“7. Our client has recently been informed that AML is withholding the money due to our client, purportedly relying on the indemnity given by AMMENA to AML in clauses 5.1 and 5.2. AML claims that it has incurred significant costs resulting from disputes with Aston Martin franchisees following decisions by AMMENA to terminate the franchise arrangements in Bahrain and Saudi Arabia. AML has unilaterally decided to cease paying all the sums due to our client and now proposes to offset the total amount it claims it has incurred of GBP5,247,908 (the “Offset Sum”) from the sums due to our client. 8. We note the indemnity given in clause 5.1 but deny that it is liable to reimburse AML for the Offset Sum for the reasons explained in more detail below. We therefore consider that AML is currently in breach of its payment obligations under clauses 4.3 and 4.5.”
“[AMMENA] did not have the right to rely on clause 6.1 to terminate the Agency Deed with immediate effect and its purported termination of the Agency Deed on19 April 2021 is invalid. As a result of this wrongful termination, [AMMENA] is in repudiatory breach of the Agency Deed. Such repudiatory breach gives [AML] the right — at common law and pursuant to clause 6.1 of the Agency Deed — to terminate the Agency Deed, which [AML] intends to exercise. Accordingly, this letter constitutes [AML’s] notice to terminate the Agency Deed with immediate effect.”
“The Manager shall ensure that AMMENA shall receive the Manager Committed Minimum Profit (as stated in the Business Plan), making proper allowance for sums paid under clause 4.3.”
“At least twelve months prior to expiry of the Initial Period, or an Additional Period, the parties will review and agree the Business Plan that will apply to the next Additional Period.”
“This Agreement shall come into force on the Commencement Date and (subject to the provisions for earlier termination in Clause 6 below) shall last for an initial period of three years (the “Initial Period”) and shall continue in force thereafter for additional periods of three years each (“Additional Period(s)”) unless and until either party gives to the other not less than 12 months’ prior written notice of termination such notice to expire at the end of the Initial Period or one of the Additional Periods.”
“10 The court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning…” 11… Interpretation is, as Lord Clarke JSC stated in the Rainy Sky case (para 21), a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause (the Rainy Sky case, para 26, citing Mance LJ in Gan Insurance Co Ltd v Tai Ping Insurance Co Ltd (No 2) [2001] 2 All ER (Comm) 299, paras 13, 16); and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest: the Arnold case, paras 20, 77…” 12… To my mind once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each. 13 Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals…But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type.”
“The Manager shall ensure that AMMENA shall receive [for any year, 90% of the Projected AMMENA Net Profit shown for that year in the Business Plan agreed by AMMENA and AML from time to time] (as stated in the Business Plan)…”
“18 In the Privy Council case BP Refinery (Westernport) Pty Ltd v Shire of Hastings(1977) 180 CLR 266 , 283, Lord Simon of Glaisdale (speaking for the majority, which included Viscount Dilhorne and Lord Keith of Kinkel) said that: “for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.” “21 In my judgment, the judicial observations so far considered represent a clear, consistent and principled approach. It could be dangerous to reformulate the principles, but I would add six comments on the summary given by Lord Simon in the BP Refinery case 180 CLR 266, 283 as extended by Bingham MR in the Philips case [1995] EMLR 472 and exemplified in The APJ Priti[1987] 2 Lloyd’s Rep 37 . First, in Equitable Life Assurance Society v Hyman[2002] 1 AC 408 , 459, Lord Steyn rightly observed that the implication of a term was “not critically dependent on proof of an actual intention of the parties” when negotiating the contract. If one approaches the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time at which they were contracting. Secondly, a term should not be implied into a detailed commercial contract merely because it appears fair or merely because one considers that the parties would have agreed it if it had been suggested to them. Those are necessary but not sufficient grounds for including a term. However, and thirdly, it is questionable whether Lord Simon’s first requirement, reasonableness and equitableness, will usually, if ever, add anything: if a term satisfies the other requirements, it is hard to think that it would not be reasonable and equitable. Fourthly, as Lord Hofmann I think suggested in Attorney General of Belize v Belize Telecom Ltd[2009] 1 WLR 1988 , para 27, although Lord Simon’s requirements are otherwise cumulative, I would accept that business necessity and obviousness, his second and third requirements, can be alternatives in the sense that only one of them needs to be satisfied, although I suspect that in practice it would be a rare case where only one of those two requirements would be satisfied. Fifthly, if one approaches the issue by reference to the officious bystander, it is “vital to formulate the question to be posed by [him] with the utmost care”, to quote from Lewison, The Interpretation of Contracts 5th ed (2011), p 300, para 6.09. Sixthly, necessity for business efficacy involves a value judgment. It is rightly common ground on this appeal that the test is not one of “absolute necessity”, not least because the necessity is judged by reference to business efficacy. It may well be that a more helpful way of putting Lord Simon’s second requirement is, as suggested by Lord Sumption JSC in argument, that a term can only be implied if, without the term, the contract would lack commercial or practical coherence.”
“As explained in our 30 June Letter, strictly without prejudice to AML’s position that (i) the Agency Deed was validly terminated by AML with immediate effect on3 June 2021 following AMMENA’s repudiatory breach, and (ii) AML does not have an obligation under Clause 2.3 of the Agency Deed (or otherwise) to assist with an orderly transition plan to facilitate AMMENA’s resumption of its responsibilities under the Distribution Agreement, since the termination of the Agency Deed on3 June 2021 AML has continued to perform certain of the same activities it used to perform when acting as Manager under the Agency Deed in the interest of ensuring business continuity and minimising disruption for customers. For the avoidance of doubt, for the period between AML’s termination of the Agency Deed on3 June 2021 and1 September 2021 (or the date on which AMMENA resumes substantive operational control of its responsibilities as Distributor, if earlier): (a) AML has no obligation to perform any such activities and it does so strictly without prejudice to its position. AML reserves the right to cease performing such activities at any point at its full discretion; (b) AML has not and is not acting as an agent of AMMENA; (c) AML has not and will not perform all of the activities it used to perform as Manager. For example, AML will not make any changes to or decisions on price realignment, warranty policies or the addition or termination of dealers; (d) there is no obligation upon AML to continue to make payments to AMMENA on the revenue generated through such activities and it does not intend to do so. It is therefore in the interest of your client to complete the transitional period and assume all of its obligations under the Distribution Agreement by no later than1 September 2021 ; and (e) for the avoidance of doubt, all activities performed by AML are performed on a temporary basis only and will cease to be performed on these terms on1 September 2021 (or the date on which AMMENA resumes substantive operational control of its responsibilities as Distributor, if earlier). 8. As a gesture of goodwill and provided AMMENA confirms that it will resume substantive operational control of its responsibilities as Distributor on1 September 2021 in accordance with paragraph 5 above, AML is willing to perform these activities for no fee. Absent confirmation, AML reserves all rights.”
“MCMP was due to be paid until the end of the transition period on30 September 2021 . In the premises, AML is indebted to AMMENA, and AMMENA is entitled to and claims from AML, the further sum of£3,875,162.15 due in respect of Manager Committed Minimum Profit from1 January 2021 to30 September 2021 .” “AND the Claimant claims: (1) The sum of£5,734,006.70 ; (2) The sum of£3,875,162.15 ; (3) Further sums becoming due under the Agency Agreement after the date hereof; (4) An account; (5) Damages; (6) To the extent necessary, a declaration. (7) Interest. (8) Such further or other relief as the Court thinks fit (9) Costs”
“AMMENA will indemnify and hold [AML] harmless against any and all damages, costs, expenses (including legal fees), losses, and liabilities incurred in the course of, or as a result of, or in connection with: (a) any and all historic liability arising out of or in connection with [AMMENA’s] provision of services under the Sub-distribution Agreement and/or the Amended Agreements howsoever arising, including without limitation claims for breach of contract, negligence and/or fraud, whether arising before or on the date of [the Agency Agreement], in each case whether known or unknown to AMMENA; and (b) [AML’s] appointment as agent on [AMMENA’s] behalf pursuant to the terms of [the Agency Agreement].”
“For the avoidance of doubt, in either case, as provided for in clause 5.1 above, this includes any damages, costs, expenses (including legal fees), losses, and liabilities incurred in connection with the assignment or termination of the existing dealership arrangements with Haji Husein Alireza & Co. in Saudi Arabia and any other Existing Dealerships’ dealership arrangements.”
“The indemnity in clause 5.1 shall not apply to: (a) any acts of AML in breach of its obligations under this agreement…”
“We refer to (a) the letter agreement dated18 August 2017 between AMMENA and Aston Martin Lagonda Limited about costs in connection with the assignment or termination of the existing arrangements with HHA (the “HHA Side Letter” ) and (b) the agency agreement between AMMENA and AML entered into today (the “New Agency Agreement”). We agree that the HHA Side Letter will be honoured by AML and AMMENA notwithstanding clause 5.2 of the New Agency Agreement.”
“…it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.”
“As I understand the situation under the AMMENA distribution agreement, AML should not be liable for HHA termination costs regardless of the time of assignment… AMMENA's right to choose assignment or termination, and our duty to do so for the benefit of, and as directed by, AMMENA, reflects the agency relationship between AML and AMMENA. I have been advised that under English agency law, AMMENA is under a duty (as principal) to indemnify AML (its agent) for all costs, expenses, damages, and liabilities the agent incurs in acting for the benefit of and as directed by the principal. Therefore regardless of whether the HHA dealership agreement has been assigned to AMMENA (or AMMENA instructs AML to terminate the HHA dealer agreement), AMMENA has a duty to fully indemnify AML for acting as AMMENA's agent for the region. Whilst AML should not bear any liability relating to AMMENA's instruction to terminate HHA's dealer agreement, in the interests of moving this matter forward, we are prepared to consider the following on a without prejudice basis: (a) AMMENA signs the agency agreement assuring full indemnity with respect to all future matters relating to all AMMENA territories; (b) AML will offer to share costs relating directly to the termination of HHA, on a ratchet basis as below (we assume that the actual amount will be in the region of$1m to$2m and ultimately this will be returned through better sales performance in Saudi. We also assume this liability is likely to arise in 2018) …”
“For the avoidance of doubt, in either case, as provided for in clause 5.1 above, this includes…”
“9. Did AML owe a duty to cooperate in good faith during the Transition Period(either expressly under Clause 2.3 of the Agency Agreement or by implication)? 10. If AML did owe a duty to cooperate in good faith during the transitional period, did AML breach this duty, as alleged by AMMENA in RRAPOC paragraphs 26BB to 26D? 11. Did AML breach Clause 3.2 of the Agency Agreement as alleged by AMMENA in RRAPOC paragraph 26BA? Paragraph 26BA stated 26BA Further to AMMENA’s termination notice, and in breach of Clause 3.2, AML took no substantive actions to ensure that AMMENA would obtain the benefit of the experiences and structures developed by AML during the term of the Agency Agreement. As pleaded at paragraph 20A above, AML had in fact failed properly to develop such structures. Nonetheless, AML did not take all reasonable steps to assist AMMENA with commencing operation of the business under the Distribution Agreement.”
“2.2 This Agreement shall come into force on the Commencement Date and (subject to the provisions for earlier termination in Clause 6 below) shall last for an initial period of three years (the “ Initial Period “ ) and shall continue in force thereafter for additional periods of three years each (“Additional Period(s)”) unless and until either party gives to the other not less than 12 months’ prior written notice of termination such notice to expire at the end of the Initial Period or one of the Additional Periods. 2.3 Once either party gives notice of termination, the parties will meet and confer to work out an orderly transition plan so that AMMENA can assume its duties under the AMMENA Distribution Agreement and to minimise insofar as practicable any losses incurred by the Manager in the course of, or as a result of, or in connection with termination of the agency. AMMENA and AML will (acting reasonably and in good faith) agree minimum sales targets for volume and mix for the two years immediately following termination of this Agreement based on the principles set out in Article 3(2) of the Distribution Agreement. (“Interim Targets”). For the two years following the termination of this agreement: (a) Article 3A(3) of the Distribution Agreement will not apply to any failure to meet the Interim Targets if AMMENA has used reasonable commercial endeavours to meet the Interim Targets; and (b) the remedies otherwise available to AML under the Distribution Agreement in respect of any default in compliance with the obligations of AMMENA under the Distribution Agreement in respect of retail dealers shall not apply insofar as AMMENA has used reasonable commercial endeavours to meet those obligations. Thereafter the Distribution Agreement shall apply in its entirety.”
“3.2 The Manager will establish a regional presence and contemporary and benchmark operations in the Territory known as “Aston Martin Middle East “/”
“6.1 Without affecting any other right or remedy available to it, either party may terminate this Agreement with immediate effect by notice to the other if: (a) subject to Clause 6.2 below, the other party commits a material breach of any of its obligations under this Agreement which is incapable of remedy; or (b) subject to Clause 6.2 below, the other party fails to remedy (where it is capable of remedy) any breach of any of its obligations under this Agreement after being required in writing to remedy or desist from such breach within a period of 60 days; (c) the other party becomes insolvent or bankrupt or go into liquidation, receivership or administration or is wound up or enters into a composition or arrangement with its creditors or takes or suffers any similar or analogous action in any jurisdiction; or (d) the AMMENA Distribution Agreement terminates for any reason whatsoever.” (a) subject to Clause 6.2 below, the other party commits a material breach of any of its obligations under this Agreement which is incapable of remedy; or (b) subject to Clause 6.2 below, the other party fails to remedy (where it is capable of remedy) any breach of any of its obligations under this Agreement after being required in writing to remedy or desist from such breach within a period of 60 days; (c) the other party becomes insolvent or bankrupt or go into liquidation, receivership or administration or is wound up or enters into a composition or arrangement with its creditors or takes or suffers any similar or analogous action in any jurisdiction; or (d) the AMMENA Distribution Agreement terminates for any reason whatsoever.”
“6.3 On termination of this Agreement, clause 5 will continue in force. 6.4 Termination of this Agreement will not affect any rights, remedies, obligations or liabilities of the parties that have accrued up to the date of termination, including the right to claim damages in respect of any breach of the Agreement which existed at or before the date of termination.”
“… negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement..”
“3.2 The Manager will establish a regional presence and contemporary and benchmark operations in the Territory known as “Aston Martin Middle East”/ “AMME “. The proposed operational structure is set out in Schedule 1. On termination of this Agreement, the Manager shall in good faith take all reasonable steps to pass on to AMMENA the benefit of the experience and structures developed by the Manager in respect of such operations in order to assist AMMENA to commence and continue such operations itself with immediate effect.”
“144. What a particular good faith obligation (whether express or implied) requires depends on the intention of the parties construed objectively from the contractual wording, the context of the contract as a whole and the admissible factual matrix (see Chitty at [2-055]). As Leggatt J expressed it in Yam Seng Ptd Ltd v International Trade Corp Ltd[2013] EWHC 111 QBD;[2013] Lloyd’s Rep 526 a good faith obligation is an obligation to act honestly towards a contractual counterparty and not to act in a way which would frustrate the purpose of the contract or to act in a way which would be “regarded as commercially unacceptable by reasonable and honest people.”
“147. In approaching the interpretation of clause 4.2, the first, and most important, point to emphasise is that like any question of interpretation of a contract, an express clause in a contract requiring a party to act in “good faith” must take its meaning from the context in which it is used. That point has been made very clearly in many cases, including by Jackson and Beatson LJJ in Compass Group UK and Ireland Ltd (t/a Medirest) v Mid- Essex Hospital Services NHS Trust[2013] EWCA Civ 200 (“Compass Group”) at [109] and [150]- [151]. 148. The second, and related, point is that when considering the interpretation and meaning of an express good faith clause in context, cases from other areas of law or commerce, which turn upon their own particular facts, may be of limited value and must be treated with considerable caution… 149. Given that very clear warning, as Newey LJ observed at the hearing, apart from the very obvious point made by Auld LJ in Street that the core meaning of an obligation of good faith is an obligation to act honestly, it is very far from obvious why it is logical or appropriate to attempt to analyse other cases, decided on other facts, in order to deduce a number of further “minimum standards” of conduct that a defendant must be taken to have agreed to comply with in every case in which a good faith clause has been used in a contract.”
“I turn next to the content of the duty to co-operate in good faith, limited as it is by the two stated purposes. It is clear from the authorities that the content of a duty of good faith is heavily conditioned by its context. In Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd[2001] UKHL 1 ,[2003] 1 AC 469 insurers alleged that shipowners had failed to observe “utmost good faith” (as required bys. 17 of the Marine Insurance Act 1906 ) in the presentation of a claim. The Commercial Court judge, the Court of Appeal and the House of Lords all rejected that defence. Lord Scott, with whom Lord Steyn and Lord Hoffmann agreed, held that in the particular context the duty of utmost good faith required no more than that the insured should act honestly and not in bad faith: see paragraph 111.”
“AML will implement an experienced team into the Middle East region immediately and proposes to establish head offices in either Abu Dhabi or Dubai. AML proposes to structure the team in line with the organisation chart below (names are indicative and for illustration purposes only). In the short term, Christian Marti will take temporary charge.”
“There was an implied duty to cooperate in good faith upon termination to ensure that no damage was done to the business under the Distribution Agreement as it was transferred back to AMMENA from AML.” 154.2 Alternative 2 (Paragraph 26B.2 of the Re-Re-Re-Amended Particulars of Claim): “In the further alternative, having agreed to a transition period until1 October 2021 to facilitate an orderly transfer of the business, AML was under an obligation to cooperate in good faith during the period of the transition to ensure that the business could be transferred on1 October 2021 .”
“40B.1. AML understands AMMENA to be making allegations about express and/or implied obligations contained in the Agency Agreement (not in the Distribution Agreement), and AML’s response below is pleaded on that basis. 40B.2. AMMENA has failed to particularise the basis on which it is said that the alleged duties to cooperate in good faith pleaded in paragraphs 26B.1 and 26B.2 are to be implied and/or to arise, including how it is said that any such duties can be implied and/or arise in circumstances where it is common ground that the Agency Agreement was terminated with immediate effect.”
“224D As to paragraph 40A to 40C.1: 24D.1 It is admitted that AMMENA is making allegations of breaches of the Agency Agreement (express and implied) during the transitional period...”
“In short, in order to imply a term into an ordinary business contract, the term must be necessary to give business efficacy to the contract; it must be so obvious that it goes without saying; it must be capable of clear expression; and it must not contradict any express term of the contract.”
“The Supreme Court in Marks & Spencer affirmed that it is not enough to show that the term is a reasonable one for it to be implied into the contract. Reasonableness may be a necessary requirement before a term will be implied but it is not sufficient of itself to lead to the implication of a term into the contract. Thus a term will not be implied into a detailed commercial contract merely because it appears fair or because the parties might have agreed to it had it been suggested to them. Nor will a term be implied simply because it would improve the contract or make the carrying out of it more convenient. As it has been observed, “[t]he touchstone is always necessity and not merely reasonableness”
“If the contract does not expressly provide for what is to happen when a particular event occurs or in a particular situation, the most usual inference to be drawn is that nothing is to happen and no term is to be implied.”
“having agreed to a transition period until1 October 2021 to facilitate an orderly transfer of the business, AML was under an obligation to cooperate in good faith during the period of the transition to ensure that the business could be transferred on1 October 2021 .”
“this is precisely the kind of case where a party must have regard to the interests of the other party because of the duty of good faith. The contractual structure is what which Snowdon LJ described in Re Compound Photonics as the kind of case “concerning business decisions by one party which are capable of adversely affecting, or even depriving the other party of, the contractual benefit enjoyed by that other party.”
“In my judgment, therefore, the authorities do not support the proposition that a contractual duty of good faith can only be breached by conduct that is dishonest according to the explanation of that concept in Royal Brunei and Ivey. Depending on the contractual context, a duty of good faith may be breached by conduct taken in bad faith. This could include conduct which would be regarded as commercially unacceptable to reasonable and honest people, albeit that they would not necessarily regard it as dishonest.”
“Secondly, the particular concept of a requirement to have regard to the interests of the other contracting party has largely been developed and applied in cases concerning business decisions by one party which are capable of adversely affecting, or even depriving the other party of, the commercial benefit expected to be enjoyed by that other party under their contract (e.g. Burger King, Overlook, Berkeley and CPC Group). It is far from obvious how or why the same approach is automatically to be applied in the context of voting by shareholders at general meetings of a limited company.”
“In the Bropho case, the judgment of French J. contains a very detailed discussion of the concept of good faith. It is not necessary to set out the facts of the Bropho case but it is necessary to remind oneself that it was not a commercial case nor was it a case where there was an obligation to act in good faith. Good faith came into the matter because conduct which would otherwise be unlawful as contrary to a statute would not be unlawful if the conduct was for a particular purpose and was done “reasonably and in good faith”
“Observance of reasonable commercial standards of fair dealing in a given trade or business”…”
“Mr Pymont did not suggest that these statements by French J. (and the material referred to by the learned judge) were not a useful attempt to describe the concept of “good faith”
“147. In approaching the interpretation of clause 4.2, the first, and most important, point to emphasise is that like any question of interpretation of a contract, an express clause in a contract requiring a party to act in “good faith” must take its meaning from the context in which it is used…”
“195. From this survey of the cases relied upon by the Judge, a number of points emerge relating to the concepts of fidelity to the bargain and a requirement to have regard to the interests of the other contracting party. 196. The first, and general, point is that those specific concepts originated in a commentary on US contract law and were then adopted and developed in New South Wales in the context of the imposition of terms requiring good faith in the performance of contracts as a matter of general law. They were not developed in the context of the interpretation of individually negotiated contracts. It is entirely understandable that if a term is implied as a matter of law, it should have a single, clearly understood meaning. However, I see no sound juridical basis for saying that all of the same concepts should automatically be regarded as incorporated in a formulaic way whenever any contract governed by English law contains an express term requiring the parties to act in good faith. Put into the context of this case, I do not see why the parties to an English law governed contract concerning an English company should automatically be presumed to have intended to incorporate such obligations, irrespective of the context given by the other terms of their contract.”
“…I see no sound juridical basis for saying that all of the same concepts [of fidelity to the bargain and a requirement to have regard to the interests of the other contracting party] should automatically be regarded as incorporated in a formulaic way whenever any contract governed by English law contains an express term requiring the parties to act in good faith. Put into the context of this case, I do not see why the parties to an English law governed contract concerning an English company should automatically be presumed to have intended to incorporate such obligations, irrespective of the context given by the other terms of their contract…”
“I do not consider that it is appropriate to try to be prescriptive in describing what conduct might fall into this category, given that to do so would necessarily involve recourse to synonyms or epithets (such as “improper” or “sharp practice”).”
“…although judges have, on occasions, used the expression “the spirit of the contract” in the context of a good faith clause, I do not read that as an open invitation to the court to interpret a good faith clause as imposing additional substantive obligations (or restrictions on action) outside the other terms of the contract. That must especially be so where (as in the instant case) the contract in question is professionally and comprehensively drafted, and contains an entire agreement clause.”
“AMMENA and AML will (acting reasonably and in good faith) agree minimum sales targets for volume and mix for the two years immediately following termination of this Agreement based on the principles set out in Article 3(2) of the Distribution Agreement. (“Interim Targets”).”
“The purpose of the exercise was to come up with a target that meets the requirement of the distribution agreement, and unfortunately there is analytical data availability problems on the way to that number, which then again brings me back to what I said before. It is a proposal, and then you do a collaborative negotiation with the distribution partner. I have done this over decades with dealers and it's a process where two people need to come together and find an agreement.”
“Q. Whatever you put in -- if you want to get to a certain outcome you just change the numbers that you put in, you can change the competitor set, you can change various of the inputs, and you could come up with a number that you want. A. Yes, but we had never any intention to come up with a number. We wanted to do a calculation that is kind of, well, least faulty, because obviously correct does not exist in this circumstance. Q. Well, you came up with a number which, standing back, is obviously way out of step with AML's actual performance whilst it was running the agency agreement. We agree on that? A. Yes, but AML's performance while it was running the agency was sports cars only, and I think the sports car number exceeded the sales target for sports cars in every single year, and then the SUV was added, and that obviously made the overall number much bigger…”
“Q. Would you agree that AML's approach and communication strategy was terrible in relation to the transitioning of the four employees? A. I would not agree to “terrible” as a terminology, but it could have probably done slightly better, in hindsight. … Q. And the transition period was ending on1 October 2021 , only five weeks later, one of which is in August when people traditionally are on holiday. A. That is correct, yes. But five weeks was more than ample time to do what needed to be done. And I personally would have liked to do it a bit earlier, but the HR department didn't figure out the process earlier. I can only speculate…”
“Q. It's just nonsensical, isn't it, to start with a global number that includes a forecast and then derive another forecast from that number? A. Correct, to the mathematical basis, yes. That's why I had assumed it would have been excluded. Q. Yes, that's right. So in your first and second witness statements – A. I had the pure maths in my mind. Q. Yes, because on any mathematical statistical approach, it's nonsensical to include the Middle East target prediction in a data set, the start of a data set, which is itself meant to provide (overspeaking) – A. I disagree with the terminology “nonsensical”
“4.4 Accordingly, your client’s decision to release wholesale prices into the DCS, without first consulting AMMENA, represents a further breach of the obligation to act reasonably and in good faith as set out in Article 3 (A) (2) of the Distribution Agreement. Furthermore, it also represents a breach of clauses 3.4 (obligation to act in good faith and promote the best interest of AMMENA) and 4.3 (AMMENA’s right to receive 10% of the wholesale price) of the Agency Deed. 4.5 To remedy this breach for the 2022 calendar year AML should reduce the ex-factory prices listed in the table below paragraph 10 of your letter of 30 June are reduced to the prices set out in the attached table that ensures that AMMENA is preserved for that year. 4.6 Regarding paragraph 12 of your letter of 23 July and the Key Target for the 2022 calendaryear if AML agrees to this reduction AMMENA will provide AML with its Key Target proposal for the 2022 Calendar Year.”
“5.9 As previously advised in paragraph 4.5 of our letter dated 5 August AML, should reduce the ex-factory prices listed in the table below paragraph 10 of your letter of 30 June to the prices set out in the table enclosed with our letter of5 August 2021 to ensure that AMMENA’s margin is preserved for that year. AMMENA’s experience over the previous 2-3 years in the Territory is that the Vantage Coupe and Roadster models will not be sold at the prices proposed by AML. Unless AML provides further marketing support for these two models AML’s proposed prices will adversely impact on sales and this will need to be reflected in setting targets for the region. 5.10 AMMENA will provide its Key Target proposals for the 2022 calendar year when this issue has been resolved.”
“Please find attached the price lists for AM802 for your region. I will be looking to push these to Brand Hub for upload at the close of this week. Can you review and ensure any issues are highlighted as soon as possible prior to upload? Vehicle base price remains unchanged vs 21MY. Any query please don’t hesitate to get in touch.”
“Q. And the discussion that you had with Mr Robinson was on market competitiveness? A. Correct. With a correlation between pricing and volume, obviously. Q. Yes. It wasn't a discussion about setting prices to harm AMMENA, was it? A. No. As far as I'm concerned, at that point of time, I have no involvement with AMMENA or any other entity, I'm just focused on AML job. Q. Yes. AMMENA wasn't mentioned here, AMMENA's margin wasn't mentioned here? A. No. Q. So far as you were concerned, this was simply the normal setting of DNPs? A. Correct.”
“an implied duty to cooperate in good faith upon termination to ensure that no damage was done to the business under the Distribution Agreement as it was transferred back to AMMENA from AML.”
“182. AML has denied that prices were set in bad faith (whether to reduce AMMENA’s margin or otherwise) but has not provided any explanation of why the prices were released at the level at which they were set, in combination with the Ex-Factory Prices that were provided… 183. What is alleged is that AML set prices in bad faith, such that the profitability of the distribution business was undermined before AMMENA took over as Distributor on1 October 2021 . It is unclear from AML’s pleaded case and evidence whether they even accept that was the effect of the actions that it took, but the numbers speak for themselves. In the absence of any explanation as to why AML would release figures which had such an effect without consulting with AMMENA, it is difficult to see how AML could have been acting in accordance with a duty of good faith to AMMENA, particularly in light of what AML said in the Margin Comfort Letter. Importantly, on AMMENA’s analysis it would be no defence for AML to assert it was acting in its own commercial self-interest without regard to the interests of AMMENA in setting DNPs and Ex-Factory Prices in circumstances where it owed a duty of good faith to AMMENA.”
“Q… If you had thought at the time that AML owed a duty of good faith to AMMENA, then it would have been commercially unacceptable to behave like this and set the ex-factory prices at a level which would – A. No, I wholeheartedly disagree. There is no bad faith in this. This is simple commercial thinking. Q. Your position is AML was acting in accordance with its own commercial self-interests and without any regard to those of AMMENA? A. AML was acting in alignment with the distribution agreement, which was signed by both parties. That was the basis of our relationship at that time.”
“Q. You and Mr Moers, I suggest, would have both been aware that setting the ex-factory prices at this level in combination with the DNPs that had been released would adversely affect AMMENA's financial position? A. No, this is mixing two things, because the ex-factory prices were supposed to be in place after AMMENA took over the distribution management in the region and then they would set their own DNPs, so they can adjust it to whatever margin they need or want to achieve. The release of the DNPs in May was the normal model year release that did not assume any change in regional management or any contractual status. Q. But you knew that the ex-factory prices with the DNPs that had been released, taking those figures, that would adversely affect AMMENA's financial position compared with the agency agreement and compared with the situation before the agency agreement? A. Unless AMMENA adjusts the DNPs accordingly, yes.”
“As we agreed, I have sought out, as a hypothetical, an understanding of timing to transfer AML's responsibilities as agent of AMMENA back to us, if a transition were to take place. I have gone back to those involved in the transition 3 years ago and the view is as we discussed logically, that 1 year would not be needed, and that the 6 month timeframe you and I discussed would be the longest period required. More likely would be between 3 and 6 months, and closer to 3.”
“To allow an orderly transition our client envisages that the transitional period will take a significant period of time of at least 12 months. This minimum period of time would allow AMMENA and AML to set the Key Target in October 2021 for the 2022 calendar year during the transition process and also allow further time for AMMENA and AML to agree sales and volume targets for 2022 and 2023 in accordance with Article 3 (A) 2 and 3 of the Distribution Agreement and Clause 2.3 of the Agency Deed respectively.”
“The proposed operational structure is set out in Schedule 1.”
“In 2020-2021, due to the COVID-19 pandemic and lockdowns, sales were down and therefore there was an Aston Martin-wide redundancy programme to consolidate roles and functions and cut costs globally…” “…in 2020 Nomaan [Tahir] left AML to return to the UK and Souad El Baiz and Ayman Ghanem were made redundant as part of the Aston Martin wide redundancy programme that took place in 2020/2021 to consolidate roles and cut costs globally.”
“As discussed in the announcement this morning, please see attached the letter confirming your end date with AML. The email addresses for the contacts at the Al-Roumi Group are below: […] […] …”
“We have a situation whereby we no longer need our employees in MENAT as we will be changing some relationships with have with distribution companies. The employees need to end with us on30th September 2021 (they don’t know this yet). The company taking their work over would be happy to take them on, so we will be encouraging them to approach this company. We will be announcing this to them in the next few days etc. Can you confirm who needs to do what between me and you? …”
“…I can inform you that we informed our MENAT team this morning about the upcoming transition of regional responsibility. In that call we have also encouraged them to contact you about their employment options. I hope you will hear from them soon. We are exploring with our employment services provider ways to ensure gapless coverage of visas for the team from30 September 2021 .”
“…My team is supporting the Aston Martin Lagonda employees in Dubai with HR, Payroll and Compliance provisions through our employer of record platform. We have been advised by Lyndsay Summers, HR Business Partner of AML in the UK that they are offboarding Dana, Larbi, Ramzi and Houssam with effect on30 September 2021 . My team will support them during this transition. We were further advised to connect with you for a possibility of employment continuity of the team with you through our employer of record platform. Please let us know if you are interested to discuss further…”
“I personally would have liked to do it a bit earlier, but the HR department didn't figure out the process earlier.”
“…our client notes that there is currently no rented office space that would need to be transferred to AMMENA all employees are currently working from home as a result of COVID-related restrictions.”
“You might have heard that we are in the process of restructuring our approach to the MENA region. After having acted for over three years as AMMENA’s agent our objective is now to hand responsibility back to AMMENA and revert to the Distribution Agreement (DA) which has 38 years left before expiration. This transition has two parts: “ Management responsibility: AMMENA seems quite ready to take back management responsibility now, i.e.. before September, in order to be able to negotiate targets and business plans with the dealers for 2022. This responsibility is also quite easy to hand over from our POV. “Administrative responsibility: This is a lot more complex and time-consuming, since it involves systems and many external laws and regulations and here is where we need your help. … “Trade flow: The DA is very clear on how the trade flow should be: AMMENA buys vehicles from AML UK at ex-factory prices and wholesales them to their dealers. Obviously this is a big change from current practice, where vehicles are sold directly from AML to the MENA dealers. Question therefore: which disadvantages will we face from changing scheme? Can we separate this trade flow from the physical flow after all things would be very complicated if vehicles would have to be imported to a 3rd country before ending up in the dealer’s market…”
“Q. …In practice, we know that AML's position was that it left all of these things to AMMENA for AMMENA to do, and it didn't assist AMMENA in any way in developing a new operating model under the distribution agreement, it basically took the view that was AMMENA's problem?”
“I very much disagree. This email was part of my effort to find out as much as I could to help AMMENA, because I was obviously not an expert in Aston Martin's internal processes and how had this been done. I had all the conversations with Mr Quinlan and Mr Zidan, and they asked questions, and I tried to be as competent and informed as possible to answer their questions.”
“As I said, we have been discussing these matters at least since probably August/September '21. There were various versions of the document that were sent back and forth between counsel…”
“Dear Richard and Abdulla I write you to kick start the handover process for all topics related to marketing and PR which I have been managing for the past three years. This includes agency retainers, preferred suppliers, brand partners, Valhalla tour, upcoming three F1 races in the region etc. Happy to schedule a call during September to help onboard whoever will take over the Marcoms role.”
“Please find attached the contract we have in place with Adsense, our social media agency. We have a monthly retainer with them as they manage all our social accounts including community management, content creation, and media promotion. The contract has all the details. Below are the regional accounts they manage. We had built these accounts from scratch since taking on the region three years ago. Before that, the brands social presence was scattered bits and pieces that were off brand and poorly managed by the previous team. We had to close multiple pages down and build again properly. “ https://www.instagram.com/astonmartinmena/ “ https://www.facebook.com/Aston-Martin-MENA-106941564774350 “ https://twitter.com/AstonMartinMENA During the process of hiring this agency, I looked into multiple proposals and pitches which I thoroughly analysed and compared to agree on this partner and these T&Cs. This was done as per AML procurement process and was approved by HQ back then. Happy to provide more details/documents if required. I recommend Ammena continue to work with this agency to ensure brand exposure consistency as they are properly briefed and staffed to support the AM brand.”
“It was good seeing you last week, hope you had a safe journey back. As discussed, it’s of utmost important to reactivate our regional social media pages on Instagram, Facebook, and Twitter. To do so we will require our social media agency to resume regional content creation, account moderation, and planning content calendars. I will ask them to revise the contract so we can kick off as of November after being offline for a month. Appreciate your input on: “ Ammena s legal/finance name to update the contract “ Ammena’s supplier payment terms Once shared ill have them update the contract with the same scope to what we had negotiated after pitching the business last year to multiple agencies.”
“In September 2021, I attended a meeting with Mr Kipferler and Ms. Dana Taleb, AMMENA’s Marketing Manager. During the meeting, Mr Kipferler explained that AML would cut off all support and funding of marketing activities in the MENAT region following the conclusion of the transition period on30 September 2021 . All contracts between AMMENA and regional suppliers, including Adsense, were subsequently terminated on30 September 2021 . The termination of the contract with Adsense materially interrupted AMMENA’s business operations and internet presence following the handover of the business, including by disconnecting AMMENA from all of its social media platforms and preventing AMMENA from carrying out important marketing activities...”
“…the defining feature of AML’s approach was to push AMMENA to take over immediately, without providing the necessary practical assistance to allow AMMENA to take over the role of Distributor in an orderly fashion that would not disrupt the business in the Territory…”
“I am sorry to have to bother you continuously — I know you are busy enough running the region. However, we have received a rather substantial information request from AMMENA in the course of the transition discussions. Therefore I need to ask you a few more questions…”
“This transition has two parts: “Management responsibility: AMMENA seems quite ready to take back management responsibility now, i.e.. before September, in order to be able to negotiate targets and business plans with the dealers for 2022. This responsibility is also quite easy to hand over from our POV. “Administrative responsibility: This is a lot more complex and time-consuming, since it involves systems and many external laws and regulations and here is where we need your help. I do need your input on the following issues. Depending on the complexity of your POV, please just reply with comments to this email or let s set up a meeting to get into the details as needed…”
“I very much disagree. This email was part of my effort to find out as much as I could to help AMMENA, because I was obviously not an expert in Aston Martin's internal processes and how had this been done. I had all the conversations with Mr Quinlan and Mr Zidan, and they asked questions, and I tried to be as competent and informed as possible to answer their questions.”