueur can be bought for£24.99 for a 50cl bottle from Selfridges, which makes it the perfect treat. ”
“ Hi Jon , This is Sam and Jill from pmd finance that are helping us get the bottling line/brewing kit. Ladies this is Jon Hammond owner of Hammonds of Knutsford. They just want to know what you believe you’ll be taking over the next year Jon.”
“There have been email exchange official promises by Hammonds of Knutsford for a minimum of 12480 cases a month up to December which Sam was included in I believe. Jon could you please repeat this for the benefit of PMD better still a signed note. ”
“ Your correct…..to make 30% margin, we will need to offer you a bespoke price. Would£14.85 be workable for you? I think this should give you the margin you need.” 82.5 On11 January 2018 , Mr Newton responded saying: “ The cost does help so thanks for this. In order to move this forward, can you liaise with the brand owners regarding what annual support investment they can offer? If I am to launch, I can offer some early off shelf support but I would require£1k per sku [26] . If they are agreeable I’m happy to agree to a£2k across both skus for a listing for 2018.” 82.6 On12 January 2018 , JH forwarded the email thread with Booths to AD. 82.7 On16 January 2018 , there was a further email exchange between DA of HOK and Mr Newton of Booths. a) DA emailed at 09:39: “ With regards to the listing fee, you mentioned the product would be permanent line. Could you advise how long the£1000 covers?” b) Mr Newton’s responded at 12:42: “ I am happy to run the line barring any major sales concerns (f)or 2018. We can always swap out the product for a suitable replacement .” c) Mr Newton said at 12:42: “ I would be keen to understand if you can run any price promotions as this can make a significant impact on sales and allow me to feature off shelf on our gondola ends .” d) DA responded at 14:06: “ I will look in to the promotion side with the brand owners. Is it a saving of£5 per bottle? Based on the revised price that Jonathan shared we certainly don’t have anywhere near this available and I am not sure if the brand owner could fund such a deep discount, but will certainly look in to.” 82.8 This email thread was forwarded by DA to AD later on16 January 2018 under cover of an email that said: “ Please see below. We continue in discussions with Booths and I believe we have agreed to SW and TD to be listed. We are now discussing Marmalade. You will see that there is ongoing discussions with regards to price promotions and this is an area we would like to discuss with you further on Thursday. We have already explained that£5 is too much, but are looking at what could work. We are have agreed to the tastings as this can only boost sales and also the listing fees ”. 82.9 A meeting took place between AD, JH and DA on18 January 2018 . It is HK’s case that at that meeting, it was agreed that, according to DA’s witness statement, the “previously agreed prices of£11 and£17.85 respectively would apply ”; AD said that these prices were the standard list prices at which ZL sold to HOK. As to the ability of ZL to meet the demand, it is DA’s evidence that they discussed the anticipated demand which AD assured HOK could be met. AD did not accept that he said that ZL would meet the demand but that they would have tried to do so. 82.10 HOK points out that, in paragraph 144 of his first statement, AD says: “ No one at HOK notified either me or CD of the price at which Sweet Violet, Turkish Delight or Marmalade would be sold to Booths. That was entirely a matter for HOK in relation to their arrangements with Booths for the onward sales of our product .”
“ I’ve spoken with the brand owners and I’m just awaiting their feedback on the commercial support request …we are very keen to work with you/GK, so I will do my best to get to your aspirational pricing target.” 84.3 In his witness statement, CJ says of this email, “ I cannot recall whether I had then actually spoken to Aron about a specific amount of support - I may have done, or may have been making Calum wait a little as a negotiating ploy.” 84.4 In agreeing the price for sales to Greene King, CJ states that a retro of£1 to be paid by ZL was agreed with AD [27] . He was unable to remember the detail of this conversation. AD’s case was that he “ offered to agree to apply retro for Greene King order on the same basis as I had supplies to JDW if needed [28] , but CJ told me during a telephone conversation in August 2018 that a ‘retro’ would not be needed”. 84.5 It is common ground that ZL did not in fact pay a retro in respect of sales to Greene King. It was put to CJ in cross examination that this was because no retro had in fact been agreed. CJ responded, “ as far as I was aware from the initial conversation we had around the first proposal to Greene King, it was very clear what the commercial structure needed to look like and Aaron consented to that commercial structure.”
“ I then called Aaron to discuss this. It was obviously yet another exciting opportunity. The conversation was primarily about Aaron/Zymurgorium’s ability to meet the likely demand for SV from Bargain Booze. I made him aware of the potential size of the orders Bargain Booze would place: 20 pallets at a time - not as big as Matthew Clark/JDW, but still big. And also that, as with the other large customers, it would be essential to maintain supplies to maintain the listings. However, with production by H&A now up and running we agreed this should not be a problem. 105. I told him Bargain Booze might be interested in other liqueurs. We ran through the other liqueurs that he Aaron/Zymurgorium held most stocks of at that time, and agreed that I would offer those to them as well . 106. I cannot now recall whether I told Aaron that Bargain Booze were looking for a discounted price from HOK, and that I was proposing to offer them a discount in the hope of securing the listing. I think I may well have done so, but without necessarily telling him what price they were looking for, because I was not asking him to contribute to the discounts I was proposing to offer. We did not discuss what Zymurgorium’s price to HOK would be - we did not need to, as the agreed price for liqueurs was£11 . … I have been asked to comment on what Zymurgorium’s commitments to HOK were as a result of our conversation and the listing with Bargain Booze. Although my discussions with Aaron took place over the phone, and there was no need for a listing fee as in the case of Booths, I am sure that Aaron fully understood and agreed to what was being proposed. As in the case of Booths, and for the same reasons, although this was not explicitly stated and agreed, for the arrangements to work it was necessary that Zymurgorium should not be free to decline orders HOK placed in order to meet orders from Bargain Booze, or to change its prices to HOK, or to start selling directly to Bargain Booze. Otherwise we would not have committed ourselves to Bargain Booze. As I have said, I believed Aaron wanted the sales, logistics and relationship management aspects to be handled by HOK, leaving him free to concentrate on production. They were extremely busy at this time and it was all they could do to keep up with production requirements.”
“137… I explained about the Multibuy promotion, and the volumes of SV I expected Booker would require. I explained the dynamics of the Multibuy to him - i.e. that a customer buying 3 gins in the Multibuy would receive a case of tonic free of charge. I may have told him that a retro was required in order to take part in the Multibuy, but I don’t think I told him the amount of the retro because I was not asking him to contribute to it. I am sure I will have stressed to him that in order for us to be considered for this, which was an ongoing commitment at least until the end of the year, Zymurgorium needed to make a commitment that sufficient stocks would always be available. We agreed that with production of SV by H&A having been further increased, then at the levels then proposed through to the end of the year that should not be a problem… 139. As with Booths and Bargain Booze, there was no need for me to discuss with Aaron the price at which Zymurgorium would supply SV to HOK for the purposes of the Booker deal.£11 per bottle was the current price as previously agreed and I was not proposing anything different .” 86.4 In his evidence, AD states: “152…I did not have a telephone conversation with DA shortly after16 August 2018 or at any time regarding the supply of Sweet Violet to Booker nor did I assure DA that ZL could ensure that Sweet Violet would be produced and be available to HOK to maintain continuity of supply to Booker. How could I? Booker is a cash and carry with around 200 branches in the UK. To make such a commitment so that ZL would assume this level of obligation I would need a detailed understanding of levels of supply required. 153. I did have a conversation with JH on18 August 2018 , but this conversation was to inform me that HOK would need ZL to produce more Sweet Violet due to an increase in orders for the product by customers such as Booker. JH did not explain why orders were increasing and I did not assure JH that we would be in a position to supply the quantities HOK needed as a result of Booker’s orders. 154, HOK continued to place orders in the way it had always done and we also invoiced HOK as we had always done. Nothing about how we supplied the products to HOK to Booker changed from how we supplied any other product for any other retailer, as no special agreement was in place .”
“ With 22 years of ‘intimate’ industry knowledge at your side I’m sure all will come to light. Thanks for sending the PO, could you also send us the address so we may make a label to ensure this lonely pallet reaches its destination .”
“ During week commencing22 October 2018 I had a call from Aaron, asking which account I wanted the£27,000 I had lent in April 2017 to be paid to. I was extremely surprised by this. I said: “I’ve not made any loans, only an investment”
“ I had sensed that the relationship between Aaron and myself had deteriorated, and I already had some unease and concerns about what was going on in his mind and what his future plans were. But this changed everything for me. It was a complete betrayal of the trust I had placed in him.” b) In his second witness statement, JH states that the date given in the first statement was wrong and that the conversation must have been in the week commencing15 October 2018 . The reason for saying this is that an email had come to light dated19 October 2021 in which CJ emailed Jason Groves about the proposed Imaginaria project. This is dealt with further below, but JH’s second statement says : “ 11. I do not recall seeing that email at the time, but what I do now recall clearly is that immediately after the call from Aaron I called Danny and Chris into my office and told them about it because I felt sure it was very important, and signalled a significant change of attitude on Aaron’s part and I wanted to know their views… 13. Chris was certain it only meant one thing: Aaron was planning to cut HOK out and deal directly with JDW and the other major customers we had obtained for Zymurgorium products. Aaron knew who they were, what products we were selling to them and, in many cases, the prices. He had complained to both Chris and Danny about the margins he believed HOK was making on his products. Chris thought Aaron would switch to direct dealing rather than consider appointing another wholesaler or distributor - by cutting out the “middleman” margin he could offer the customers the same products at lower prices, and still make more for Zymurgorium. 14. Chris had no doubt at all that this was what was going to happen, and that only question was when. He said he thought it would almost certainly be in the New Year…. 15 If Chris was right about what was going to happen, HOK was obviously going to have a big hole in its product portfolio when it did. Chris thought that the best response would be to produce our own range to offer as an alternative to Zymurgorium products. Chris said we could get them made by H&A, and make sure they were as good if not better than Zymurgorium’s; we would not have the supply/capacity problems we had had with Zymurgorium. He reminded me of the “Imaginarium” concept that he had explored earlier that year but which had been shelved… 18 At this point in time it was not my intention that HOK would definitely create and market its own range. I saw it a defensive possibility, to give HOK some protection if Aaron did what Chris thought he was planning. If the relationship with Zymurgorium could be got back on an even keel, which I would have much preferred, we would have spent some money on labels and other things but it would not be a big deal in the overall scheme of things.”
“I just wanted to follow up on our meeting earlier to say thanks to you and your team for seeing me at such short notice, I hope my urgency now makes sense!, As we discussed, speed is of the essence for us, so we are keen to push forward (under complete confidentiality) to get the 2 flavours we discussed up and running as soon as possible. We will get all the necessary paperwork across asap and a label design over to you as soon as we have approved a proof, we will also get started on the Box design It goes without saying that you should not divulge your knowledge of the Zym plans to them at any point. Let me know when you are available to meet with Jonathan and I will set up the meeting. Thanks again for your speedy response - looking forward to working with all of you!”
“Jonathan I’ve been thinking about the zoo Magorium alternative project and thought it might be worth just pointing out that we need to keep this extremely confidential and within the fewest number of people as we possibly can within the business even a hint of this getting to Earlham good cause all kinds of problems at the moment they are on likely to see our trademark registration because it isn’t similar enough Two pairs to flag it to them however if they become aware they could seek it out and try to block it equally it may complicate things if he is aware there is likely to be a switch out of his products on the horizon and remove control away from us and into his hands.”
“We really need this being lowered tomorrow morning immediately. We’ve had a few customers question why the price is so high and have had to push them elsewhere to get a more reasonable price. It’d be better/more efficient for everyone if people could get the stock through amazon prime. Regardless on views of availability, supply/demand we can produce more than enough and also we have a policy not to over charge our customers. As this is being sold in at the same price it shouldn’t be a different price to the consumer I’m sure you’d agree.”
“I am somewhat confused with your email below. I am assuming this is relation to retail price, but not 100% sure Could you give me a call when you are free so I can understand a little more?”
“It’s quite simple the price is too high on amazon’s website”
“ Danny I’m not being rude the problem is that we’ve been left in a position where we can no longer make contact without it being recorded when concerning business. This isn’t us that has created this situation and pains me to have to conduct business in this manner, but it is due to unprofessionalism from certain individuals that has left us where we are. Bringing up questions about our product when we see something clearly in fault is my prerogative as a brand owner. The over inflated price on Amazon is something that Hammonds should have foreseen would be an issue. It is our prerogative to protect our end customers especially when complaints and remarks are not isolated. You may not be my employee but you are our main wholesaler and always claimed to be a friend, who has always stated that we’d be listened to and our concerns would always be taken on board. This goes against the very issue that has been plaguing this relationship for a while. We’ve been heard and have been blatantly ignored, that is rude no matter how large the person smile may be or how sincere they may feel at the time of making promises. Therefore again promises that have been made have again been broken. We’re meant to be working together and I have given my all to this relationship for years. I may be wrong but I believe your reaction stems from the fact there is an unreasonable reason why the prices are so vastly different. As I’ve said to Jonny, friends should be able to tell each other freely when they are wrong without fear of accusation or lost temper. Unfortunately you have misinterpreted an email and left us now in a very awkward position. Nothing I said was rude unless you were reading it with rudeness in mind, the emails I sent are ‘matter of fact’ emails, facts aren’t rude or polite. Emails like yours are non-productive and are only provocative. Therefore I’ll offer the olive branch and say I’m sorry if my emails offended you, but this has been triggered because we’re having complaints which potentially damage our reputation as on amazon it looks like it is being sold directly by ourselves to people who do not know. I hope you have nice relaxing weekend and have great sales over the next week.”
“ Hi Danny, Hope you are well. Just to let you know we’ve finished off some of the original Manchester 20cl bottles. Just wondered if you needed any for new year and if there’s anything else you need? Also it’s been 4 days since the 15th for Novembers invoices just wanted to remind you as I know Christmas gets busy. Not rushing you just would like to know if you had a date in mind. I know things have been strained this year and we’ve all frustrated each other, but we still need to arrange time for a meeting how are your dates fixed for the beginning of Jan first 2 weeks? I was hoping for a break over Christmas but everything that is going on it doesn’t seem likely. We’ll be closed after this Friday till new year but I’ll still get back to your emails if you need anything urgent. Over the Christmas period I’m going to consolidate our product files so we can fill out forms for you faster if need be. I sincerely hope you all have a great Christmas and that we can make good plans for the future where everyone benefits next year. Also what are your delivery rates into Manchester city centre and delivery days? Just planning for the bar. I think our manager is getting in a sponsor which is boring, but doesn’t stop us from getting the more quirky and expensive stuff from you guys for the back bar. Are there any ranges Hammonds wants to particularly want to promote in a luxury setting ?”
“I believe and am advised that there was a binding agreement between HOK and Zymurgorium (the Agreement) with the following key terms: 1. that HOK was Zymurgorium's main wholesaler for the UK; 2. that where arrangements for distribution of Zymurgorium’s products via HOK were agreed between us in relation to specific products and/or specific customers, such as for Wetherspoon/MC, those arrangements would not be materially changed by Zymurgorium without our consent; and 3. that neither party would terminate the Agreement without first giving the other reasonable notice of termination. On or about 14‘" December 2018, puzzled by the absence of orders from MC for Wetherspoon, we made enquiries and discovered that Zymurgorium was now supplying the Wetherspoon products directly to MC. Clearly this could not have come about without your first approaching WetherSpoon and/or MC about it some weeks if not months before that. I am advised that your actions constitute a serious breach of the Agreement and a repudiation of it by Zymurgorium. I hereby give you notice that HOK accepts that repudiation as bringing the Agreement, and the commercial relationship between us, to an end. I am further advised that HOK is entitled to claim damages from Zymurgorium for breach of the Agreement. We are in the process of quantifying the claim for damages, but it will clearly and significantly exceed the sum of£682,625.88 which is currently owed by HOK for products supplied. We do not, therefore, intend to pay that amount. I will write to you again when I am in a position to quantify HOK's claim for damages.”
“ Please make note if the invoice is overdue you will incur a compound monthly charge of 8.5% of the total invoice [35] .”
“…apart from those few accounts, we agreed that all other sales would go through us” ; 126.2 Paragraph 84 of JH’s first witness statement: “ we had no formal exclusivity agreement”; 126.3 HOK’s Reply to a Request for Further Information: “It was agreed between the Claimant and the Defendant that the Defendant would be the exclusive wholesaler of the Claimant’s Zymurgorium products in the sense that all Zymurgorium products (with the exception of a few small accounts) would go through the Defendant, and the Defendant would then sell on those products, including to other wholesalers.” 126.4 Paragraph 19 of the RDCC: “ there was no express agreement on exclusivity.”
“If there was an MWA: 5.1 Did ZL commit a repudiatory breach and/or renounce the contract by supplying direct? 5.2 Did HOK accept any repudiatory breach or renunciation of the MWA? If there was an SSA: 5.3 Did ZL commit a repudiatory breach and/or renounce it, by supplying direct? 5.4 Did HOK accept any repudiatory breach or renunciation of the SSA?”
“If there was an MWA: 6.1 Did HOK commit a repudiatory breach and/or renounce the contract by developing Imaginaria? 6.2 Did ZL accept any repudiatory breach or renunciation? If there was an SSA: 6.3 Did HOK commit a repudiatory breach and/or renounce it, by developing Imaginaria? 6.4 Did ZL accept any repudiatory breach or renunciation?”
“ I am not inclined to be strict in limiting the damages recoverable against wrongdoers, but if their obligation is left so much to their discretion that there are several ways of performing it, I have always understood that the Court assesses damages on the basis that "if the contract could have been performed by the performance of the alternative least beneficial to the plaintiff, the measure of damages would be regulated by the loss occasioned by non-performance of that alternative": Deverill v. Burnell LR 8 CP 475 at 481, per Bovill C.J. The simple reason for this is that a defendant is not liable i n damages for not doing that which he is not bound to do.”