Thames Cruises Ltd. v George Wheeler Launches Ltd & Anor

This action is a dispute between operators of passenger boats on the Thames in London. Until the events giving rise to the dispute they were involved in business in conjunction with one another, operating passenger boat services, primarily between Westminster Pier and Greenwich Pier. These proceedings arise from the circumstances in which that arrangement came to an end.

The Claimant’s case is that the Defendants reneged at the last minute on a commitment with the Claimant to pursue together a single joint tender for the new Pier Licence, which was necessary for continued operation of the passenger boat services to be maintained. The Claimant contends the Defendants did that by submitting a separate competing tender for the Licence and simultaneously undermining the original tender.

The Licence was then granted to the Defendants (and others in a new consortium created by them for that purpose) and the Claimant has been precluded from operating on this route since. That occurred by the acceptance of the Defendants’ consortium’s tender and those operations commenced in April 2002, after the expiration of the previous Licence under which the Claimant and the Defendants operated.

The trial was for liability only.

All parties have been passenger boat operators on the Thames for many years. The First Defendant ("Wheeler") since 1946, the Claimant since 1973 (under the name Tidal Cruises Limited until 2001) and the Second Defendant ("Kingwood") since prior to 1976.

In or about 1975, an association Westminster Passenger Services Association ("WPSA") was formed, its members including the Defendants and the other four passenger boat operators then operating on the Thames (not including the Claimant). The Defendants are closely connected to one another, being jointly owned and sharing the same directors, Mr Reed and Mr Watts. I will say something about the WPSA further in this Judgment.

Among the members of the WPSA at the time it was established was a company called Jackson Brothers River Services Limited ("Jacksons"). In 1982 the Claimants acquired Jacksons, which continued to operate on the same route in conjunction with the Defendants and others. The Claimant also operated a separate charter passenger vessel business, which it still operates to this date. In about 1997/1998 Jacksons ceased operating and transferred its passenger vessel business to the Claimant. WPSA’s accounts show the Claimant itself became a member of WPSA then with the Defendants.

The operation of WPSA involved each party contributing and operating its own vessels and crews, but otherwise operating as a single entity, providing tickets which could be used on any of the boats, constructing and maintaining ticket offices as one entity, marketing the service as one entity and employing pier and ticket staff as one entity, with operations according to an agreed timetable, with agreed training and sharing of net profits of all ticket sales. The profits were shared according to the number of boats that the respective operator had on the operations.

Although each party shared the costs of operating the ticketing and sales as I have set out above, as an expense of WSPA, each party provided its own boat and crews and was responsible for the expenses attendant on the operation of those boats.

The Claimant claims the agreed proportions were 40:40:20. That is disputed by the Defendants, but that was the agreed split towards the end of the association.

In order to access the piers necessary to conduct the operations, a licence was required from time to time from the Pier Owner. In the early days of WPSA the Pier Owner was the Greater London Council and subsequent to its dissolution the Port of London Authority. By 2001, a company called London River Services Limited ("LRS") a subsidiary of a public body called Transport for London was the owner of the Piers.

All licences were at all material times held in the names of a company called Westminster Passenger Services Limited ("WPSL"), a company established in 1980 by the then members of the WPSA inter alia to hold such licences as trustee for WPSA. By 2001, the relevant licence was a twenty-five month licence from LRS dated 1^st March 2000 expiring on 31^st March 2003.

Matters ran smoothly for many years. The composition of WPSA fluctuated, the number of members gradually shrinking until it comprised of only the Defendants and Claimant. Until 1^st January 2001, there was no competition on the Westminster – Greenwich route. However, a company called City Cruises Limited was from that date awarded a licence by LRS to use the Westminster and Greenwich Piers in competition with WPSA, inevitably leading to a decline in WPSA’s income. There was an issue between the members of WPSA in 2001 over the proportions in which the net sale profits of part of the route (to the Thames Barrier) were to be shared when the service on that route hitherto operated by the Claimant alone was incorporated into the service operated by WPSA. This featured in the trial and the Claimant contends that it was one of the reasons why the Defendants chose to exclude the Claimant from the ultimately successful bid.

Times changed however, in 2001. On 22^nd May 2001, the parties were notified by LRS that when their present licence expired on 31^st March 2002, the replacement licence to commence on 1^st April 2002 would be the subject of a competitive tendering process. That kind of process has never applied before, so it was something entirely new to the parties to this action. The parties agreed to apply together for that licence as they had for all previous licences. Without the licence WPSA’s business could not operate. As regards the Defendants that would be a disaster. They had no other business and it followed that if the licence application was unsuccessful from their point of view they would go out of business. The Claimant was not in the same position, because although it would suffer a loss of income if the licence bid was unsuccessful, it could still operate its charter business which was not dependant upon the licences.

There is no doubt the parties agreed together after the receipt of the letter dated 22^nd May 2001, to proceed by making a combined bid as they had done in previous occasions. As I have said, that was done against a different background, namely the competitive tendering process. Whilst LRS had indicated that there would be a tender process in its letter of 22^nd May 2001, the actual tender process did not start for many months, until November.

There was a meeting with Mr Griffiths, LRS’s general manager on 13^th June 2001. At that meeting Mr Griffiths indicated that a bid by the parties to this action, if it included another company Campion Launches Limited ("Campion") would be likely to receive favourable treatment. The reason for this was that Campion had provided the service to the Millennium Dome under a licence from the LRS, which had been loss making. Campion had taken over the licence when the existing licence holders for that service, White Horse Ferries Limited, became insolvent. Mr Ludgrove gained the impression that Campion had some form of informal preferred bidder status in respect of the Westminster – Greenwich licence tender as a return favour for taking over that controversial operation.

The Claimant (in particular its managing director, Mr Ludgrove) did not favour the inclusion of Campion in the bid. Although this is pleaded as a justification in the Defendants’ defence for not proceeding with the Claimant, it was quite clear on the evidence that Mr Ludgrove had accepted the inclusion of Campion as early as August 2001, so that does not seem to me to be a justification for not proceeding further with the Claimant.

On or about 13^th November 2001, WPSA received the anticipated Invitation to Tender from LRS stipulating the following deadline:-

The administrative lead in preparing the WPSA tender was given to Mr Reed, and he replied on 21^st November 2001, on behalf of WPSA, submitting a notice of intention to tender. Neither the Claimant nor the Defendants in respect of their own independent bids actually submitted a notice of intention to tender, as neither was contemplating submitting its own separate tender by the time the deadline had expired on 21^st November 2001. LRS allowed the Claimant to submits its own tender on the basis of the notification sent by WPSA and allowed the Defendants’ consortium to submit a tender on the basis of a tender notification provided by Campion.

Unknown to the Claimant, the Defendants had written to LRS claiming to have a nagging feeling that they were at a disadvantage through combining with the Claimant in the WPSA tender. The Defendants’ case is that this was precipitated by two anonymous telephone calls from two different men, made to Mr Watts. He said he did not recognise the men. The Defendants first revealed these anonymous telephone calls in their witness statement. They did not tell Mr Ludgrove of the calls, despite the fact that they were still, as far as he was concerned, working together towards a joint bid, nor did they tell him of their nagging doubts. They did not tell him that they had written to the LRS and furthermore, they did not tell him that they had a secret meeting with Mr Griffiths on 21^st November 2001.

As I have already observed, that was the last day for returning the notice of intention to tender. On that day a meeting took place between Mr Griffiths and his assistant Paul Owens and Mr Watts and Mr Reed. Mr Owens prepared a note summarising the discussions that took place at the meeting. The Defendants in their evidence denied that it accurately reflected what was discussed in some ways. I will deal with this evidence further when I come to examine this crucial meeting later in this Judgment, but I am quite satisfied that the notes were an accurate note of the meeting. I observe that the note was sent to the Defendants shortly after the meeting, and was never challenged by them as not being an accurate note.

Subsequent to that meeting (and the Defendants say as a result of it, but the Claimant disputes that) the Defendants decided to make a bid without the Claimant. The reason put forward by the Defendants in the trial was that they believed that their bid would not be successful if the Claimant’s old boats were part of the bid. There was a history to this, as I shall recount further in this Judgment. I stress that it has never been suggested that the Claimant’s boats (which do have a certain elderliness) were not safe. At all times, they had the relevant requisite operating licences.

Accordingly, the Defendants entered into discussions with Mr Campion, to bring his company into the consortium with them, to the exclusion of the Claimant. Other companies formed part of the consortium as will appear.

At a meeting with Mr Ludgrove on 27^th November, (which he believed was called for the purposes of finalising the WPSA tender) they announced to him without warning their intention to submit a tender in competition with WPSA, as members of a separate consortium. The express reason given at the meeting was the age of the Claimant’s boats, and the observations which they interpreted from Mr Griffiths. Mr Ludgrove described the Defendants’ actions as a shameful betrayal.

The Defendants duly submitted their bid. At the same time Mr Watts submitted a tender on behalf of WPSA. The Claimant contends that the Defendants’ tender was submitted using confidential information obtained from WPSA, but this did not stand after Mr Ludgrove was cross examined by Mr Clayton QC, who appears for the Defendants. There is no confidential information which was used in the Defendants’ bid.

The WPSA bid prepared by Mr Watts (although he claimed not to know anything of the detail and said it was prepared by Mr Reed’s input) included the Claimant and paradoxically Campion (although Mr Campion said he did not realise that). Nor did he realise that his company had submitted a separate bid in its own right. The Claimant also submitted its own separate bid. Campion was invited to participate but refused. The Defendants did not participate in that bid.

Thus the Claimant participated in two bids, the Defendants participated in two bids and Campion participated in three.

The bids were evaluated by the LRS board on 18^th December 2001, and a memo disclosed by LRS shows that only five tenders were submitted. Three of them were the Claimant’s, WPSA’s and the Defendants’. As the Claimant correctly contended, but for the Defendants’ action there would have only been one bid from those three parties. Campion submitted a bid, but it was in letterform and was non-compliant. City Cruises also submitted a bid, but this was also non-compliant and unattractive for other reasons, namely it would give City Cruises a monopoly, an event that the tendering process was amongst other things designed to avoid.

The Defendants were successful, and it is fair to say that the major factor appears to be the age profile of the boats in various tenders, coupled with the promises made to renew boats over the course of their licence.

As the trial developed, it became clear that there were only two factual issues, which required determination.

The first issue was whether Mr Ludgrove had ever said that he would, as part of a tender process, promise to acquire new boats in order to obtain the licence, but then would renege on that promise subsequently. The Defendants’ case is that such a statement was made first in 2000 and later in or around October 2001 just before the bidding process was to start. Mr Ludgrove denies he made any such statement.

The second issue of a factual nature was whether or not the age of the Claimant’s boats justified them in withdrawing from the agreed joint bid process, and going on their own. This involves considering whether there was in effect any reasonable apprehension on their part that the bid might be jeopardised because of the age of the Claimant’s boats. It seems to me that if the Defendants had such a reasonable apprehension (given the disastrous consequences for their companies of an unsuccessful tender) they would be entitled no longer to proceed in tandem with the Claimant, unless there was evidence, which showed it genuinely addressed the age of the boats in the meaningful way.

After the successful tender in favour of the Defendants the Claimant sought Judicial Review of LRS’s decision, but it failed on grounds, as I understand it, of jurisdiction, rather than substantive evaluation on the merits.

The Claimant contends the association WPSA constituted a partnership as a matter of law and the Defendants were in breach of their obligations as partners in submitting a tender in competition with the partnership. The Defendants deny that.

Alternatively, the Claimant contends that there were implied terms of good faith between the parties arising from their relationship over a period of years, which the Defendants likewise breached by their conduct in submitting the rival bid. The Defendants deny the existence of any such implied term.

In the final alternative, the Claimant contends that there is a constructive trust which arises in respect of the Defendants’ interest and new licence on the principle Pallant –v- Morgan [1953] Ch 43 as applied in Banner Homes –v- Luff [2000] Ch 372, the Defendants having inequitably seized for themselves a business opportunity which the parties had agreed to secure jointly. This claim is also denied by the Defendants, not on the basis that there was no agreement to bid jointly, but on the basis that the circumstances after that agreement in May 2001 changed, justifying them in no longer being willing to participate in a joint bid with the Claimant.

The confidential information issue no longer arises.

A separate and independent issue is as to whether or not WPSA was governed by any rules and if so what was the impact of those rules.

In order to evaluate the claims put forward by the respective parties to this action, it is necessary to come to a conclusion as to the nature of the relationship between them.

The Claimant’s primary case is that the operation of WPSA in law was a partnership. There is a secondary argument involved in that contention raised by the Defendants as to whether there were any rules under which WPSA operated.

The Claimant’s case is that there were no rules, as none was drawn to its attention, WPSA did not operate in accordance with any rules and that the partnership was therefore a partnership at will, covered entirely by implied terms and the provisions of the Partnership Act 1890. As such a partnership of course, being a partnership at will, it would be dissolvable at will. It is to be appreciated that in a case of partnership at will any of the parties to it can dissolve it unilaterally by giving an instant notice (see Lindley & Banks "Partnership" (18^th Edition) paragraph 24-9). Further a partnership dissolution can be inferred from circumstances such as a quarrel, even though no notice has been given (Ibid. 24-25). The notice of dissolution or act of dissolution takes effect as soon as it is communicated to all parties.

Whatever the terms of the partnership (if any) I am of the opinion that the partnership dissolved on 27^th November 2001 at the meeting between Mr Ludgrove and Mr Watts and Mr Reed, when the latter two announced their intention to make a separate bid with Mr Campion. Whatever the subsequent actions in belatedly submitting a bid on behalf of WPSA at a later stage the reality is that the partnership in my opinion (if any) was finished as from that date save for the purpose of dissolution and realising assets in respect of such dissolution.

In this context whilst partnership duties carry on for the purpose of dissolution, I cannot see that those duties would extend to forcing the partners to complete a bid, which if successful would force them to carry on in partnership. Once the partnership is dissolved a number of consequences apply. These are summarised in Lindley at paragraph 25-58 and are well known. The partners would be entitled to have the partnership property applied in liquidation and have all the surplus assets divided. That right would inevitably prevent the continuation of the operation of the services in the event that the WPSA was successful. Equally, no partner is entitled to appropriate to himself the partnership assets, so there would either have to be an express agreement as to the distribution of the partnership assets (including the right to operate services in the event of a successful bid) or otherwise they would be sold. Whilst the duties of good faith carry on, nevertheless partners can insist no further business is transacted or done save with a view to winding up. Finally, in this context once the winding up is complete, each partner in general is entitled to carry on business of the same nature as the dissolved firm, either alone or in partnership with others. It is suggested that a partner cannot solicit the business of a dissolved firm; see the incorporation by reference in footnote 5 on page 742 of Lindley to paragraph 10-204. Equally, one partner of a dissolved firm cannot use the name of the old firm after a general dissolution; see Ibid. paragraph 10-198. These are difficult principles to apply in the context of a partnership at will for obvious reasons. First, it is unlikely (but not impossible) that a partnership at will has developed any sizeable goodwill value because of the ability of the partners of the dissolved firm to compete subsequent to dissolution. In certain circumstances it may be possible however. How the enforcement of the protection of the goodwill operates in the case of a dissolution of a partnership at will is equally by no means easy to see because of the inability of any partner to arrogate for themselves any part of the goodwill and the trading name. In most cases therefore where there is a partnership at will (assuming there has been no express purchase of a goodwill item) each party will be in effect free to compete, but not using any of the dissolved partnership assets, including its name.

The consequences of this are that, in my opinion, even if a partnership was established the Defendants were entitled to dissolve the partnership as they did on 27^th November 2001 and were equally entitled thereafter to submit a competing bid, without thereby being in breach of any partnership duties owed to the Claimant as co-partner. This to my mind makes the partnership claim (which is the fundamental one of the Claimant’s) entirely academic.

For there to be a partnership as a matter of law, there must be (1) a business, (2) carried on by two or more persons in common and (3) with a view to profit.

Plainly the WPSA was a commercial venture for the purpose of maximising profits from plying the route, and therefore satisfies the first criteria; see Lindley paragraph 2-02 "virtually any activity or venture of a commercial nature including a one off trading venture will be regarded as a business for this purpose".

Second, there must be a single business (Ibid. paragraph 2-06) carried on for the parties’ common benefit, rather that the carrying on of separate business wholly independent of one another. The Claimant contends that the weight of evidence supports a single business. The numerous factors relied upon by the Claimant as set out in Mr Ludgrove’s first witness statement (paragraph 20) comprise:-

The Defendants’ contention is that WPSA was originally established at the behest of the GLC in order to provide a single ticket issuing body. The Claimant does not accept that that is a relevant factor.

It seems to me that the key and vital requirement is for there to be a single businesscarried on in common. A business can be carried on in common even if there are a number of separate unrelated and different activities. There must however, (as the current editor of Lindley points out (paragraph 2-06)) be an acceptance of some level of mutual rights and obligations as between themselves. However, "if, on a true analysis, each supposed partner is carrying on a separate business wholly independently of the others as in the case of a mutual insurance society or a genuine share farming agreement or one is actually supplying consultancy or other services to the others there can in law be no partnership between them". (This paragraph in the previous edition was approved by Dyson J in Brostoff –v- Clarke Kenneth Leventhal [11-3-96] (unreported).

In this case the three alleged partners had their own separate limited companies, which had to trade profitably. The Claimant in particular traded through that company in activities other than the proposed partnership activities. Each constituent person was obliged to provide and man its own boats at its own risk and cost and there was never any question of the supposed partners being responsible for the losses incurred by the other partners in operating their own boats. It is true that they had a mutual responsibility as regards liabilities incurred by the WPSA, but that is not an indication of partnership in my mind; it is merely an indication that they jointly and severally as regards third parties became liable for contracts WPSA entered into (or rather WPSL entered into) because they contracted to provide those services in a joint and several way. It is significant also, that the parties never addressed the issue of partnership for example by the method in which taxes were paid. There was never any submission of partnership tax returns. Each net amount of profits due to the three members of the association was accounted for in the company accounts. There is nothing wrong with the suggestion that the losses of operating WPSA were born jointly, as that was a necessary consequence of operating that service. It was of course suggested by the GLC as a smooth way of enabling the companies then offering the services to ensure that there was a rational ticket operation as between them for the benefit of the customers.

I do not see when the relationship is thus analysed the result is a partnership. It is more akin to a set of Barristers’ Chambers where individuals operate in certain common elements with a view to benefiting the individual separate profits. The division of the profits was done here sensibly as between them according to the number of boats each company provided.

It follows therefore that I am of the opinion that the relationship between the parties was not one of partnership.

Equally, I so not think that the unthinking use of the words "Directors and partners " in the WPSA submission tender drafted by Mr Reed in December 2001 is significant. Likewise, the use of the word "partner" in the notes of the secret meeting of 21 November 2001 (prepared by someone who was not a "partner") is not significant. Lay people use the word partner in a colloquial sense i.e. people who go in so in business in some way without being true partners in law. Lay people might call themselves partners without necessarily intending to describe the relationship as being one of partnership, as the law might recognise it.

Further, if the Rules of WPSA are relevant clause 19 of the Rules the declaration is significant. It provides:-

The decision of Weiner –v- Harris [1910] 1 KB 285 at page 290 is stated by the Claimant (as set out in Mr Graham’s opening written submission paragraph 43) as being authority for the proposition that a declaration against partnership is ineffective. At first sight that seems a realistic submission in the sense that it is also a similar result to that obtained in the area of Landlord and Tenant for example, where the courts frequently disregard declarations that arrangements do not create a tenancy. However, the Weiner case is not authority for such a stark proposition, as the judgment shows. Cozens-Hardy MR said this:-

There was not actually a partnership dispute before the Court; the example was given to illustrate a dispute over the sale of goods. What the Court of Appeal are saying, is that the phrase is not conclusive. They are not saying that such a declaration can never be regarded, but that the Court looks at the whole circumstances. Thus in the Brostoff case Dyson J (page 7) referred to a similar declaration in that arrangement where he said "there can be no doubt therefore that the declared intention of CKL was that it should not be a partnership and that it should be a mutual association for the development of accountancy firms … it is well established that the declared intentions are not conclusive and that is for the court to determine the true status of CKL: see Weiner …". On reviewing the evidence the Judge concluded that on that evidence "nothing was said or done by CKL [which] undermined its clear declared intention not to be a partnership" (page 12).

In the present case clause 19 is significant. Whilst Mr Graham correctly submits that the rest of the clause seeks to avoid joint and several liability for torts completed in the operations of the WPSA that to my minddemonstrates that the parties were not intending to create a partnership. Its purpose was to make clear that the responsibility for the operation of each separate boat was the responsibility of each separate member of WPSA. It is therefore self evident that they are not carrying on a single business in common.

Even if I was wrong, for the reasons that I have already set out, I do not accept that the events complained of by the Claimant in any event would have constituted a breach of any partnership provisions. The Defendants were entitled to dissolve the partnership and did so effectively on 27^th November 2001.

The Defendants contend that the WPSA rules govern the relationship between the Claimant and the Defendants. The case is that the WPSA adopted the rules in 1977 for the purposes of co-ordinating the operation of the Public Passenger Boats Services, operated by individual members of the WPSA from Westminster Pier to Greenwich Pier. The Defendants were (amongst others) founder members of the association as set out in schedule 1 to the rules. The Claimant was not. The Claimant became a member of the WPSA gradually. In 1982 it bought out Jackson Brothers River Services Limited ("Jacksons"). Mr Ludgrove, in his witness statement explained that he obtained an understanding of the WPSA when the Claimant took over Jacksons. That understanding was based on what Mr Steele the owner of Jacksons told him. Mr Ludgrove says that Jacksons said nothing about the written constitutional rules and did not pass any document on to him. In his witness statement Mr Ludgrove suggested that he had been informed recently that historically WPSA had been formed at the behest of the GLC. Upon acquiring Jacksons he said that the Claimant under its then name Tidal Cruises because a member of the WPSA. It initially carried on a business within the WPSA as Jacksons, but Jacksons ceased trading in 1995 and closed down completely in 2001. As soon as the Claimant acquired Jacksons he says it was regarded as being fully a member of the WPSA. There was he recalled no formal process of joining, but there was no doubt that this occurred. No reference was made to him that the association had a written constitution or rules, still less was any provided until 21^st January 2002 following a request for a copy of the rules that he sent on 2^nd January 2002. Despite firm cross examination from Mr Clayton QC, who appears for the Defendants, Mr Ludgrove remained firm in his belief that he was not aware of any rules and further that he had obtained information about WPSA from Mr Steele of Jacksons rather than (for example) his lawyers who acted for him when he acquired Jacksons. I find this surprising. When I pressed Mr Ludgrove on this and pointed out that there are many associations of which he must have been a member, which had rules, he professed surprise at that.

It is clear that reference was not made to the rules during the entirety of the period that the Claimant was involved in the WPSA. Further, when it became a member and when one of the founder members Thompsons ceased to be a member, the rules were not applied. Under schedule 3 of the rules a member who wishes to sell his business or any part thereof, which includes the operation of the Passenger Boat Services, is obliged to give a notice to the other members, enabling the other members to acquire the business proposed to be disposed of, on not less favourable terms. In the two instances to which I have made reference, those provisions were never considered, let alone operated. The Claimant acquired Jacksons without demur. Thompsons assets were acquired by all the other partners in specie and they were compensated with a reduced share of the income over the next year.

When the association retained Alliotts, its accountants to prepare a business plan in 1999, no mention was made of any rules despite the historical review of the WPSA contained in it. Equally, the WPSA accounts, which were signed off by a Mr Watts, right down until the dissolution of the association with the accounts ending 31^st March 2002, contained a statement:-

Those accounts were signed off on 18^th June 2003. By that time the Defendants had already served a Defence (5^th November 2002) and an Amended Defence (10^th March 2003). In both those Defences the Defendants purported to rely upon the rules. The signing off of the WPSA accounts in that manner shows an extraordinary amount of casualness, bearing in mind the fact that the Defendants were already in litigation, where they were asserting there were such rules. Mr Watts was unable to explain this, except on the basis that he signed the accounts without reading them (a common observation of witnesses who sign such documents and are then caught out in what they say).

I have come to the conclusion in the light of all these inconsistencies that the reality is that the WPSA was properly constituted initially by reference to rules that were agreed at the out set, but that thereafter (a not uncommon occurrence even in the most well run partnerships for example) that the parties had little or no regard to the rules and there operation until a dispute arose. I do not accept Mr Ludgrove’s evidence when he says that he did not believe that there were any rules. That is so incredible that it is to be beyond belief. On balance I conclude that there were rules, but the parties never operated them.

In the context of the present dispute, I find the rules of little assistance as regards governing the relationship between them for that reason. I have already rejected the argument put forward by the Claimant that the relationship was one of partnership. The only relevant clause in that regard was clause 19, and even then it had a peripheral significance for the reasons already referred to in this Judgment. It does not seem to me that there is any significant issue over whether or not the WPSA operated under these rules now.

This is the second alternative way in which the Claimant puts its case. It is said that if there was a contractual relationship which governs the parties i.e. the association of WPSA, which as I have found is not a partnership, then there must be an implied term, that they would act in good faith towards one anther and would not compete with the association or its members within its agreed area of operations. Reliance is placed upon observations in Blackett-Ord "Partnerships" (2^nd Edition) paragraph 2.40. Authority for the proposition that a joint venture give rise to an obligation for good faith is said to be the decision of the Court of Appeal in Hampton and Sons –v- Garrard Smith (Estate Agents) 274 EG 1139. I do not find this case of any assistance. The Judgment is short and there is no analysis of any arguments. Further, it was a decision based on an application for a judgment in default. All the court appears to have decided is that as the facts deemed to be admitted in the Statement of Claim, there was some duty to account. It says nothing more.

The absence of partnership I fully accept does not mean that duties akin to the partnership might not arise in a different type of relationship. However, the courts in this country have been reluctant to expand fiduciary duties in the way in which they have been expanded elsewhere. Thus as Blackett-Ord rightly observes (paragraph 2-41) the existence of a joint venture of itself will not invoke quasi-partnership obligations. It has been held to apply where a property is acquired for a joint project or money is paid by one joint venturer to another; see for example Banner Homes Group Plc –v- Luff Developments Limited [2000] Ch 372. That is a point to which I shall revert when I consider the Claimant’s third basis of claim. However, even the (at first sight) wide statements in Banner Homes have themselves been limited by the Court of Appeal, see London & Regional Investments Limited –v- TBI Plc and another [2002] EWCA Civ 355 and in particular paragraphs 44 – 50. It seems to me that to invoke fiduciary duties in an area where there is not immediately a fiduciary relationship by way of a constructive trust is something that the court is reluctant to do where there is an express agreement between the parties, which governs their relationship. In the London & Regional case there was an express agreement drawn up professionally by solicitors and negotiated between parties and the trust was sought to be imposed arising out of an annexed document which itself was marked subject to contract. That is far removed from the present case I accept, nevertheless the courts in this country have not moved as far as the courts have in other jurisdictions in relation to the imposition of a constructive trust as a remedial device or as a device used to correct what are perceived to be injustices. They should not be used to add to or alter the rules, which governs the relationship of the members of WPSA.

A similar result is arrived at in respect of implied terms. A term will only be implied if it is necessary to give efficacy to the contract. In the present case the contract is the contract constituted by the rules of the WPSA. It is in my opinion not necessary to imply the terms as alleged by the Claimant. Nor, is there anything in the rules and the nature of the association, which leads me to conclude that there is a fiduciary relationship between the parties. The simple position is that the association was formed to provide a more efficient method of dealing with the ticketing arrangements between the operators of the various ferries for the benefit of the customers. As time developed that efficiency led of course to the incorporation of WPSL a limited company, which is used as the medium for the operation of the WPSA. The nature of the arrangement set out in the rules to deal with what happens when a member leaves the association or wishes to dispose of their assets. In fact as I have already observed the parties have never operated those clauses. That of course is a matter which all the members can decide if it suits them from time to time. Other than that there is nothing to stop a member leaving the association. Nor to my mind is there any implied term or fiduciary duty, which prevents them from competing with the association of itself. It would be wrong to imply such action. It is not necessary of course if an opportunity came to a member by way of the association or if a member of the association acquired for example a trade secret or confidential information whilst a member of WPSA, which independently of the contract imposed a fiduciary duty on such a person then the courts, could interfere. I have already however, observed that the Claimant has accepted that there is no confidential information issue in this case now.

It follows therefore that I do not consider that there is any term or fiduciary obligation implied or imposed as alleged by the Claimant and that accordingly there is no broken obligation under the WPSA membership.

In case I am wrong, it is essential to analyse the relationship. Any such fiduciary duty or implied term can only subsist as long as the person is a member of the association. It is impossible to impose that obligation after a person ceases to be a member or if the association ceases to exist. Although the Defendants did not formally resign from the WPSA association, nor was the association expressly dissolved, the reality is that as at 27^th November 2001 the WPSA had come to an end by the decision of the majority members (i.e. the Defendants) to go their own way. It is at best analogous to the situation of the partnership at will, where as I have already set out after the dissolution (express or implied) or after a person has ceased to be a partner he is free to compete with the former partners. It follows therefore that even if (which is contrary to my view) there was such an implied term the actions complained of by the Claimant cannot be a breach.

This is not affected by the submission belatedly of a tender application by WPSA or by the Claimants to which I shall refer in more detail in the next part of my Judgment. Those were plainly made without any consideration of legal liabilities.

This is the third way in which the Claimant puts its case. It is said by the Claimant that after receipt of a letter from the LSR to WPSL stating an intention to require "competitive tender" for a licence from 1/4/02 the parties agreed that there would be a joint single bid for a new licence. The Claimant further contends that the Defendants withdrew from that arrangement in circumstances, which they ought not to have, with a result, that the licence that was successfully obtained by the new consortium by the LRS tender evaluation committee on 19^th December 2001 is held upon constructive trust for the Claimant.

Reliance is placed upon the authorities of Pallant –v- Morgan [1953] Ch 43 and Banner Homes Group Plc –v- Luff Developments [2000] Ch 372. I have already in this Judgment observed that the Banner Homes case has been subject to clarification by the Court of Appeal. However, that does not impact on the way in which the Claimant puts its case. In essence, the Claimants says where potential rivals for the acquisition of property reach an understanding or arrangement, they will participate together and one of them reneges upon that arrangement or understanding, acquires property itself to the advantage of the acquiring party and/or to the determent of the non-acquiring party a constructive trust arises in favour of the non-acquiring party if the circumstances are that it is inequitable for the acquiring party to retain the property for himself in a manner inconsistence with the arrangement or understanding.

The relevant paragraph is paragraph 17 of the Amended Particulars of Claim. In paragraph 22 of the Amended Defence it is specifically denied that there was an agreement or understanding that they would jointly apply for such a licence, following the receipt of the LRS letter of 22^nd May 2001. Having heard the evidence, it is quite clear that the Defendants acknowledged that there was such an agreement made, but their claim was that circumstances subsequently arose which entitled them to withdraw from that understanding. The first of those was that the Claimant (despite suggestions at a meeting by the LRS on 13^th June 2001, where they indicated that any tender not including Campion Launches Limited would be unlikely to succeed), refused to allow Campion to be part of the joint bidding process. It is certainly true that the Claimant was unwilling to allow Campion to be a participant initially. However, as the Defence acknowledges (paragraph 15(i)) it agreed to admit Campion membership of the WPSA on about 8^th August 2001. Bearing in mind the fact that the tender documents were not sent out until 21^st November 2001, I do not see how it can be argued that the exclusion of Campion had any relevance justifying the Defendants withdrawing from any understanding that they would make a joint bid.

The second and most important point, relates to the "new boats" policy. In reality this was the most significant dispute between the parties.

The Defence puts it this way:-

An attempt is made by the Claimants to suggest that that pleaded case cannot extend to threats to renege vis-à-vis the tender, as opposed to between the members of the WPSA. I reject that.

Nevertheless, only two breaches were alleged in the evidence. The first was September 2000. The second was October 2001. I cannot see that the events in September 2000 can have any significance at all, given the fact that the parties thereafter continued together in the WPSA and also agreed in May/June 2001 to make a joint bid. There was, as I have said on the evidence, no dispute in reality, but that they had agreed to make a joint bid. Mr Reed for example, accepted in cross examination that by the time the WPSL had submitted (as it did) an application for a licence extension on 1^st May 2001, it cannot then have been an issue, because otherwise he would have been a party to a deliberate misrepresentation to LRS. He accepted that it was "water under the bridge".

Therefore there was only one allegation where it is said that Mr Ludgrove made such a statement. The seriousness of the statement is self evident. It is an odd statement to make, because if the consortium bid on a promise of making boats (unless the bid was ambiguous) a breach of the terms of the tender would lead to a termination of the licence. Putting that aside, I shall set out the evidence as regards this allegation further in this Judgment.

The other matter (which arises from paragraph 15(k) of the Defence) is that after 21^st November 2001 (where Mr Watts and Mr Reed attended a meeting with Mr Griffiths at LRS (behind Mr Ludgrove’s back) they concluded there was a significant risk, that any tender including the Claimant would be rejected because of the age and quality of its vessels. As a result of that "the Defendants therefore decided to invite Campion, Crown River Cruises Limited and Westminster Party Boats Limited to form a new consortium for the purpose of preparing and submitting a new tender to London River Services for a licence".

The second question therefore arises as to whether or not, given that perceived risk the Defendants were entitled to make a bid without the Claimant.

It is important to look at the events starting in 2000.

The first event of significance is a meeting that took place between WPSL (where Mr Ludgrove, Mr Reed and Mr Watts meet Mr Griffiths). Unknown to Mr Griffiths, Mr Ludgrove taped that meeting. The note has been transcribed by Mr Ludgrove and on that transcription the view was expressed that the meeting took place "believed to be 28^th September 2002". Mr Graham identifies it as occurring pre 1^st March 2000. The actual date is not significant. The concern arose on the part of WPSL the from fact that City Cruises Limited had an operation now competing with it and the question arose as to whether or not another company would be allowed to compete alongside City Cruises Limited from April 2002 (i.e. the time when the WPSL existing licence expired). The meeting was wide ranging and the significant part from the point of view of this trial is the discussion that took place concerning new boats. Mr Griffiths pointed out that a substantial amount of investment had been put in by Cat Cruises albeit second hand boats and a substantial amount had been put in by City Cruises and he then posed this question to all of WPSL "what I don’t know is what exactly you guys did", he supplemented this by saying "because if somebody asks me at the moment what WPSL had done in its ten years of investment, I wouldn’t know what the answer was so I think you need to explain your position about that"

Mr Watts answered by saying that it was Bill (i.e. Mr Ludgrove) who dictated, and that no boats had been built in the last ten years, but the fleets had been maintained by refurbishment. He said that there were plans drawn up for a professional architect and new vessels, which had been priced at £1.25 million each. Mr Watts also referred to the drawing up of a business plan and that they would provide that to Mr Griffiths as soon as it was to hand (they did that on 8^th May 2000). Mr Griffiths pointed out that City Cruises had spent £5 million on boats to which Mr Watts commented "you look at the balance sheet, it is not very funny. If I was Gary (Beckwith) I think I would be having a few sleepless nights". Mr Griffiths drew back to the point that WPSL had not launched a new boat in the ten year period and that needed to be explained "because people in this building will say are this lot just milking their assets. It is a reasonable question to ask. Are you just replacing what you have got, keeping them going with the minimum amount to get by and make a large profit out of the business and saying thank you very much. Now there are people who have these views. Therefore you need to convince them that that is not your future and that you do have a vision for the future". Questions were then raised as to whether the refurbishment would do, and Mr Griffiths said:-

Following that meeting LRS granted a licence to WPSL for a twenty-five month term ending on 31^st March 2002.

It is quite clear that the Claimant over the period of the rest of that year investigated the possibility of acquiring new build boats.

On 1^st January 2001 City Cruises was given a licence to compete with the Claimants on their routes.

The important point from the business plan (which is dated 30^th March 2000) is set out in the introduction. WPSA proposed to purchase new craft at a significant capital outlay with a ten year payment profile, and was correspondingly bidding for a ten year licence from LRS. It was proposed (as set out in section 12) that the two new boats would be operational by 2002, i.e. with the new licence.

On 19^th September 2000 LRS wrote to Mr Watts. This was Mr Griffiths’s response to the business plan which had been sent on 8^th May 2000. He suggested that the best way forward was to expand on a number of areas mentioned in the business plan and it could then be appended to their proposal. It was quite clear from that letter that he was attracted by the offer to take two new boats and further, as regards three existing vessels, he indicated that the proposal would be enhanced if WPSL was able to state that at least two of those vessels would no longer operate upon delivery of the new vessels. He indicated that the fleet age profile would be significantly improved if this were the case. Ultimately Mr Watts on behalf of WPSL submitted an application in response to that letter on 1^st May 2001. In that he enclosed the business plan, the plan of the proposed new craft and an addendum by way of amplifying the business plan.

Unfortunately for WPSL the rules of the game changed dramatically. On 22^nd May 2001, Mr Griffiths on behalf of LRS wrote back acknowledging the letter of 1^st May, but indicating that LRS was now part of Transport for London (TFL") and was now a best value authority, which obligated LRS to ensure that they were obtaining value for money. TFL’s standing orders require a competitive process. He also referred to a proposed EU regulation which might require all riverboat services to be competitively contended. Accordingly, he indicated that the relevant services would be subject to a competitive tender process. He acknowledged that previous indications had been give that a licence extension was possible without such a process, but that the advise received required them to go to competitive tendering.

Having heard Mr Ludgrove, Mr Watts and Mr Reed I am firmly of the view that they all agreed to submit a joint bid in response to that letter. It was of course a new process as there had been no competitive tendering before.

On 13^th June 2001 Mr Ludgrove, Mr Reed and Mr Watts met Mr Griffiths again, and at that meeting, as I have already indicated, Mr Griffiths indicated that any tender not including Campion Launches would be unlikely to succeed. I am satisfied that Mr Ludgrove after initial reluctance agreed that Campion could join WPSA by the latest 8^th August 2001. On the basis of that agreement a Pallant –v- Morgan equity arose which bound them all to participate in a joint tender process. That obligation was not absolute and would not bind the Defendants if circumstances arose which enabled the Defendants reasonably to conclude that either Mr Ludgrove would make a promise to provide new boats and renege on that (paragraph 15(h) of the Defence) or there was a significant risk that any tender included in the Claimant would be rejected because of the age and quality of its vessels (paragraph 15(k)) of the Defence. As I have already set out in this Judgment, in respect of that latter plea, the Defendants allege that the decision to invite Campion, Crown River Cruises Limited and Westminster Party Boats Limited was because of that significant risk.

Mr Ludgrove vehemently denies acting in such a way. Further, such actions are inconsistent with the steps he took to prepare a new vessel, the submission of the business plan (as late as 1^st May 2001) including express commitments to purchase a new boat. In addition the actions are inconsistent with his negotiations to acquire "FEAN PRINCESS" entering into a preliminary purchase agreement on 12^th November 2001. The extensive activities of Mr Ludgrove were set out in the written closing submission of Mr Graham on behalf of the Claimant.

Mr Campion gave evidence, saying that he had evidence of seeing Mr Ludgrove make such a declaration. His evidence was criticized by Mr Graham, on the basis that he was not independent, because he has an interest, having joined in the consortium with the Defendants which was successful. I do not think that is a basis for questioning Mr Campion’s evidence. However, I do accept that his evidence was confused. For example he did not realise that he had been a party to no less than three tenders, namely Campion’s, WPSL’s and the successful consortium. He did not know that the Defendants and the Claimant were intending to buy new boats as per the business plan and he claimed he did not know that the Claimant was considering buying a second hand boat (the "FEAN PRINCESS") although he acknowledged that he had seen and boarded the "FEAN PRINCESS" in The Netherlands. He had clearly had input from others. Thus he was unable to explain why he could remember the first meeting between the parties of 11^th July 2001 and he was unable to give any reason for remembering the alleged meeting when he saw these words was in October 2001. Ultimately he acknowledged that he might have misunderstood what Mr Ludgrove was saying. Mr Ludgrove said that under the terms of the tender and the advice that they had received from Mr Griffiths (see further in this Judgment) that there was no immediate need to purchase such a vessel. Mr Griffiths advised that it would be sensible for no tenderer to commit to buy a boat in advance of a successful tender. I found Mr Campion’s evidence to be confused. I do not accept that Mr Ludgrove made the threat suggested. There was no apparent immediate reaction to this event; Mr Campion saying that he left the room as soon as the words were said.

Mr Reed was equally unimpressive in my opinion. He said in his witness statement that he objected to Mr Ludgrove’s stated intention, yet was unable to say how Mr Ludgrove reacted. He was unable to explain why someone in Mr Ludgrove’s position would have declared such a thing to his fellow consortium members. It does not make sense to make a promise to build new boats, obtain the licence on that basis and break it. There could not (in the context of Mr Griffiths’s concerns) be a clearer action as to excite the LRS to seek to revoke the licence. It is also illogical against the background of the business plan and the steps Mr Ludgrove was making to acquire newer vessels. Although Mr Reed and Mr Watts suggested that the acquisition of a newer second hand boat was improbable and that they knew nothing about it, that is not sustainable. I have already observed Mr Campion inspected the "FEAN PRINCESS" and, in any event, at the meeting of 21^st November 2001 Mr Owen’s note (paragraph 2) records Mr Reed saying, "he asked if LRS had a problem with WL’s boats and pointed out that WL had been looking at acquiring a newer boat. They asked if WL acquiring a newer boat would help".

Mr Watts did not deal with the meeting in his witness statement, but merely adopted everything Mr Reed said in his. At best he could say that the indication was that the commitment would not necessarily be carried through and he too denied that he knew that Mr Ludgrove was looking at second hand boats.

Despite the clear significance of such a stance, there is no contemporary documentation produced by the Defendants recording even a complaint addressed to Mr Ludgrove about this. This is to be contrasted with the fact that they did correspond about other matters of dispute as the same time.

Having seen the witnesses and having seen the other contemporary factors to which I have set out above I unhesitatingly reject the Defendants evidence that Mr Ludgrove stated that he would enter into a commitment to build new boats in order to obtain the licence and subsequently renege on it.

It is instructive first to see how the Defendants plead this allegation. The extent is to be found in paragraphs 15(j) (k) and (l) of the Amended Defence which provides as follows:-

The pleading has an element of disingenuity about it. Thus it is said that on 21^st November Mr Watts and Mr Reed attended the meeting with LRS on behalf of the First and Second Defendant’s and the purpose was to discuss WPSA’s tender. The supposed reason for this meeting was that Mr Watts in his witness statement refers to receiving two anonymous telephone calls in around late October or early November 2001. Each was from a different male voice and they told him that WPSA would not be considered by LRS for the new Westminster to Greenwich licence in its present form. On each occasion the person/s refused to identify themselves. Mr Watts attempted to obtain a recall by pressing 181 (this he corrected in his evidence by referring to the correct number 1471). He did not say that failure to address the new boats policy allegedly by the Claimant was the stated reason. So far as I can understand it no reason was given. However, it is said by Mr Reed and Mr Watts, in effect, that they concluded that the reason would be because of the Claimant’s reluctance to address the new boat issue. I remind myself of the Claimant’s stance as regards new boats at that time. It had agreed to the proposal to acquire two new boats under the business plan, which had been submitted, it was in the process of acquiring the "FEAN PRINCESS", it had admitted Campion into the tender process and of course by this time the tender documents had not been received, let alone answered. Mr Reed wrote to Mr Griffiths on 12^th November 2001. In the second paragraph he said, "we have a nagging feeling that this company and its associate company may be at a disadvantage through being grouped with Thames Cruises Limited. If our assumption is correct, would London River Services consider a separate tender/application from individual companies … I would be only willing to arrange a meeting with you".

The next day LRS issued the invitation to tender to WPSA. On 21^st November 2001 Mr Watts and Mr Reed attended a meeting with Mr Griffiths and Mr Owen as I have said. They did not tell Mr Ludgrove of the letter nor the meeting.

This meeting of course put Mr Griffiths in some little difficulty. It is difficult to operate a competitive tender process if he is having discussions with potential tenderers but does not have similar discussions with other tenderers. The process was new to WPSA and its members. That there were concerns about the age of the Claimant’s boats is evidence from matters already referred to in this Judgment. I should say that the age profile of the Claimant’s boats was far worse than that of the Defendants’. Its youngest boat was older than the Defendants’ oldest boats. The best record of what took place at that meeting is the contemporaneous note prepared by Mr Owens, as I have said, and sent unchallenged to the Claimants. I have already referred to paragraph 2 where the question was raised as to whether the acquisition of a newer boat by WL would help. That can only be against the background that Messrs Watts and Reed knew that Mr Ludgrove was contemplating acquiring a newer (not a new) boat.

Mr Griffiths replied carefully:-

I accept that something must have provoked the decision on the part of the Defendants to seek that meeting. I accept that the reason that they had the meeting was that at that stage they had a legitimate concern that the age profile of the Claimants boats might lead them to lose the tender. This was of particular significance to the Defendants because this licence was their only source of income. If they lost the licence their companies went out of business. The same did not apply to the Claimant. That reason is stated in their letter of 12^th November 2001. It was not suggested that that letter was untrue when it was written or was part of an elaborate scheme to create a smoke screen in order to get rid of the Claimant. I accept the telephone calls took place. However, where they come from is entirely a matter of speculation. What is clear however is that they chose not to discuss their nagging doubts with Mr Ludgrove (nor discuss the anonymous telephone calls with him).

Equally, I reject Mr Reed’s evidence that he had not told LRS that he had suggested that they might have to go elsewhere if newer vessels were not acquired. It does not appear in his statement, and there was no basis to my mind for suggesting that an important part of the meeting was prepared by Mr Owens and not challenged was inaccurately recorded.

I cannot understand why the Defendants did this. It totally undermined the Claimant in the eyes of the LRS. It discussed matters of concern as between the consortium, not between the consortium but with LRS. It seems to me that the Defendants wanted to make a bid independent of Mr Ludgrove and that they went to the LRS hoping to receive from LRS a statement that if the bid included the Claimant it would fail. They were disappointed in that because Mr Griffiths quite properly failed to give any such indication. He gave them general advice about the age profile of the vessels and was careful not to offer an opinion that they should get rid of the Claimant. This part of the note is also wrong of course if Mr Reed’s evidence is to be accepted.

The Defendants, as I have said, kept this meeting from the Claimant. The same day was the final day for returning of documents stating that a bid was intended to be made. Mr Reed sent WPSL’s notice of intention to tender back that same day.

The first Mr Ludgrove got to hear of all of this was at a meeting on the 27^th November. I accept his evidence that he understood that the meeting was to discuss the further process of the tender given the deadline for submissions being 14^th December.

In fact what happened at this meeting was that Mr Ludgrove made the point (correctly) that there was no requirement to tender to purchase new or replacement vessels. It is alleged, as I have said, in the Defence that that led Mr Reed and Mr Watts to conclude that he was not committed to renewing the vessels. The evidence at trial was somewhat different. I accept Mr Ludgrove’s version of the meeting. He was presented with a fait accompli that the Defendants were no longer to participate in a joint bid with the Claimant; they were going to form a new consortium. Significantly the evidence at trial (not to be found in the witness statements) was that the Defendants had already taken steps of a preliminary nature with Mr Campion and others, with a view to a competing separate tender being submitted. By 27^th November the Defendants had decided to bid elsewhere without the Claimant. The meeting became merely an exercise informing the Claimant of their decision. The statement by Mr Ludgrove as to the obligations to submit a new document was used merely as an excuse; the plans for departure were already underway.

There were other factors concerning the age of the boats. In his closing submissions initially, in response to a question from me as to why in financial terms would the Defendants risk all this when the tender arrangements did not gain them anything financially, Mr Graham submitted that a factor was undoubtedly the Defendants’ concerns about a commitment on their part to build a new boat as part of the business plan. The figure is significant (£1.25 million). Mr Clayton QC objected that this was not put (as indeed was the case). I therefore allowed the evidence to be reopened to permit the recall of Mr Reed and Mr Watts to address this issue.

Having heard them, my conclusion is that the Defendants were very concerned about the tender. Their concern was that the age profile of the WPSA’s boats needed to be modernised. However, the WPSA was under competition; its monopoly had been replaced by competition and that was likely to continue. The takings had been reduced, as far as could be discerned in 2001, by the competition from City Cruises. I have already observed that City Cruises had made a substantial investment in new boats. The profitability of all the groups in the consortium would be affected if they had to incur the financial burden of acquiring new boats. In some way this explains Mr Ludgrove’s desire to acquire the "FEAN PRINCESS", which would have cost about £350,000.00 which would be financed at a much lower level of exposure (even taking into account repairs and necessary adaptation works) than a brand new vessel.

I do not accept as I have said, that Mr Ludgrove gave any indication that he intended to make a commitment and dishonour it. The Defendants were entitled to assume that the age profile of the boats might be a significant problem. They were clearly warned of that at the meeting of 21^st November 2001. What they were not entitled to do however, in my opinion, given the commitment to make a joint bid was to decide to take out the Claimant and make a revised bid of their own. There is no reason why they should not have raised the matters with Mr Ludgrove (preferably before, but definitely after) the meeting of 21^st November 2001. Having secured the minutes they could have gone forward with him and reinforced the need to modernise the boats. None of this happened. On the basis of Mr Ludgrove’s evidence, as summarised above, I am satisfied that if they had raised it he would have maintained a commitment to buy a new boat if necessary. However, that would not necessarily be satisfactory to the Defendants, because they would have had to match his reciprocal commitment. This to my mind would have been a financial burden which they would have been reluctant to assume. That appears from the evidence which they gave when they were recalled. I conclude therefore that the decision to go with a separate consortium was not because the Claimant refused to invest in newer boats; it was motivated by a fear that the bid might be jeopardised by the age of the boats but also by their own desire to reduce their own capital expenditure commitments. Their failure properly to raise this with Mr Ludgrove was a breach of the agreement they made to make a joint bid. Their decision to go elsewhere destroyed the agreed strategy for a joint bid.

This is demonstrated by the tenders that were actually submitted. Thus in the successful bid made by the Defendants with Campion and others, they were relieved of any commitment on their part to produce a new boat. Contrast that with the commitment in the business plan for them and the Claimant to provide new boats. Mr Reed drafted for Mr Watts to sign a tender on behalf of WPSL. This is a bizarre course of action. I have already observed that Mr Campion’s company was included in that bid and the Defendants’ consortium and had separately made its own bid. The idea that Mr Reed can draft a bid on behalf of WPSL at the same time that he is submitting a different bit under another consortium is bizarre. The conflict is self-evident. It goes further. I am satisfied that Mr Reed did not incorporate the suggestions made to him by Mr Ludgrove’s letter of 5^th December 2001. That included an important commitment that the Claimant would commit to purchasing one more replacement vessel during the first five years and a third vessel during the second five year period if a ten year licence was granted to the same standard of the "FEAN PRINCESS".

Although the tender prepared by Mr Reed and submitted on behalf of WPSL enclosed the business plan, which itself of course had the commitment to build new boats, the actual wording of the tender is somewhat different (page 6). It says:-

Gone is an obligation to provide any new boats. Mr Reed suggested that this was an over elaboration of the wording in the tender. I reject that. Mr Reed carefully crafted that provision of the tender in my view to eliminate any obligation to build a new boat as opposed to a newer boat. The investment strategy failed to include reference to the fact that the new replacement boats would be purchased to the standard of the "FEAN PRINCESS".

The contrast is starkly reinforced when one looks at the successful tender (also drafted by Mr Reed). There the investment strategy is as follows:-

Mr Ludgrove caused the Claimant to submit its own independent tender, but the reality was that he simply could not put forward any sensible or viable tender because the Defendants would not support it and Campion had refused to participate. Age of boats would count against him quite significantly and it did when the bids were evaluated.

Mr Griffiths submitted a memorandum to the LRS tender evaluation committee on 18^th December 2001. He identified that five companies had tendered. Both City Cruises Plc and Campion’s were not compliant. That left the Claimant, the WPSL offer and the Defendants consortium tender. As indicated earlier in this Judgment, the Claimant’s bid was hopeless because even if it did invest in five newer vessels the age profile would still not come up to rival bids. They were also handicapped because they only had one spare vessel to fall back on. He acknowledged that the WPSL offer was a slightly better offer and that the planned investment by acquiring three newer vessels (note - not "new") would result in a better age profile. He criticised the tender as being poor quality and lacking detail. He criticised the lack of reference to Campion Launches and there was virtually a non-existent marketing strategy. This tender of course, as I said, was prepared by Mr Watts. As regards the Defendants’ bid he observed that it offered a better age profile without including MV "SARPEDON" and was better than any other rival bid and was the only bid to commit to building a new vessel.

He recommended acceptance of the Defendants’ bid. To my mind that was inevitable. It seems clear to me that the decision of the Defendants made it impossible for the Claimant or WPSL to make any viable bid. This is more so when one realises that the commitments to provide new boats as per the business plan had disappeared.

Mr Griffiths was called by the Defendants to give evidence. He acknowledged that age of itself was not a factor and he stressed that all vessels put forward by all the parties (whatever their age) satisfied all the current safety requirements. It was, he said, not a safety issue, but a perception issue. Passengers preferred to be in newer boats rather than older ones. He would not have been able to recommend the rejection of a bid solely on the ground of age, but nevertheless the age factor had clearly been significant based on the report that he made to the committee, which was accepted. This is reinforced by his letter of 24^th January 2002 sent to Mr Ludgrove, which once again indicates that the age profile of the relevant competitors proved to be the determining factor.

Thus the Defendants had a legitimate concern in raising the question of age. However, what was not legitimate was to address this concern secretly behind the back of the Claimant with the LRS and as a result of that discussion decide to form a rival consortium without giving the Claimant an opportunity to address it. Had the Defendants’ consortium and the Claimant’s bid not been made the WPSL bid might well have been successful in the form in which it was submitted. I accept that Mr Griffiths in his evidence suggested that one possibility might have been not to accept any tender and invite new tenders, but it seems to me far more likely that the WPSL tender, but for the Defendants’ action, would have been successful. This is reinforced in my opinion by considering what would have been the WPSL tender had the Defendants raised the question of age of boats with the Claimant. I am satisfied on the evidence that if they had gone back to Mr Ludgrove with the doubts that addressed their mind and with the minute of the meeting of 21^st November 2001 he would have addressed it. The Claimant’s own tender includes commitments to buy newer vessels. The reality is that the Defendants and the Claimant would either have maintained their business plan (i.e. purchase of two new boats) or possibly taken a chance with a selection of newer vessels, or even simply reduced the commitment to buy one new vessel. The Defendants, however, by going in the new consortium have actually benefited themselves because they have reduced their commitments. That is a significant feature, but by no means the sole feature. Finally the consortium would also as agreed include the Campion boats so it would have been a very strong tender with no serious contenders.

Accordingly, the Defendants’ justification as set out in paragraph 15 (k) of the Amended Defence is not made out. It follows that the Defendants are in breach of the agreement they made to make a joint tender and it is not conscionable for them to have made a bid without reference to the Claimant and to retain the benefit of that bid without recompense to the Claimant.

I refer to the Amended Particulars of Claim. Prayers for relief (1) – (4) do not arise because I have rejected the partnership claim. The only claim, which the Claimants have succeeded on, is that based on paragraph 29 of the Amended Particulars of Claim. I have had no submissions on the form of relief. A number of potential forms of relief are available. One is that the Defendants hold their interest in the licence granted to the new consortium upon constructive trust for the Claimant in such shares as shall give the Claimant beneficial interest in such licence. I doubt whether that would be acceptable to the LRS. Alternatively a claim is made for an account of profits. That too will involve further consideration. The account of profits must be addressed i.e. whether or not and if so what allowances are to be given to the Defendants in respect of the profits.

Finally, I do not leave out of the equation an argument that a more satisfactory method of compensating the Claimant would be by way of a payment of a sum of damages; see Seager –v- Copydex (No. 2) [1969] 1 WLR 809. That would of course require the Claimant to mitigate its loss and bring into credit the profits made by the use of the boat actually purchased in any event. It would also give the Defendants a way of offsetting the cost to them of achieving the profits. I stress however that I have no concluded view yet as to the nature of the remedy for the breach I have found.

I will hear further submissions as to the remedies to be afforded to the Claimant in the light of this Judgment when this Judgment is handed down.