TG Can Ltd v Crown Packaging UK Plc [2007] EWHC 1271 (QB)

[2007] EWHC 1271 (QB)Case No HQ05X00313
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 18/05/2007
Before
THE HONOURABLE MR JUSTICE GRAY
Between
TG Can LimitedClaimantCrown Packaging UK PLCDefendant
Mr G Buttimore (instructed by CJ Jones) for ClaimantMr P Lowenstein (instructed by Clarkslegal LLP) for DefendantHearing Hearing dates: 15 th, 16 th 17 th& 18 th May 2007
Judgment

The issues

[1]I deal in this judgment with three questions: i) whether the claimant should have permission to re-amend the Particulars of Claim; ii) whether certain passages in the pre-re-amended Particulars of Claim should be struck out; iii) whether summary judgment should be entered for the defendant in respect of the principal claim in contract on the ground that there is no real prospect of it succeeding at trial. It is convenient if I take the pleading points first. Background facts[2]The claimant, TG Can Technology Limited (“TGC”) is a manufacturer and supplier of machine tools including consumable tooling, principally steel and cupper tooling, for the beverage can industry. Consumable tooling comprises the tools that touch the product (aluminium and steel cans) during the manufacture process. Over time, such tooling wears out. It must then either be refurbished or replaced.[3]Sandvik Espana SA (“Sandvik”) is in a similar line of business. However, it specialises in a different kind of tooling, namely carbide consumable tooling.[4]Crown Packaging UK PLC (“Crown”) is the UK subsidiary of a multinational supplier of packaging to the food and beverage industry. Its headquarters is at Wantage. It has an associate company, Carnaud Metalbox Engineering PLC, based at Shipley in Yorkshire, which is a manufacturer, supplier and procurer of tooling.[5]TGC had been a supplier of consumable tooling to Crown for several years before it, together with Sandvik, submitted a joint proposal to Crown to supply consumable tooling. The proposal was successful: TGC and Sandvik were awarded a supply contract for a period of one year from 1 March 2002.[6]That contract was allowed to roll over for several months after its expiry date. TGC and Sandvik then entered into a new supply contract (“the Contract”) with Crown. This action is concerned with this Contract. The period of the Contract was three years running from 1 November 2003. The terms of the contract were these:
“TG Can & Sandvik (TG/S) have been awarded the contract to supply Crown Cork & Seal – Beverage European Division (CCS), with - 50% of all its tooling requirements for 2002/3. This volume will change to – 30% or – 70% of all tooling for subsequent years subject to the following conditions: 1. Quality: The yearly average for complaints to be no greater than 2 month over the contract period. 2. Service Levels: OTIF to average 95%+ (on quoted delivery dates) each year of the contract. 3. Pricing Structure: TG/S will maintain all current tooling prices for year until 01.03.03. Any price changes after 01.02.03. will be jointly agreed between CCS and TG/S, and funded out of the cost reduction programme. 4. Competitive Pricing Clause: Should CCS identify equivalent parts from an alternative supplier where the total net price differential is >5% less expensive than TG/S, TG/S shall be asked to review its prices. If TG/S are unable and unwilling to match the alternative price, CCS reserves the right to terminate the above contract. In this case, TG/S will be given 3 months termination notice. 5. Cost Reduction Programme: TG/S is to work with CCS to reduce the tooling cost per thousand cans over the contract period 01.03.02 to 01.03.03. To enable this usage calculation to be made TG/S are to advise what information they will require. Details of the cost reduction programme agreed with TG/S are described in Attachment 1. 6. Rebate: TG/S to provide CCS a 5% annual retrospective rebate each year based on the total spend by CCS with TG/S over the proceeding 12 months. The rebate is to be paid is the form of free tooling. Terms and Conditions of Purchase: All current CarnaudMetalbox Terms & Conditions apply. Termination Clause: Six months written notice required by both TG/S and CCS, subject to contract compliance.”
Terms and Conditions of Purchase: Termination Clause: Six months written notice required by both TG/S and CCS, subject to contract compliance.”

Termination Clause:

[7]According to the evidence, during the currency of the contract a directive was issued by Crown’s US parent company to place 90% of Crown’s orders for tooling and spares with one of the group’s own machine shops. Thereafter an internal review took place within Crown which resulted in plans being put in place which would require plants to place their tooling orders through its associate company based in Shipley. The intention was that in future orders would either be fulfilled at Shipley or by one of the group’s machine shops in the US or by third party suppliers.[8]On 3 November 2004 a meeting was held between TGC, Sandvik and Crown to review the first year of operation of the Contract. In advance of that meeting Crown had warned TGC of its intention to implement a new policy of in-house procurement wherever possible. At the meeting Crown notified those present that it would with immediate effect reduce the volume of business under the Contract to 30% of its total tooling requirements. It was further indicated by Crown that for the remainder of the period of the Contract the amount of tooling which would be ordered from TGC would be reduced to nil.[9]Part of the case for TGC is that a “Termination Plan” (as it is described in the Particulars of Claim) was hatched within Crown during 2004. According to TGC, the objectives were to terminate without notice TGC’s commercial relations with Crown; to interfere with exclusive distribution arrangements which TGC had put in place with Sandvik and another company; to reverse engineer tooling which had been designed by TGC to facilitate the same tooling to be carried out by Crown in house; and to maximise the financial effect of all these actions by suddenly ceasing to do business with TGC and withholding money due to it.[10]It is TGC’s case that this Termination Plan was conceived “for reasons connected with [Crown’s] investigations into an employee named Allen Sheffield whom it is alleged had received inducements from Ian Williams at a time when he was a director of NV Tools Limited”. It should be explained that NV Tools Limited formerly supplied tooling to Crown. Mr Williams is the founder and Managing Director of TGC.

The instant proceedings

[11]By this action TGC claims damages from Crown for breach of the Contract. As will be seen, the claim has been formulated in various different ways over the months. The essence of TGC’s case is that Crown was contractually bound, whether by the express terms of the contract or by implied terms, to place orders with TGC and Sandvik for approximately 70% of its consumable tooling requirements for the full three year term of the Contract. TGC contends that Crown was only entitled to reduce the volume of orders placed to approximately 70% to approximately either 30% or 50% in the event that TGC/Sandvik breached any of the conditions contained in clauses 1 to 8 of the Contract. The damage claimed consists primarily of the profits which TGC claims it would have made but for Crown’s breaches of contract in reducing the volume of orders placed from 70% ultimately to nil. There are in addition subsidiary claims brought by TGC against Crown but they are not material to the questions which I have to decide.[12]The action was commenced as long ago as February 2005. In November 2005 Amended Particulars of Claim were served by which TGC sought to join three of Crown’s employees, as well as Sandvik, as additional defendants. At that stage new causes of action in design rights infringement and conspiracy were introduced. However, that version was subsequently withdrawn, as was a third version of TGC’s Particulars of Claim, which added allegations of fiduciary duty on the part of Crown and breaches of implied obligations to act fairly and in good faith.[13]On 10th May 2007 (that is five days before the start of the present hearing) TGC served draft re-amended Particulars of Claim. This statement of TGC’s case includes the amendments which had been contained in the preceding version of the statement of case (viz fiduciary duty and breaches of implied terms to act in good faith) but also adds further amendments which had not previously been notified to Crown.[14]On the second day of the present hearing Mr Gabriel Buttimore, appearing on behalf of TGC, in the course of his oral submissions advanced a case which, as it appeared to me, represented a departure from the case as it then stood on the pleadings. Whereas previously the pleaded case had been that Crown had not acted “for sound commercial reasons” but rather had acted “capriciously” (see paragraph 18 of the pleading), Mr Buttimore was submitting that Crown had breached an implied obligation “not to exercise its discretion dishonestly, for an improper purpose, capriciously or arbitrarily” (see paragraph 18 of the new Particulars).[15]I then adjourned the hearing for a short time in order to enable Mr Buttimore to revise his pleading to reflect the new case. He duly did so. I will in due course address the question whether permission should be given to make this amendment as well as the others.[16]For the sake of completeness I should record the fact that there is now a re-amended Defence and Counterclaim on behalf of Crown, prepared in response to the third draft amended Particulars of Claim of TGC. Crown’s case is that it was entitled by virtue of the express terms of the Contract to reduce the volume of tooling ordered from TGC/Sandvik, irrespective of whether there had been any breach of any of the eight conditions of the Contract. Crown’s case is that there is no reasonable prospect of TGC being able to establish at trial any of the implied terms relied on.

The amendments sought

[17]On the second day of the hearing Mr Buttimore conceded on behalf of TGC that the claims for breach of fiduciary duty owed by Crown to TGC are unsustainable, as are the claims based on an implied obligation to act fairly. In consequence several paragraphs have been removed from the revised re-amended Particulars of Claim. No more needs to be said about those parts of the pleading, save that the claim advanced by TGC now has a radically different shape to it.[18]The amendments now sought to be made are the following: i) the addition to paragraph 15 of the words “being necessary to give it business efficiency and/or by reason of the application of the officious bystander test”. Paragraph 15 consists in a number of terms which TGC contends are to be implied into the Contract. The words sought to be added are intended by TGC to spell out the reasons why these terms are to be implied; ii) the addition of a new paragraph 18 which reads:
“Further or alternatively where: a. it is found that Crown had an otherwise unfettered discretion to reduce the percentage of consumable tooling under the Supply Contract from 70% b. and/or an unfettered discretion whether to order consumable carbide tooling rather than consumable steel tooling c. and/or an unfettered discretion as to whom to place the orders for tooling with as between Sandvik and TG Can, TG Can will also aver, [as] being necessary to give it business efficiency and/or by reason of the application of the officious bystander test and/or so as to give effect to the reasonable expectation of the parties, that the following terms are to be implied into the Supply Contract: d. in each of the cases specified in sub-paragraphs (a) – (c) above, Crown was bound not to exercise its discretion dishonestly, for an improper purpose, capriciously or arbitrarily and e. in each said case, Crown was bound to exercise its discretion reasonably”. a. it is found that Crown had an otherwise unfettered discretion to reduce the percentage of consumable tooling under the Supply Contract from 70% b. and/or an unfettered discretion whether to order consumable carbide tooling rather than consumable steel tooling c. and/or an unfettered discretion as to whom to place the orders for tooling with as between Sandvik and TG Can, d. in each of the cases specified in sub-paragraphs (a) – (c) above, Crown was bound not to exercise its discretion dishonestly, for an improper purpose, capriciously or arbitrarily and e. in each said case, Crown was bound to exercise its discretion reasonably”
. Breaches of these implied terms are pleaded at paragraph 23 of the pleading. The facts relied on consist essentially of the “Termination Plan” which TGC allege Crown devised in order to inflict economic injury on TGC. iii) Finally amendments are sought to be made to paragraphs 19 and 20 which relate to the Termination Plan and are alleged to constitute breaches of the implied term introduced by paragraph 18. TGC’s existing case at paragraph 19(a) is that employees at Crown agreed “to terminate without notice TG Can’s commercial relationship with Crown UK”. The first amendment sought is to add to those words the following:
“For reasons connected with its investigations into an employee named Allen Sheffield whom it is alleged had received inducements from Ian Williams at [the] time when he was a director of NV Tools Limited”
. Paragraph 19(e), as it stands in its existing form alleges that Crown employees agreed “to keep, as far as possible, the foregoing secret from TG Can”. To those words TGC apply to add the following:
“By falsely asserting, when the time came to notify TG Can and Sandvik of Crown’s intentions, that the reason for severance was due to the economics of in house manufacturer, as in fact was done at the meeting on 3rd November 2004 referred to below”
. Finally there is an amendment to paragraph 20 to make clear that it is TGC’s case that the meeting on 3rd November 2004 was “pursuant to the Termination Plan”.

Argument for TGC on the amendment

[19]Mr Buttimore for TGC submits that he has to establish no more than that the amendments disclose an arguable case in order for his clients to be entitled to permission to make them.[20]He says that the words sought to be added to paragraph 15 (see paragraph 18(1) above) simply explain the basis on which it will be contended that the terms in that paragraph are to be implied into the Contract. As to the amended paragraph 18 (see paragraph 18(2) above), Mr Buttimore relies on Paragon Finance PLC v Nash [2002] 1WLR 685, in which case the Court of Appeal accepted that a similar term was to be implied in a case where a mortgagee sought to recover possession from mortgagors on the ground that they were in arrears with their mortgage payments. His argument is that Paragon is authority for the proposition that there can be an implied term of a commercial contract that a party will not act capriciously albeit nor dishonestly. In other words he says that caprice may be severed from dishonesty. Mr Buttimore submits that there can be no objection to his relying on the Termination Plan as constituting a breach of those implied terms. He contends that the additional particulars (see paragraph 18 (iii) above) do no more than elaborate an already pleaded case. The argument of Crown on the amendment and in support of its application to strike out[21]Mr Paul Lowenstein for Crown does not confine his argument to resisting the amendments for which TGC seeks permission. He argues further that other parts of the Particulars of Claim should be struck out. That is a course he is entitled to take even as late as the trial: see National Westminster Bank v Rabobank [2007] 1 All ER 975. Mr Buttimore has sensibly accepted that I can and should deal with both arguments here and now.[22]As to the amendment sought to be made to paragraph 15 (see paragraph 18(1) above), Mr Lowenstein opposes it on the ground that, as presently formulated, the case advanced in paragraph 15 is bound to fail because it is not pleaded that the implied terms contended for are “necessary” to give business efficiency to the contract. According to his argument, TGC must for present purposes establish that it is at least arguable that the contract cannot be effective unless the terms pleaded are implied into the Contract. Mr Buttimore in response submitted that it is implicit in the existing pleading that the implication is necessary to give business efficiency to the contract; alternatively he seeks permission, if necessary, to add the word “necessary” to his pleading. Mr Lowenstein contends further that it is not arguable that the terms pleaded in paragraph 15 should be implied by reference to the officious bystander test. He says that the standard laid down in Shirlaw v Southern Foundaries(1926) Limited [1939] 2KB 206 plainly cannot be met in the circumstances of this case.[23]As to the implied terms now pleaded at paragraph 18 of the Particulars (see paragraph 18(2) above), Mr Lowenstein contends that the present is not a case where an implied term of the Paragon kind can or should be implied. On his argument the term which was implied in Paragon is a composite or conjunctive term; it cannot be divided up in the way suggested on behalf of TGC. He says that the Contract in the present case does not confer any discretion on Crown, still less an unfettered discretion. As to the pleading that there was an implied term that Crown was bound not to exercise its discretion dishonestly/improperly as to whom to place the orders for tooling with as between Sandvik and TGC, Mr Lowenstein submits that the pleading is fallacious because Sandvik and TGC were not two suppliers; they were under the Contract a single supplier. He submits that it follows that the allegation of breach of this implied term is based on a false premise.[24]Finally Mr Lowenstein objects to the changes sought to be made to paragraph 19 (see paragraph 18(3) above). It is objected that TGC have not made clear what are said to be the reasons “connected with its investigations into an employee named Allen Sheffield” which are said to have led to the decision to terminate TGC’s commercial relationship with Crown. In his oral response to this submission, Mr Buttimore referred me to paragraph 60 of the witness statement of Mr Claxton and to paragraph 22 of the witness statement of Mr Francis.

Decision on the applications for permission to amend and to strike out

[25]It is beyond question that the history of the Particulars of Claim is an unhappy one. Even though the case has now reached its trial stage, substantial amendments are still being sought. I nevertheless do not think it would be right for me to disallow the amendments on the ground of lateness. Indeed Mr Lowenstein did not press me to do so.[26]As I see it, the real question is whether the amendments now proposed are arguable, that is to say, whether they have some prospect of success: see Oil & Minerals Development Corps v Sajjad 3rd December 2001, unrep, QBD (Comm) (Morison J.) and Flexitallic Group Inc v T&N Limited December 19th 2001, unrep, QBD (Comm) (Jules Sher QC).[27]I start with the amendment to paragraph 15. The narrow objection to the words sought to be added to that paragraph is that it is not averred that the implication of the term is “necessary” to give business efficiency to the Contract. The objection is plainly valid. It is, however, easily met by inserting the absent word “necessary” into the pleading.[28]But there is, as it appears to me, a broader and equally valid objection, namely that there is no real prospect of TGC being able to establish that the terms set out in paragraph 15 should be implied. The conditions to be fulfilled in order for a term to be implied are conveniently set out in paragraph 6.03 of Lewison’s “The Interpretation of Contracts”, namely:
“a. [the implied term] must be reasonable and equitable;” b. 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; c. it must be so obvious that it goes without saying; d. it must be capable of clear expression; e. it must not contradict any express terms of the contract.”
[29]It is in my judgment clear that TGC cannot satisfy these conditions in relation to any of the implied terms set out in paragraph 15. Speaking generally of the circumstances in which the court will be willing to imply terms into a commercial contract, Sir Thomas Bingham said this in Philips Electronique v British Sky Broadcasting [1995] EMLR 472 at 481:
“The courts’ usual role in contractual interpretation is, by resolving ambiguities or reconciling apparent inconsistencies, to attribute the true meaning to the language in which the parties themselves have expressed their contract. The implication of contract terms involves a different and altogether more ambitious undertaking: the interpolation of terms to deal with matters for which, ex hypothesi, the parties themselves have made no provision. It is because the implication of terms is so potentially intrusive that the law imposes strict constraints on the exercise of this extraordinary power. There are of course contracts into which terms are routinely and unquestioningly implied. If a surgeon undertakes to operate on a patient a term will be implied into the contract that he exercise reasonable care and skill in doing so. It is inconceivable that any patient would in any imaginable circumstances commit his bodily well-being to the ministrations of a surgeon who did not undertake that obligation, or that a surgeon could hope to remain in practice without professing to discharge it. Again, quite apart from statute, the courts would not ordinarily hesitate to imply into a contract for the sale of unseen goods that they should be of merchantable quality and answer to their description and conform with sample. It is hard to imagine trade conducted, in the absence of express agreement, on any other terms. But the difficulties increase the further one moves away from these paradigm examples. In the first case, it is probably unlikely that any terms will have been expressly agreed, except perhaps the nature of the operation, the fee, and the time and the place of operation. In the second case, the need for implication usually arises where the contract terms have not been spelled out in detail or by reference to written conditions. It is much more difficult to infer with confidence what the parties must have intended when they have entered into a lengthy and carefully-drafted contract but have omitted to make provision for the matter in issue. Given the rules which restrict evidence of the parties’ intention when negotiating a contract, it may well be doubtful whether the omission was the result of the parties’ oversight or of their deliberate decision; if the parties appreciate that they are unlikely to agree on what is to happen in a certain not impossible eventuality, they may well choose to leave the matter uncovered in their contract in the hope that the eventuality will not occur. The question of whether a term should be implied, and if so what, almost inevitably arises after a crisis has been reached in the performance of the contract. So the court comes to the task of implication with the benefit of hindsight, and it is tempting for the court then to fashion a term which will reflect the merits of the situation as they then appear. Tempting, but wrong.”
[30]As will be apparent when I come to the construction of the Contract (see paragraphs 36 to 40 below), the implication of the terms would in effect amount to re-writing the Contract to the advantage of TGC. Some of those terms flatly contradict what is in my view the clear meaning of the words used in the Contract. I do not see that it can be said that the implication of any of the terms is “necessary” to give business efficacy to the contract; the Contract is effective without those terms. It is not in my view arguable that the Contract by implication requires Crown to be even-handed as between TGC and Sandvik. The Contract is made between Crown on the one hand and Sandvik and TGC (S/TGC) on the other hand. S/TG is treated in the Contract as a single entity, analogous to a joint venture. It was of course open to Sandvik and TGC to regulate the contractual position as between themselves (as to an extent they did: see their agreement of 23 June 1999) but I cannot accept that Crown undertook by the Contract to treat TGC and Sandvik in the same way. My conclusion in relation to paragraph 15 of the re-amended Particulars of Claim is that it should be struck out in its entirety.[31]I come next to paragraph 18 of the Particulars, which I have quoted at paragraph 18(ii) above. Mr Buttimore’s reliance on Paragon the Court of Appeal in that case accepted that the mortgagee should not have a completely unfettered discretion to vary the interest rates payable by the mortgagor as was contended on its behalf (see paragraph 30 of the judgment of Dyson LJ). Dyson LJ drew a distinction between an implied term that the lender would not impose unreasonable rates (which he rejected) and an implied term “that the discretion to vary interests rates should not be exercised dishonestly, for an improper purpose, capriciously or arbitrarily” (which he accepted).[32]I cannot accept the argument that Paragon legitimises the pleading of such a term in the context of the present case. Vital to the decision in Paragon in my view were the facts, firstly, that under the terms of the mortgage Paragon had an unfettered discretion to vary the interest rates payable and, secondly, that the term which Dyson LJ accepted was to be implied was a single composite term (i.e. arbitrariness or caprice would not suffice).[33]I cannot accept that the Contract in the present case conferred any discretion upon Crown as to the volume of orders to be placed. Mr Buttimore suggested that the contract gave Crown an “option” in regard to the volume of orders. Even if (which I doubt) the term “option” is appropriate, I do not think an option equates in this context to discretion. If, as I find to be the case, there was no discretion here, still less an unfettered discretion, a Paragon-type implied term is out of the question. Apart from that I am very doubtful if it is arguable that the particulars relied on in paragraph 23 of the pleading are capable of establishing dishonesty and impropriety. I reject the suggestion of Mr Buttimore that capriciousness or arbitrariness would of themselves and without more suffice to establish breach of a Paragon-type implied term.[34]As to the amendments sought to be made to paragraphs 19 and 20 (quoted at paragraph 18(iii) above) I remind myself that the particulars are pleaded in support of what is a charge of dishonesty against Crown. I think it is wholly unsatisfactory for TGC to plead, as it does at paragraph 19(a) of the proposed pleading, that the agreement to terminate was for reasons connected with the investigation into allegations against Mr Sheffield without condescending to say what those unconnected reasons were and without identifying the nature of the dishonesty alleged against Crown. I would disallow the amendment to paragraph 19(a) on that ground alone.[35]But there is a more fundamental problem with both paragraph 19(a) and (e). It is that the dishonesty/concealment there alleged relate to the reasons why and the manner in which it is said that Crown set about terminating the Contract rather than to the substance of Crown’s decision to reduce the volume of orders placed with TGC. As Potter LJ observed in James Spencer v Tame Valley Padding [8 April 1998, unrep]:
“It seems to me, on analysis, that all the defendants seek to do is to expose the motive of the plaintiffs for terminating….However, motive is of course, strictly speaking, irrelevant. There is no general doctrine of good faith in the English law of contract. The plaintiffs are free to act as they wish provided that they do not act in breach of contract”
. I would disallow the amendments to both paragraph (a) and (e) on this ground.

Argument on the construction of the Contract

[36]I have set out the terms of the Contract at paragraph 6 above. I will start with parties’ respective arguments as to the meaning of the words used in the Contract itself. Thereafter I will consider what, if anything, emerges from a consideration of the factual matrix.[37]TGC’s case is that the wording of the preamble is to be construed as meaning that the volume of the orders placed by Crown can be changed (sic) to approximately 30% or 50% in the second and third year of the Contract if and only if TGC breach one or more of conditions 1-8. Absent such a breach, TGC maintain that the contract continues at 70% of Crown’s tooling requirement for the full three years of the Contract.[38]Crown’s case by contrast is that in 2003/4 S/TG are to supply about 70% of Crown’s requirement, subject only to the entitlement of either party to terminate on giving 6 months notice, as provided in condition 8. In the second and third year of the Contract, the preamble entitles Crown to reduce the volume to 50% or 30% or alternatively to keep the volume at 70%. According to Crown’s argument, the words “subject to the following conditions” apply throughout the three years of the Contract.[39]I prefer the construction for which Crown contends. I cannot accept that the second sentence of the preamble was intended by the parties to mean that Crown could on reduce its requirement to 50% or 30% if there had been an antecedent breach of one or more of the 8 condition by TGC. If that was indeed the intention it could and in my view would have been spelled out differently and far more clearly. If the meaning of the preamble is that contended for by TGC why is there a reference to the requirement continuing at 70%? It seems to me that the purpose underlying the preamble was to provide flexibility for Crown in the event that the market for its tooling declined. I accept that the positioning of the words “subject to the following conditions” within the preamble is not ideal but I think those words can only be read sensibly to mean that the award of the three year contract is dependent on TGC complying with the conditions. The preamble says that the volume “will” change not that it “may” do so. My final comment is that it is odd if compliance with the 8 conditions prevents Crown from reducing the volume, given that conditions 3, 6, 7 and 8 require no compliance on the part of TGC or Sandvik. One asks rhetorically what is to determine whether a breach of, say, condition 3 is to result in a reduction to 50% or 30%?[40]Before leaving the wording of the Contract, I should make clear that I do not accept that the wording requires Crown to allocate to TGC or to Sandvik any specific share or proportion of the volume of tooling to be supplied. The Contract is in my judgment to be read as treating them as one supplier. That is essentially the reason why I struck out paragraph 15 of the Particulars (see paragraph 30 above). It would of course have been open to TGC and Sandvik to enter into contractual arrangements between themselves as to the steps which should be taken in the event that Crown excluded one or other of them when placing orders. That was not done. I reject the suggestion made on behalf of TGC that such arrangements could not be entered into because the Contract required that the tooling supplied under it should be manufactured by TGC and Sandvik respectively. The Contract simply does not say or imply that: it refers only to “supply”.

The factual matrix

[41]Since I am of the view that the meaning of the preamble is clear and unambiguous, it follows that there is no justification for resorting to the factual matrix: see Investors Compensation Scheme v West Bromwich BS [1998] 1 WLR 896 per Lord Hoffmann at 912-4. In deference to the argument of Mr Buttimore, however, I make a number of brief observations. The first is that, as is apparent from the speeches of Lord Wilberforce in Reardon Smith Line v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-6 and of Lord Hoffmann in BCCI v Ali [2001] 1 AC 251 at 269, the circumstances to which it is legitimate to have regard when taking account of the factual matrix are comparatively limited.[42]Although Mr Lowenstein has appropriately accepted that for the purpose of the present application the facts relied on by Mr Buttimore are to be taken to be true and to be the only material facts to be taken into account when considering the matrix, it is obvious that the matters relied on by TGC at paragraph 13 of the Particulars of Claim reflect only its own commercial objectives and concerns. He relies, for example, on the substantial quantities of steel consumable stock which TGC would need to hold in order to meet its contractual obligations. No account is taken of Crown’s commercial concerns and aspirations.[43]It may very well be that at the time when the Contract was entered into the parties all intended, or at least hoped, that the split as between TGC and Sandvik would remain broadly the same both in terms of volume and the type of metal used for the tooling (carbide and steel). But that falls far short of providing the basis for an argument that Crown was contractually bound to retain the split throughout the three year term, especially in circumstances where I have found that the contract unambiguously treats TGC/Sandvik as a single contracting party. I recognise that historically Sandvik had committed itself to the manufacture of carbide consumable tooling and that TGC used steel for its tooling. But if for whatever reason Crown were to order steel products from Sandvik or carbide products from TGC, I can find nothing in the contract to prevent TGC and Sandvik fulfilling such an order by supplying Crown with tooling bought in from another manufacturer. As I have already said, I reject the contention on behalf of TGC that this was a contract for the manufacture, as well as the supply of the tooling.[44]It follows that TGC’s claim in contract against Crown must be dismissed.