Mileform Ltd v Interserve Security Ltd

This case concerns the terms and formation of a contract for the provision of warehousing, packaging, distribution and storage services. The critical question for the Court's determination is whether the agreement reached between the parties, on or about 15 January 2010, alleged by the claimant to be contained in a partly written and partly oral agreement of that date, contained an exclusivity term, pursuant to which the defendant appointed the claimant to supply the agreed services on an exclusive basis for two years. The claimant contends that such a term was orally agreed and that the defendant’s conduct in the period between January 2010 and March 2011 amounted to breaches of its obligation to use the claimant as its sole provider of the relevant services, such that the claimant was entitled to terminate the agreement on the grounds of the defendant’s repudiatory breaches in March 2011. The claimant claims damages not merely for breaches of contract during the operational period of the contract but also in respect of the sums which it allegedly would have earned had the Agreement continued until 31 January 2012. The defendant, on the other hand, contends that no exclusivity term was ever orally agreed between the parties, that, even if such a term had been orally agreed, it had no contractual effect because of an “entire agreement clause” in the written agreement between the parties, and because it was in any event too uncertain to be contractually enforceable, and that such term was unauthorised. The defendant also contends that there was no breach of the agreement on its part.

The following summary of the factual background relating to the period prior to 15 January 2010 was largely agreed between the parties. In so far as it was not agreed, the summary reflects my findings of fact in the light of the evidence.

The claimant company, Mileform Limited ("Mileform"), was incorporated in the United Kingdom in 2001. From its incorporation until mid-2005, Mileform's principal business was managing a shoe shop and a warehousing facility. It was established as a family business by the two Crump brothers, Michael and Peter Crump. They are, and were at all material times, its sole directors and 50% shareholders. Mr Peter Crump was at all material times responsible for running the business. Mr Michael Crump helped to set up the business in April 2001, but thereafter he had limited involvement in the operational side of the business.

The defendant, Interserve Security Limited, formerly MacLellan Attlaw Security Limited, was incorporated in the United Kingdom in 2004. It is currently a member of the Interserve group of companies ("the Interserve group"), having been taken over by that group in 2007. In this judgment I shall refer to the defendant as "Interserve", other than in relation to the period prior to its takeover by the group of companies in; in relation to that earlier period I shall refer to it, as the parties did, as "MacLellan".

Until its takeover in 2007, Mr Michael Crump owned and ran MacLellan. At that time it carried on the business of distributing Red Tag security products, manufactured by AGI Amaray. At all material times its business was effectively the sale of security products to retailers which allowed them to display shop merchandise securely.

In mid-2005, following a request by Mr Michael Crump to Mr Peter Crump, Mileform started providing logistic services to MacLellan. Under the arrangement between Mileform and MacLellan, which was not recorded in any formal written agreement, Mileform warehoused, picked, packed and dispatched Red Tag security products to MacLellan’s customers in accordance with its instructions. At all material times Mileform had warehouse premises at The Vennland Centre, Minehead.

After its takeover by the Interserve group in 2007, MacLellan changed its name to Interserve Security Limited. Mr Michael Crump remained managing director of Interserve until his suspension from employment on 27 May 2010. He was also Head of the Business Unit within the definition of Interserve’s procedures for the purposes of authorising transactions. His line manager, to whom he reported, was a Mr Bernard Spencer, who had joined the Interserve group in 1986 and in January 2010 was employed by Interserve plc as Chief Operating Officer of the Support Services Division. Mr Spencer gave evidence on behalf of Mileform at trial. Mr Michael Crump did not give evidence at trial, either for Mileform or Interserve.

The pre-existing arrangement between Mileform and MacLellan was not formalised upon MacLellan's takeover by Interserve, and Mileform continued to supply logistic services to Interserve in respect of the Red Tag security products, as it had done previously. At all material times from 2008, if not earlier, the majority of Mileform’s turnover derived from the business which it conducted with Interserve.

At all material times Mileform was also the UK sales agent for Workman Marine School Limited (“WMS”), a boat chartering business based in England and Spain, which specialised in the charter of rigid inflatable boats (known as “RIBS”) for pleasure and corporate trips. The company is now dissolved, although the business continues. Messrs Peter and Michael Crump and a former Interserve employee, Mr Bill Barkley, who was a witness for Mileform at trial, were all qualified RIBS instructors and in their spare time ran boat trips for WMS. WMS apparently provided corporate entertainment services to Interserve, as well as instruction services. The three men were at all material times close friends.

Mr Michael Crump and Mr Peter Crump were also each 25% shareholders in a company called Corporate Ventures (Europe) Limited ("CVE”), which, between February 2008 and October 2009, received payments of £31,131.25 from Interserve. The payments appeared to have related to trips or other expenses related to boats which were owned by CVE and operated by WMS and/or to corporate entertainment said to have been provided to Interserve. There were no written contracts governing these arrangements or payments.

At all material times until his suspension in May 2010, Mr Barkley operated as Mr Michael Crump’s “right hand man”. Mr Barkley was not a board director of Interserve, although his job description was "director of client services". He reported principally to Mr Michael Crump, although he was part of Mr Spencer's team and reported to him on occasions. Mr Barkley, Mr Michael Crump and Mr Peter Crump are currently business partners in a new venture set up in 2011.

In about October 2008, the informal arrangements relating to logistic services provided by Mileform were extended to a new range of security products known as the InVue product range. These products performed a similar function to the Red Tag products, but were manufactured by a Dutch company, InVue Security Products B.V. I refer to the Red Tag products and the InVue products collectively as "the Security Products" and to the logistic services provided by Mileform in relation to the Security Products as "the Security Products Services".

The rates which Mileform charged Interserve for the Security Products Services appeared to have been constant since about 2008 and reflected those ultimately set out in the written version of the agreement between the parties. Thus:

Until late 2008 Interserve and another member of the Interserve group, First Security Limited ("First Security"), had archived human resource records, and other documentation relating to the personnel whom they had previously employed, in a barn in Essex. Interserve and First Security required access to this documentation at relatively short notice in order to provide references for former employees. In January 2009, due to their dissatisfaction with their existing storage facilities, Interserve and First Security agreed with Mileform that the latter would provide file archiving and furniture storage services at Mileform's warehouse premises in Minehead. At this stage, prices for Mileform’s storage services had not been finally negotiated. I refer to the services provided by Mileform to Interserve in respect of the storage of archive material and furniture as “the Storage Services".

I find as a fact that the rates charged by Mileform to Interserve during this period were as follows:

I find as a fact that the charges being raised by Mileform for the Storage Services during this period were substantially in excess of a commercial rate. A commercial rate in 2009/2010 was roughly 6p per box per day. Interserve's evidence showed that whereas it would have cost approximately £537.60 per month (i.e. approximately £124 per week) to store 1,600 boxes with Iron Mountain (a well-known commercial provider of storage services), to store the same number of boxes with Mileform (on the assumption that 350 of the boxes had belonged to Interserve, as opposed to First Security) would have cost Interserve £1,350 per week or in excess of 10 times the Iron Mountain rate. Mileform’s witnesses sought to justify the discrepancy on the grounds that the retrieval rate of boxes might well have been high and such rate was unknown to Interserve at the time. This explanation was not credible. By August 2009 when the rates were apparently agreed, both parties would have had a good idea about the number of retrievals.

I find as a fact that, during this period prior to January 2010, neither the Security Products Services, nor the Storage Services, operated on the basis of exclusivity; in other words Mileform was not Interserve's only supplier of these services. Indeed, some of the services Interserve performed for itself.

I deal in due course with the evidence relating to the circumstances surrounding the signing of the written agreement between Mileform and Interserve, and Mileform's contention that the entire agreement between the parties was not contained in the written document. However it was common ground that, at a meeting which took place at Interserve's offices on 11 January 2010, which was attended by Mr Michael Crump (at least at the start of the meeting), Mr Syradd and Mr Barkley, on behalf of Interserve, and Mr Peter Crump, on behalf of Mileform, a draft of the proposed written agreement, apparently produced by Interserve’s in-house legal or contracts department, was on the table. Neither Mr Syradd, nor Mr Barkley, had given instructions for the production of the contract - Mr Barkley assumed that the person who had given the instructions was Mr Michael Crump. The written contract was signed at the meeting on behalf of Mileform by Mr Peter Crump and subsequently signed on behalf of Interserve by Mr Syradd and Mr Barkley respectively on or about 15 January 2000. I shall refer to it as "the Written Agreement".

The Written Agreement described itself as a "distribution agreement" between Mileform as "Distributor" and Interserve. It consisted of seven pages; the first page of seven was a cover sheet which bore the parties' signatures; pages two to six consisted of "attached terms and conditions", which incorporated some but not all of Interserve standard terms and conditions; page seven of seven set out the agreed charges for the Security Products Services and the Storage Services (as well as additional administrative charges and charges for Mr Ken Lewis) in a format that had been produced by Mr Peter Crump. He had sent a draft of page 7 to Interserve after he had agreed the storage rates with Mr Syradd in about August 2009. The effective date, as of which the Written Agreement was deemed to have been signed, was stated to be 31 January 2010 and the "Initial Term" was stated to be a "fixed term up to 31 January 2012".

The cover sheet of the Written Agreement stated:

The terms and conditions did not define or describe the Security Products Services or the Storage Services actually agreed to be provided by Mileform, but rather simply appointed Mileform as a “non-exclusive distributor of” defined “Stocked Products” (which clearly included the Security Products). It contained the statement that Mileform “shall distribute the Products… as an independent reseller, at its own risk and expense”. That was not what happened in practice. Mileform never purchased Security Products from Interserve; it merely warehoused, picked, packed and dispatched Interserve’s Security Products to Interserve’s customers and got paid by Interserve for providing that service.

In so far as here material, the terms and conditions of the Written Agreement provided as follows:

"Recitals

WHEREAS, Interserve develops, owns and markets certain products and; and [sic]

WHEREAS, Distributor is an independent distributor of computer products to its authorised resellers ("the Resellers"), which distribute such products to end-users; [I interpolate to comment that Mileform was not an independent distributor of computer products to its authorised resellers] and

WHEREAS, Distributor desires to distribute the Products and services and Interserve desires to make the Products and services available to Distributor for further distribution in the Territory;…..

Appointment.

Neither party made any submissions or adduced any evidence in relation to Belgian Law. For that reason I have proceeded on the basis that it is the same as English law.

Page seven of the Written Agreement, which set out the agreed charges for the Security Products Services and the Storage Services, was in the following terms:

STORAGE

RED TAG

The rates set out in respect of the Security Products Services appeared to be the same as those charged since about late 2008. The rates set out in respect of the Storage Services were the same as those agreed in approximately August 2009.

Notwithstanding the Written Agreement, the working relationship between Mileform and Interserve effectively continued as it had been conducted previously. Mileform continued to invoice substantial amounts for the Security Products Services and for the Storage Services, and Mileform continued to be paid by Interserve on the basis of the charges set out on the sheet appended to the Written Agreement. I find as a fact that, as was the case prior to the execution of the Written Agreement, the arrangements between the parties in reality remained non-exclusive.

Thus:

I also find as a fact that, during the period January to August 2010, approximately 100 of Interserve's archive personnel boxes were stored in locations other than Mileform's premises. These included a number of boxes stored by an Interserve director in Livingston, and a number stored at various of Interserve's own premises. Moreover as at the beginning of July 2010 it appeared that, according to Mr Peter Crump, 363 boxes belonging to Interserve and 1238 boxes belonging to First Security were stored at Mileform's premises. Both Interserve’s and Mileform’s respective records of what was actually being stored were chaotic. Mileform’s method of storage of the boxes did not follow a logical sequence and boxes which should have been destroyed, as being past their destruction date, had not been segregated from live archive boxes. Again I rely on the evidence of Mr Frost in this respect.

Interserve suspended Mr Michael Crump’s employment on 27 May 2010. The suspension was as a result of an internal enquiry which suggested that he had been involved in transactions whereby millions of pounds had been inappropriately paid by Interserve to third parties, in circumstances where such payments had no benefit to Interserve and where Mr Michael Crump had a personal connection to other beneficiaries of the transactions. His employment was subsequently terminated. I was informed that Mr Michael Crump was currently being prosecuted by the Crown Prosecution Service for fraud by false representation contrary to sections 1 and 2 of the Fraud Act 2006 in relation to his actions as a director of Interserve. At some time after his suspension, Mr Michael Crump formed, or acquired, a new company, Servoca Security Limited which carries on similar business (i.e. supply of security products) to that previously carried on by Interserve.

On 2 June 2010, Mr Steve Neville of Interserve group, who was responsible for First Security and Interserve,sent Mr Peter Crump an e-mail informing the latter that Interserve would be arranging for the collection of all the First Security archive records held at Mileform’s premises within seven days due to a concern that important archive records for First Security were being stored in a facility without an adequate fire detection system.

On 3 June 2010 Mr Peter Crump e-mailed Mr Neville. Mr Peter Crump stated:

"As I pointed out to you I have a contract with Interserve to cover storage for the security businesses and distribution which ends 31^st Jan 2012 signed by Mr Barkley and agreed with Mr Spencer. If you wish to remove any boxes from this premises I will need payment in full to the end of the contract period before this happens. […] If any attempt is made to remove any of the stored boxes this will be treated as trespass and dealt with appropriately. A local fire alarm company will be fitting the necessary fire alarm in the next few days, all this could have been avoided had you bothered to discuss with me in the first place."

Four days later, on 7 June 2010, Mr Peter Crump obtained the use of adjacent warehouse premises, with payment starting from 10 July 2010. On 10 July 2010, Mileform entered into a lease for those premises.

In early July 2010, Interserve reviewed the terms of the written agreement. In a meeting on 16 July 2010 at Mileform’s warehouse, Mr Michael Frost of Interserve gave Mr Peter Crump verbal notice of Interserve’s intention to remove the "live archive" of files held by Mileform at the end of July2010.

On 23 July 2010, Mr Peter Crump e-mailed Mr Frost stating:

"As you are aware I have a contract to store the files until January 2012 before you remove them I must have your assurance that you will honour the contract."

On 26 July 2010, Mr Frost acting for the Interserve group e-mailed Mr Peter Crump stating that the storage of boxes in archive was "a casual arrangement with no defined minimum."

In early August 2010, Mr Peter Crump received a telephone call from Mr Leigh Read, a sales manager for Interserve. Mr Read told Mr Crump about rumours he had heard that Interserve was planning to transfer its part of the business related to Red Tag and InVue from Mileform to another entity. In the same month, Mr Spencer left Interserve.

By e-mail, dated 6 August 2010, Mr Peter Crump made clear to Mr Frost that he did not wish to aggravate the situation by contemplating legal proceedings. In order to avoid that scenario, Mr Peter Crump suggested a "reasonable compromise" in respect of the supply of archiving services. This was that Interserve would pay for August 2010 in full together with payment for an additional three months’ notice period.

On 12 August 2010 Mr Frost rejected Mr Peter Crump’s proposed compromise. Instead Mr Frost gave formal notice to Mileform of Interserve’s intention to recover the entire archive of files which Interserve had been storing at Mileform’s premises by 27 August 2010, and agreed to pay Mileform a "labour charge" to oversee the operation. Mr Frost made clear that Interserve would not pay any invoice issued for storage of archive boxes after 27 August 2010. By e-mail the same day, Mr Peter Crump told Mr Frost that he would "have to consult with [his] lawyer as to the way forward." A short time later that day, Mr Frost offered to pay £1,500 as a "removal charge."

By e-mail dated 16 August 2010, Mr Peter Crump responded by asking Mr Frost to confirm that, if Mileform accepted the £1,500 removal charge, this agreement would "in no way affect the rest of [Mileform’s] contract with Interserve". Later the same day, Mr Frost stated that the move of the archive was not connected to the rest of the agreement.

On 19 August 2010, in an e-mail entitled "removal of boxes," Mr Peter Crump accepted Mr Frost’s offer of £1,500 to assist with the removal of the archive boxes from Mileform’s premises on 27 August 2010.

On 15 September 2010, Mr Frost spoke on the telephone to Mr Peter Crump to inform him that Interserve wanted to collect all stocks of Interserve Security Products from Mileform. Mr Frost e-mailed Mr Crump the following day to confirm, and asked when Interserve could have clear access to remove the stock. At this point, the parties resorted to legal advice.

On 21 September 2010 Interserve’s legal department wrote to Mileform demanding that products held by Mileform in its warehouse be made available for collection on 29 September 2010. On 23 September 2010, Mileform's solicitors, Mishcon de Reya, responded to Interserve’s letter stating that Mileform was treating Interserve’s demand for the return of the Products as a repudiatory breach of the agreement, but that Mileform did not accept that breach and was ready, willing and able to perform the agreement.

On 29 September 2010, Mr Frost arrived at Mileform’s warehouse and told Mileform to send all the Security Products in its warehouse to the address of Bunzl plc. This instruction was confirmed later that day by an e-mail sent by Mr Frost. In the event, however, Interserve did not pursue this demand and instead requested Mileform to meet outstanding deliveries to its customers out of its existing stock of the Security Products.

By an e-mail dated 30 September 2010, Interserve’s solicitors, Mills and Reeve, required Mileform to continue to service orders in accordance with its ongoing contractual obligations. Thus, in the period between September 2010 and February 2011, Mileform continued to perform the Agreement in respect of the Security Products in stock but did not receive any further Red Tag or InVue Security Products from Mileform after 30 August 2010. Mills and Reeve’s second letter of 6 October 2010 emphasised Interserve’s position which was that:

Mileform continued to service orders. Security Products were, from October 2010, delivered to a warehouse in Spilsby Road, Romford and distributed by Interserve itself. On 10 December 2010, a physical stock take of the Security Products was undertaken by Interserve's accountant, Mr Robert Larsen, and his colleague Mr Leigh Read at Mileform’s premises at Vennland Business Centre, Minehead.

On 11 February 2011 Mileform issued proceedings against Interserve for breach of contract.

On 8 March 2011 Mileform served written notice to terminate the parties’ Agreement. By this time, Interserve had stopped sending any orders to Mileform for delivery of the Security Products and had ceased to retain Mileform to supply the Storage Services.

Mileform’s Particulars of Claim were amended three times: on 12 August 2011, 20 June 2012 and 12 July 2012. Originally the amount claimed by way of damages, solely in respect of the alleged breach in relation to the Security Products Services, was £117,000. In August 2011 the amount claimed in this respect was increased to £170,454. On 20 June 2012 the amount claimed was substantially reduced to about £55,000, again solely in respect of the alleged breach in relation to the Security Products Services. That sum was further reduced to £33,818.77 by an amendment made on 12 July 2012. On the same date Mileform sought and obtained permission to amend to introduce an entirely new head of damage based on an alleged breach in relation to the Storage Services in an amount of £89,810.88.

On 24 March 2011 Interserve served a Defence, which was amended on 15 December 2011, and re-amended on 7 September 2012.

Originally, the trial was listed to be heard in July 2012 but was adjourned following an application by Mileform to adduce further evidence and to re-re-amend its Particulars of Claim to include a claim in respect of the Storage Services. This application was heard by His Honour Judge Stuart Baker on 11 July 2012. It was successful and consequently the trial was adjourned. Following that date, the parties served further pleadings and witness statements. There was also some further supplemental disclosure.

The trial of Mileform’s claim against Interserve for damages for breach of contract lasted four days. The hearing started on Monday 25February 2013 and lasted through Thursday 28 February 2013, with a fourth day on Thursday 7 March 2013 for further evidence and closing submissions. On 19 April 2013, the parties submitted to the Court an agreed joint note on quantum relating to the Security Product Services and the Storage Services.

In his written closing submissions, Mr McPherson summarised the key points of Mileform's case as to liability based on the evidence as follows:

In particular, in relation to the terms of the alleged party written and partly oral agreement, Mileform advanced three arguments. I summarise them as follows:

Mr McPherson did not in his closing submissions pursue Mileform’s further pleaded arguments, to the effect that if Mileform's arguments on construction failed:

He rightly recognised that these arguments stood or fell alongside his construction and formation arguments as summarised. I do not consider them further. They had no merit as free standing arguments.

In relation to loss, Mileform claimed that it had suffered loss in the total sum of £123,629.65 as a result of Interserve’s alleged breaches of contract. That was broken down as follows: in relation to the Security Products Services, Mileform claimed £33,818.77; and in relation to the Storage Services it claimed £89,810.88.

In his written closing submissions, Mr Richard Coplin, counsel for Interserve, summarised the key points of Interserve's case as to liability based on the evidence as follows:

As regards quantum, Interserve contended that Mileform had not proved its loss and put forward detailed submissions in this respect. In any event, Interserve relied upon clause 14 of the Standard Terms which, Mr Coplin submitted, expressly excluded the damages claimed by Mileform.

The notable thing about this case was that the witnesses who, to a greater or lesser extent, had been involved on the Interserve side, at the time of the conclusion of the Agreement, i.e. Mr Syradd, Mr Barkley and Mr Spencer, all gave evidence on behalf of Mileform.

Not surprisingly, in the light of the current criminal proceedings against him, and the allegations made against him by Interserve in relation to alleged fraudulent misappropriations of corporate funds, Mr Michael Crump did not give evidence for either side.

Mr Peter Crump presented as a genuine and likeable individual. However his evidence was clearly partisan and his recollection very vague and generalised. Although I am sure that he was doing his best to give honest evidence, I have little doubt that his recollection was strongly influenced and informed by what he had convinced himself was indeed Mileform’s case, in respect of which he had a clear financial interest. For example, at an earlier stage in the proceedings, he gave an account of the critical meeting which was inconsistent with the one he later produced in his witness statement, in that, in the earlier account, he said that he had signed the Written Agreement only after an oral assurance relating to exclusivity had been given. Similarly, in his first witness statement he put forward figures that he alleged Mileform had spent in circumstances where in cross-examination it was clear that many of the figures were inaccurate or wrongly dated. He clearly, and not surprisingly, given the passage of time, had real difficulty in remembering the detail. I did not feel able to rely upon his evidence, where it was unsupported.

Mr Barkley also presented as a genuine person and as a genial, albeit simplistic, witness. Again I have no doubt that he made every effort to give honest evidence. But his recollection was extremely vague and generalised; he was clearly very loyal to both Mr Peter and Mr Michael Crump, with whom he had been friends, and involved in business ventures, for many years. He had no real appreciation of the commercial or corporate issues involved in Interserve’s decision to enter into the Written Agreement. I formed the impression that he would have gone along, without question, with anything suggested to him by Mr Michael Crump as long as it did not appear to Mr Barkley to involve dishonesty. He certainly was not a "details" man. Indeed he knew little about the day-to-day operations of the Interserve business. I formed the impression that his witness statements had been carefully crafted for him. For these reasons I approached the evidence given in his written statements with caution. However to a large extent I was able to accept the evidence which he gave in cross-examination.

I found Mr Syradd to be a glib, articulate and unreliable witness, whose evidence I found difficult to accept, where not supported by other evidence. The manner in which he gave his evidence was unduly partisan in favour of Mileform. He was keen to support its case, even where he had no basis for doing so. He did not mention in his witness statements that, after his dismissal from Interserve in July 2010, he was approached by Mr Michael Crump to join the latter's new company, Servoca Security Limited, which is engaged in a similar business to that previously carried out by Interserve, and that, at the date of trial, he was employed by that company. I regarded that as a notable omission from his witness statements. It was apparent that his witness statements had been drafted for him and that he had not checked them thoroughly. His attitude to corporate governance was woeful; when agreeing to commit Interserve to a substantial transaction in respect of the Storage Services, he failed to obtain any comparable quotes in an area in which he had no prior knowledge. His assertion that the prices put forward by Mileform were "a good deal for Interserve" was not based on any substantive grounds.

Mr Spencer, who at the time was employed by Interserve as the Chief Operating Officer of the Support Services Division, gave evidence in relation to what he said was a very brief conversation, of approximately 30 seconds, which he had with Mr Barkley in about January 2010. It was clear that his involvement was peripheral and that he was only tangentially involved. His evidence about authorisation procedures, which apparently had been his responsibility, was unsatisfactory.

None of the Interserve witnesses who gave evidence on its behalf at trial had been involved in the relevant events at the time of the Agreement. Accordingly their evidence was much less important and was, to a large extent, based on their analysis of the documents. I deal with their evidence as and where appropriate below.

The following are my findings of fact in relation to the events leading up to and surrounding the conclusion of the agreement.

Some time prior to the meeting on 11 January 2010, Mr Peter Crump was informed by Mr Syradd that there was likely to be an increase in the volume of Interserve's business in the Security Products. Mr Peter Crump had a brief discussion with his brother, Mr Michael Crump, and the former indicated that Mileform would want to have a formal contract for a fixed period of time. However I am not satisfied on the balance of probabilities that the issue of exclusivity (whatever that might have meant) was discussed between the two brothers. Mr Michael Crump made it clear that, because of his connection with Mileform, and his relationship with his brother, he could not deal with the contract, or any issues relating to it, but that he would hand it over to Mr Syradd and Mr Barkley to deal with.

Following discussion between Mr Michael Crump, Mr Syradd and possibly also Mr Barkley, instructions were given (probably by Mr Michael Crump) to the Interserve contracts or in-house legal department to produce a draft contract. Neither Mr Syradd nor Mr Barkley had anything to do with giving instructions for the detail of the contract terms, nor were involved in the drafting process. As I have already stated, Mr Peter Crump was responsible for the production of page 7 which he had forwarded to Interserve sometime prior to the meeting.

I reject Mr Peter Crump’s and Mr Syradd’s evidence that there was any discussion of exclusivity between the two of them (or with Mr Barkley) in 2009 or at any time prior to the meeting in January 2010. In paragraphs 9-12 of Mr Peter Crump's first statement there was no suggestion of exclusivity, merely of a "formal two-year contract". I regard the evidence of the Mileform witnesses to the extent that it suggested that, in January 2010, they regarded Mileform's expenditure as justifying, or as a reason for, the alleged exclusivity term as an after-the-event construct.

In paragraphs 22 and 23 of the Re-re-amended Particulars of Claim, under the heading "Misrepresentation", it was pleaded as follows:

“22.

The exclusivity term was discussed between the Claimant and the Defendant on a number of occasions in about December 2009 and January 2010. At the Meeting [Mr Barkley] orally represented to Mr Peter Crump that the Agreement would be a two-year exclusive arrangement ("the Representation"). This representation was repeated by Mr Barkley in a telephone call between him and Mr Crump on about 15 January 2010.

23.

If, alternatively to paragraphs 4-9 above, the Agreement was a non-exclusive agreement then the Representation set out in paragraph 22 above was a misrepresentation. The Claimant entered into the Agreement and incurred the costs set out at paragraph 15 above in reliance on, and induced by, this misrepresentation. In the premises that Claimant has suffered loss or damage in the sum of £74,658.54 by reason of the Defendant’s said misrepresentation and is entitled to and claims as against the Defendant the [said sum] as damages. ”

In paragraph 15 of the Re-re-amended Particulars of Claim, under the heading "Performance of the Agreement", it was pleaded that, in order to fulfil its obligations under the Agreement (made on 15 January 2010) Mileform:

In fact, as was established in cross examination of Mr Peter Crump and by reference to the relevant documents:

The manner in which Mileform put forward (a) its case in its pleadings in relation to misrepresentation, as described above; and (b) its case at trial on the revised basis that Mileform's past and anticipated future expenditure was accepted by both parties as the commercial justification for the alleged exclusivity term was unsatisfactory. Neither case was credible on the evidence. I accept that: Mr Peter Crump may have realistically envisaged that Mileform would be involved in additional expenditure and/or investment, if the level of business provided by Interserve increased; that he may have communicated that fact to the Interserve representatives; and that fact, in his mind, was a genuine reason for having a formal two-year contract, to provide some sort of security. However, I reject his evidence (for example as given at paragraph 9 of his first witness statement), and that of the other Mileform witnesses, that any specific items of projected or past expenditure were discussed or that past or anticipated expenditure was agreed as the commercial rationale or basis for the alleged or any exclusivity term.

Mr Barkley's oral evidence, which I accept in this respect, was firmly to the effect that the issue of exclusivity had not come up in discussions at any time before the meeting on 11 January 2010, or indeed did not come up during that meeting until after Mr Peter Crump had signed the Written Agreement. If it had been an issue raised before the meeting, Mr Barkley's evidence indicated that the matter would have been raised with Mr Spencer prior to the meeting .

The meeting on 11 January 2010 took place at Mr Michael Crump's office at Interserve, which he shared with Mr Barkley. At the start of the meeting Mr Michael Crump, Mr Syradd and Mr Barkley were present on the Interserve side and Mr Peter Crump was present on the Mileform side. The impression given by the witnesses was that the meeting was conducted in a very informal manner, although everybody present appreciated that there needed to be a written contract, if Mileform were to be given a formal fixed term contract. Shortly after the start of the meeting, after some general banter, Mr Michael Crump left the room. The draft of the seven page Written Agreement was already on the table when Mr Peter Crump arrived. There appears to have been no discussion about the terms of the Written Agreement between the various men, prior to Mr Peter Crump signing the document. Neither Mr Syradd or Mr Barkley had read the Written Agreement at the time. Mr Syradd assumed that the contract had been drawn up by Mr Michael Crump or Mr Barkley; and Mr Barkley assumed that the Written Agreement had been drafted, or arranged to have been drafted, by Mr Michael Crump. So far as Mr Peter Crump was concerned, he did not read the Written Agreement in any detail. I accept his account as set out at paragraph 12 of his first witness statement to the following extent:

“I read the front sheet of the Agreement and signed it. I did not think that I needed to read the Agreement because I still thought of Interserve as being my brother’s company and so I trusted that the Agreement would match our discussions. But when I quickly flicked through the rest of the agreement after I had signed it, I noticed that it said it was non-exclusive…"

I do not accept that, as asserted by Mr Peter Crump in the following sentence, he asked Mr Syradd and Mr Barkley "what that meant". He would have understood the meaning of the term "non-exclusive" and it is simply unreal, given the context, and the relationship between the three men, to have supposed that they would have engaged in a philological discussion of the meaning of the term. I do accept, however, that Mr Peter Crump made it clear to Mr Syradd and Mr Barkley at the meeting that he wanted an "exclusive" agreement.

Even if I were wrong in my finding that there was no discussion about what the term "non-exclusive" meant, I am satisfied that there was no discussion at the meeting as to what an "exclusive" agreement would mean, so far as Mileform was concerned. Mr Barkley could not recall that there was any discussion about what "exclusivity" meant. All that he could remember was that he said that he would have to check or confirm with Mr Spencer "about getting an exclusivity agreement". I accept his evidence in this respect and, on the balance of probabilities, I conclude that the discussion went no further than that, save that Mr Barkley may have said comforting words to the effect that he did not think that there would be a problem about getting Mr Spencer's agreement. However, I reject Mileform's case that there was any oral agreement at this meeting on the part of Mr Barkley and/or Mr Syradd as to the alleged or any exclusivity term. Mr Barkley's evidence was clear that before any such term could be agreed, he would need to obtain Mr Spencer's approval.

In his sixth witness statement, sworn on 9 November 2012, Mr Peter Crump said at paragraph 19:

“At the meeting in January 2010, I asked that the Agreement be exclusive. We did not discuss which parts of the Agreement would be exclusive or what was included or excluded from the Agreement, as I was clear that everything I was doing should be exclusive. That was because of the investment I had had to make to deal with all of the services provided to the Defendant and the indication from the Defender and that the business was growing.” [ Emphasis supplied.]

But in contrast, in his cross-examination, Mr Peter Crump asserted that there had indeed been discussion about what "exclusive" meant. He said, in answer to questions from Mr Coplin:

“Q. So there wasn’t actually a discussion about what exclusive meant?

A. On my part, yes, because they asked me what did I mean by being exclusive. I said that everything we do, everything to do with the product and the storage, would always be for me. It was meant to entail the whole agreement that we had with them. This

Q. Do you think that’s what you said?

A.

I know that’s what I said.”

I do not accept that evidence. It was inconsistent with his written statements and came across as clearly self-serving. Moreover it was wholly inconsistent with the informal way in which these men dealt with one another and with Mr Barkley's evidence that there was no discussion about what exclusivity meant. Mr Syradd was not involved in any discussion about the meaning of the word.

Mr Barkley waited a few days before contacting Mr Spencer. He thought that, once the subject of exclusivity had come up, he ought to run the contract past Mr Spencer, just to make sure Mr Spencer was happy with it. They had a 30 seconds conversation in which Mr Barkley asked Mr Spencer something along the lines of whether he was "okay with the exclusivity" for Mr Peter Crump. According to Mr Barkley, no detail of what that meant was discussed. Mr Spencer replied that he had no issue with the contract being exclusive, provided that Mr Barkley was satisfied that the contract was a good deal for Interserve and that Mr Barkley was happy with it. There may also been some mention of the fact that Mr Peter Crump had requested exclusivity because he needed to make some investment in the business. I find as a fact based on Mr Barkley’s evidence that there was no discussion between the two men as to what "exclusivity" involved. Mr Spencer understood that the Agreement simply involved an extension of the existing arrangements as between Mileform and Interserve.

The evidence demonstrated that there was no, and certainly no proper, consideration by anyone on Interserve's behalf as to whether an "exclusive contract" was indeed a good deal for Interserve. Neither Mr Spencer, nor Mr Barkley, nor Mr Syradd, had any idea as to the value of the contract, nor as to whether it was commercially advantageous so far as Interserve was concerned. None of them had engaged in any commercial investigation, or independent checks, as to the value of the contract or as to whether similar services could be provided on more advantageous terms. Mr Barkley naïvely assumed that, notwithstanding that he had not been involved in any pricing discussions, or other discussions relating to the contract, because of the ongoing relationship between the parties and "that everything had been fine in the past" "it would be okay to continue". Neither Mr Spencer, nor Mr Barkley, nor Mr Syradd, appreciated that, because of the close connection between Mileform and Interserve, there was some need to ascertain whether the proposed exclusivity term, and the Written Agreement, were indeed in the best commercial interests of Interserve.

There was no dispute that: shortly after the conversation with Mr Spencer, on or about 15 January 2010, Mr Barkley informed Mr Syradd that he had spoken with Mr Spencer, and “that it was okay that the arrangement with Mileform was exclusive”; that Mr Barkley and Mr Syradd signed the Written Agreement on behalf of Interserve; and that the signed Written Agreement was then sent to Mileform. There had been no deletion, strike-through or amendment of the words “non-exclusive distributor” in clause 1 of the Written Agreement, or any other amendment to its terms.

There was, however, a dispute as to whether Mr Barkley telephoned Mr Peter Crump to inform him that Mr Spencer had agreed the exclusivity term. I am not satisfied, on the balance of probabilities, that any such telephone call was made by Mr Barkley.

The original Particulars of Claim (which extensively pleaded all facts and evidence relied upon to support the allegation it was the common intention of the parties that there should be exclusivity) did not refer to any such telephone conversation until an amendment made on 12 August 2011 to plead misrepresentation. Even then the alleged telephone call was not relied upon to support the rectification claim. In paragraph 9 of Mileform’s response to Interserve’s Request for Further Information dated 5 April 2011, Mileform alleged that:

“prior to the Defendant’s execution of the document on about 15 January 2010, Mr Barkley contacted Mr Crump and told him that he had discussed the exclusivity term with Mr Bernard Spencer of the Defendant and Mr Barkley assured Mr Crump that exclusivity had been agreed.”

In his first witness statement dated 1 July 2011, Mr Peter Crump stated as follows at paragraph 13:

“After the meeting I left the Agreement with Interserve, so that Andy and Bill could confirm the exclusive term and sign it on behalf of Interserve. A few days later I received a copy of the signed Agreement in the post. I did not read the Agreement when it arrived and did not think anything further about the matter. I assumed that if there had been a problem with the exclusivity, Bill or Andy would have told me.”

That evidence was wholly inconsistent with any subsequent telephone call from Mr Barkley. There was no reference to the alleged telephone call in any of Mr Peter Crump’s subsequent five witness statements. It was only in cross-examination that, for the first time, Mr Peter Crump suggested that Mr Barkley had telephoned him after the meeting to tell him that he had spoken to Mr Spencer and that they were “quite happy it would be exclusive”. This suggestion was only made after Mr Peter Crump had been taken to paragraph 9 of Mileform’s response to Interserve’s Request for Further Information and had an opportunity of reading what the pleader had said about the alleged telephone call. Previously, the allegation had been that, at the meeting on 11 January 2010, Mr Barkley and Mr Syradd had assured Mr Peter Crump that exclusivity would be agreed, but wanted to confirm it with their line manager, Mr Spencer, before signing the agreement.

Likewise, in Mr Barkley’s first witness statement dated 1 July 2011, and his second witness statement dated 17 April 2012, there was no mention of any such phone call after the meeting, confirming that Mr Spencer had agreed exclusivity.

In paragraph 16 of his first witness statement dated 18 April 2012, Mr Syradd suggested that Mr Peter Crump had been “informed that this was an exclusive arrangement”. He did not say that he had been responsible for the telephone call. His unsatisfactory evidence in cross-examination did not support a case either that he had made the call or that he had any knowledge that Mr Barkley had done so.

Accordingly I reject Mileform’s case that any such phone call was made after the meeting, either before Mileform received the Written Agreement or thereafter. The reality was that Mileform received the signed version of the Written Agreement without any deletion of the term “non-exclusive” or any other amendment to its terms. Neither Mr Peter Crump, nor anyone else on behalf of Mileform raised any point about the matter. Given the historic informality of the arrangements between the parties, Mr Peter Crump appeared to have been happy to go along with that situation. No further discussion took place between the parties in relation to the exclusivity issue until the current dispute arose.

I have already set out above my findings of fact that, as was the case in relation to the period prior to the signing of the Written Agreement, during the period after the signing of the Written Agreement, Interserve did not operate its business on the basis that the only, and exclusive, provider with whom it was contractually able to deal in respect of logistic services for the packing, warehousing and distribution of the Security Products and in respect of storage services for its files and archive materials and furniture was Mileform. It appeared from Mr Syradd’s, Mr Barkley’s and Mr Spencer’s evidence that none of them had considered it appropriate or necessary to inform the operations side of Interserve’s business that from 15 January 2010 onwards Mileform was (allegedly) the exclusive provider of such services.

I set out below my findings of fact in relation to the issue as to whether Interserve was in breach of the Agreement.

In the light of my findings of fact, the issues which I have to decide in relation to liability can be summarised as follows:

In the light of my finding of facts as set out above that (a) there was no actual oral agreement at the meeting as to the alleged exclusivity term, since it was made clear to Mr Peter Crump that Mr Spencer would have to approve any such term, and (b) that there was no subsequent oral communication by Mr Barkley to Mr Peter Crump prior to Mileform's receipt of the Written Agreement, or shortly thereafter, that Mr Spencer had indeed approved such a term, I conclude that, irrespective of whether the agreement between the parties was partly oral, or partly in writing, no such term was incorporated in the contract between them, since there was no communication to Mileform of Interserve’s acceptance. I cannot accept Mr McPherson's submission that the sending of the Written Agreement by Interserve to Mileform amounted to a communication of Interserve’s acceptance of the alleged exclusivity term, in circumstances where not only did the Written Agreement not mention the term, but, on the contrary, the words "non-exclusive distributor" to which Mr Peter Crump had objected at the meeting remained un-amended in clause 1.

But even if I were wrong in reaching the factual conclusion that there was no oral communication of Mr Spencer’s undoubted acceptance of the exclusivity term (whatever it meant), and/or the legal conclusion that, in the circumstances, there was no communication of Interserve's acceptance such as to form the basis of a contractually binding oral agreement, I have no doubt that this is a case where the entire agreement clause contained in clause 18 of the Written Agreement does, in the circumstances, and as a matter of construction, preclude Mileform from seeking to rely on some alleged collateral agreement, oral term or understanding to assert that Interserve had an obligation to use Mileform's services on an exclusive basis.

The critical point in the present case is that the parties clearly envisaged that their agreement would need to be a formal agreement in writing; that requirement arose not merely because of Mr Michael Crump's connection with Mileform, the potential for a conflict of interest, and the difficulties which that might create within Interserve, but also because of Mr Peter Crump's concern to have a written fixed term contract. Mr Peter Crump, Mr Barkley and Mr Syradd all accepted in their evidence that they understood that the terms of the agreement between the parties should be in writing. The notion that some terms of the agreement between the parties were going to be left on a vague, informal oral basis, or that there were to be two related contracts, one written and one oral, or a collateral oral agreement, sits very unhappily with what objectively I find to be the commercial intention of Mileform and Interserve - namely that there should be a formal written contract setting out the rates at which Interserve was obliged to pay for the supply of the Security Products Services and the Storage Services (including the related administrative services) for the next two years.

Thus the present case was very different from these circumstances which arose in J. Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] 1 WLR 1078, [1976] 2 All ER 930 upon which Mr McPherson sought to rely. In that case, the defendant forwarding agents had previously arranged for the plaintiffs' machines to be carried under deck on trailers. The defendants were proposing to change to carrying cargo in containers. In order to induce the plaintiffs to continue to do business with them, a representative of the defendants gave the plaintiffs an oral assurance that all the plaintiffs' machines subsequently transported in containers would be shipped under deck. On the faith of that oral assurance, the plaintiffs agreed to a changeover to container transport, accepted the defendants' new quotations for such transport and proceeded to give the defendants orders in relation to the shipment of their machines. The evidence demonstrated that at all material times the parties had operated on the basis that the plaintiffs' machines were carried under deck. However, in relation to one shipment, a container containing one of the plaintiffs' machines was erroneously stored on deck and was lost at sea. The printed standard conditions of the forwarding trade, which were incorporated in the contract of carriage, contained clauses which gave the defendants complete freedom in respect of the means and procedure to be followed in the transportation of the goods, subject to any express written instructions given by the plaintiffs; they exempted the defendants from liability for loss or damage to the goods unless the loss or damage occurred whilst the goods were in their actual custody and by reason of their wilful neglect or default, and limited the defendants' liability for loss or damage to a fixed amount. Importantly, however, there appears to have been no entire agreement clause which precluded reliance upon oral assurances.

Lord Denning MR held that the oral assurance was binding as a collateral contact on the basis that, where a promise or assurance as to the future had been given to another with the intention that he should act on it by entering into a contract, and he was thereby induced to enter into the contract, the promise or assurance was binding as a collateral warranty. However Roskill and Geoffrey Lane LJJ, on the other hand, held that the analysis of a collateral oral warranty was not applicable where one was not concerned with a contract in writing, but rather with a contract which was partly oral, partly in writing and partly concluded by conduct. They held that the court was entitled to look at, and should look at all the evidence from start to finish in order to see what the actual bargain was that was struck between the parties. In coming to their conclusion, they relied on the evidential features that: the parties had been doing business in transporting goods from Milan to England for some time before; that transportation of goods from Milan to England was always done on trailers which were always under deck; that the defendants wanted a change to use containers instead of trailers; that the plaintiffs were only willing to agree to that change if they were promised by the defendants that those containers would be shipped under deck, and would not have agreed to the change but for that promise. Roskill LJ, at [1976] 2 All ER 930 at 935, concluded as follows:

“The defendants gave such a promise which to my mind against this background plainly amounted to an enforceable contractual promise. In those circumstances it seems to me that the contract was this: 'If we continue to give you our business, you will ensure that those goods in containers are shipped under deck'; and the defendants agreed that this would be so. Thus there was a breach of that contract by the defendants when this container was shipped on deck; and it seems to me to be plain that the damage which the plaintiffs suffered resulted from that breach. That being the position, I think that counsel for the defendants' first argument fails.”

So far as the exemption clauses were concerned, both he and Geoffrey Lane LJ went on to conclude that the result was that the defendants were not entitled to rely on the printed conditions to exempt them from liability for breach of the oral promise that the container would be carried under deck. That was because the printed conditions were repugnant to the oral promise for, if they were applicable, they would render the promise illusory.

But the evidence in the present case (and in particular the evidence relating to the party's dealings both prior to and after the completion of the Written Agreement) does not provide a factual basis to support either an overarching collateral agreement, or a contract which was concluded partly in writing, partly oral and partly by conduct. As I have found, such oral indication, if any, as was given on behalf of Interserve was vague and informal in the extreme and could not have amounted to the type of assurance which overrode either the express wording of the Written Agreement or the entire agreement clause.

I was referred to a number of authorities dealing with entire agreement clauses. A helpful exposition is set out in Lewison, Interpretation of Contracts, 5th edition, chapter 3.16. As there stated, where a contract contains a clause stating that the written contract contains the parties’ entire agreement, that will usually prevent a finding that a collateral contract has been made. If, in addition, the contract contains an acknowledgment that neither party has relied on pre-contractual representations, then depending on the terms of the contract that may give rise to an estoppel. In Inntrepreneur Pub Co v East Crown [2000] 2 Lloyd’s Rep. 611 at 614, Lightman J. said:

“The purpose of an entire agreement clause is to preclude a party to a written agreement from thrashing through the undergrowth and finding, in the course of negotiations, some (chance) remark or statement (often long-forgotten or difficult to recall or explain) upon which to found a claim, such as the present, to the existence of a collateral warranty. The entire agreement clause obviates the occasion for any such search, and the peril to the contracting parties posed by the need that may arise in its absence to conduct such a search. For such a clause constitutes a binding agreement between the parties that the full contractual terms are to be found in the document containing the clause and not elsewhere, and that, accordingly, any promises or assurances made in the course of the negotiations (which, in the absence of such a clause, might have effect as a collateral warranty) shall have no contractual force, save in so far as they are reflected and given effect in that document. The operation of the clause is not to render evidence of the collateral warranty inadmissible in evidence, as is suggested in Chitty on Contract (28th ed.) vol 1 para. 12–102; it is to denude what would otherwise constitute a collateral warranty of legal effect.”

As Longmore L.J. put it in North Eastern Properties v Coleman [2010] 3 All E.R. 528:

“If the parties agree that the written contract is to be the entire contract, it is no business of the courts to tell them that they do not mean what they have said.”

Likewise, Moore-Bick L.J. pointed out in Ravennavi SpA v New Century Shipbuilding Co Ltd [2007] 2 Lloyd’s Rep. 24.:

“The effect of an entire agreement clause . . . must depend primarily on its terms, since it is the language chosen by the parties to express their agreement (wherever it appears) which, construed in its proper context, provides the primary source of their intentions. It is for that reason that I am unable to accept the suggestion in the Buyer’s skeleton argument that clauses of this kind can be construed by reference to their supposed purpose or that their significance is diminished if they are found among what are sometimes called the ‘boilerplate’ provisions of a formal contract of this kind. There may be circumstances, of course, in which the court can be satisfied that a clause of that kind, although apparently couched in language wide enough to encompass the particular matter on which one or other party seeks to rely, was not intended by the parties to operate in the way in which its terms would suggest, but any such conclusion must be borne out by the particular circumstances of the case.”

As a matter of construction, I conclude that, contrary to Mr McPherson's submissions, the subject matter of the Written Agreement (as referred to in the entire agreement clause) indeed related to the Security Products Services and the Storage Services. That is clear from page 7 of the Written Agreement which sets out the rates for such services and clause 1 which appoints Mileform as a distributor of the Security Products, which, on any basis, it clearly was. I am satisfied that, in the present case, the entire agreement clause is clearly apt, and was intended by the parties, to operate in the way in which its terms would suggest.

I accept that the statement in clause 1 that Mileform was an "independent reseller" who distributed "at its own risk and expense" was an inaccurate description of Mileform's role and, on a construction exercise, would fall to be struck out or disregarded, given the actual relationship of the parties. But it is clear that, despite the so-called parole evidence rule, oral evidence is admissible to prove the actual role carried out by a party; see e.g. Steele v M’Kinlay (1880) 5 App. Cas. 754, 778–779; Macdonald v Whitfield (1883) 8 App. Cas. 733, 745; National Sales Corp Ltd v Bernardi [1931] 2 K.B. 188; McCall Bros Ltd v Hargreaves[1932] 2 K.B. 423; Yeoman Credit Ltd v Gregory [1963] 1 W.L.R. 343.

But the fact that the Written Agreement was inapposite in certain respects, and that oral evidence might be admissible to explain the true function and role of Mileform, does not, in my judgment, justify the wholesale disregard of the entire agreement clause or the importation of a variety of alleged oral assurances and agreements. It would not be a difficult construction task to imply from page 7 of the Written Agreement the services which the parties had indeed agreed that Mileform was to provide. Thus contrary to Mr McPherson's written submissions, I do not accept that "the Contract Documents do not record the [Security] Product Services and the Storage Services which Mileform already contracted to supply to Interserve".

Mr McPherson sought to draw a parallel with the case of Ryanair Ltd v SR Technics Ireland Ltd 351 [2007] EWHC 3089 (QB). In that case Gray J. gave effect to a collateral contract, despite the existence of an entire agreement clause. He did so, on the basis that both parties proceeded on the common assumption that the collateral contract would be honoured, despite the existence of the entire agreement clause. The entire agreement clause did not prevent the contention that the entire agreement was found partly in the formal contract and partly in the collateral contract. I would agree with the comment made by the authors of Lewison that:

“It may be thought that this decision undermines the general purpose of an entire agreement clause.”

However it is not necessary for me to engage in a minute analysis of the correctness of the decision in that case, although, as presently advised, I would not be minded to follow it. The present case can be easily distinguished on the grounds that there was no evidence that Interserve and Mileform subsequently proceeded on the common assumption either (i) that the alleged collateral contract as to "exclusivity" would be honoured, (as I have already said, they did not do so); or (ii) that they did so, despite the existence of the entire agreement clause.

Nor was this a case where one party had waived reliance on the “entire agreement” clause, such as was found to have been the situation in another case relied upon by Mr McPherson, namely SAM Business Systems Ltd v Hedley & Co [2003] 1 All ER (Comm) 465 per Judge Bowsher QC at paragraph 50.

Accordingly I conclude that, even if there had been any oral agreement, or representation, as to the alleged exclusivity term, the entire agreement clause precludes any such term from taking effect.

Further, I also conclude that any such term as was (contrary to my findings) agreed as to exclusivity, was too uncertain to be contractually binding.

First, there was no real substantive evidence to support the allegation that the alleged exclusivity term related to the Storage Services. None of the witnesses gave any substantive evidence that exclusivity (whatever it meant) was to be applied to the Storage Services. The following were contra-indicators of any such case:

But in any event, notwithstanding the evidence from the witnesses that they simply assumed that the exclusivity term would apply to a continuation of all the services previously carried out by Mileform, there was no discussion at any time of what exclusivity actually meant. Mr McPherson referred to the relevant principles set out in Lewison, at chapters 8.10 – 8.15 which govern the court’s approach to the issue of uncertain contractual terms. In summary:

I accept these principles as a correct summary of the general law. But the issue in the present case (if it arises at all which, in my judgment, it does not because of my prior conclusion in relation to the entire agreement clause) is whether there was ever an oral term as to exclusivity which was certain enough, or adequately articulated, to be included as part of the contract between the parties. This was not a case of the court having to look at a written term and to construe it, and see whether it was adequately certain.

I conclude that, in the circumstances of the present case, it was far from clear what either the Interserve representatives or Mr Peter Crump meant when they referred to "exclusivity". As Mr Coplin submitted, that term, in context, and in the light of the historical dealings between the parties, could have had a number of different meanings; in particular, for example, the following questions arose:

None of these questions could be satisfactorily answered on the basis of the limited evidence as to the parties' discussions as to "exclusivity" before the court. Accordingly, if it were necessary for me to do so I would also conclude that the alleged exclusivity term was too uncertain to form part of any agreement between the parties.

I am not prepared to decide this issue for the following reasons:

For similar reasons I am not prepared to decide this issue. I received no informed or detailed factual or legal submissions, supported by relevant authority, from either party in relation to the issue. It is an important point of company law as to whether, and in what circumstances, a transaction ceases to be voidable for the purposes of section 41(4) of the Companies Act 2006. In particular, it is a matter of some interest whether, if some aspect of the transaction is unauthorised, (such as, in the present circumstances, an alleged oral exclusivity term), that aspect of the transaction is voidable, notwithstanding there has been affirmation of the remainder of the, authorised, written contract.

Contrary to Mr McPherson submissions, I am satisfied that, as a result of the e-mail and other communications between the parties in the period 2 June 2010 to 19 August 2010, Mileform compromised all claims for damages which it had in respect of the Storage Services, whether based on the alleged exclusivity term or otherwise, based on the two-year term contained in the Written Agreement. It is not necessary for me to recite the full correspondence. In cross-examination Mr Peter Crump accepted that, in the correspondence, he was distinguishing between Mileform's claim in respect of the Storage Services and its claim in respect of the Security Product Services. I refer selectively to the following communications:

Accordingly I conclude that, in the circumstances, Mileform has no further claim in respect of any breach which there may have been by Interserve of the Written Agreement in relation to the Storage Services, irrespective of whether any exclusivity term was agreed. In particular, I reject Mr McPherson's submissions which suggested that there was any absence of consideration for the compromise.

In the absence of any exclusivity provision, I conclude that, in accordance with clause 2 of the Written Agreement, Interserve had the right

"in its sole discretion and without liability to Distributor to… discontinue the availability of any Product. Interserve retains the right to discontinue distribution of any of the individual Products through Distributor upon giving distributor thirty (30) days prior written notice of such discontinuance. No such notice shall affect the right of Distributor to distribute Products that are not subject to any such notice."

In argument, both counsel appeared to proceed on the basis that Mileform's claim depended upon it establishing that there was indeed an exclusivity term; see, for example, paragraph 1 of Interserve's closing submissions and paragraph 18 of the Re-Re-Amended Particulars of Claim. Moreover counsel's agreed notes relating to quantum likewise appeared to be based on the premise that, unless I found in favour of Mileform in relation to the issue of exclusivity, no claim for damages for breach of early termination arose. If my understanding in relation to this point is incorrect, then counsel will need to address argument as to: (i) what, if any, breach occurred, and (ii) what, if any, damage flowed from such breach.

Allegations were made in the Re-amended defence to the effect that Mr Peter Crump and Mileform had been involved in improper transactions, involving Mr Michael Crump, in relation to a credit note issued by AGI Amaray to Interserve, and dated 19 November 2008, in the sum of £25,777.77. It was alleged by Interserve that 90% of the sum was paid to Mileform with no proper explanation or record of the reason for the payment. Mileform, on the other hand, contended that the payment related to engineering services which it had provided. It was not necessary for me to resolve this issue and I disregarded it in reaching my conclusions. At its highest, the issue went to the credibility of Mr Peter Crump.

For the sake of completeness, I should say that I do not accept Mr Coplin's submission that clause 14 restricts Mileform's recovery of damages to nil on the basis that it did not pay any licence fees to Interserve. That provision was clearly inappropriate to the actual relationship between the parties and for that reason it cannot operate, in my judgment, as a bar to such recovery if any to which Mileform might otherwise be entitled.

I will hear argument from counsel as to any consequential matters arising in the light of this judgment, in particular, if the issue arises, in relation to the existence of any residual damages claim, and its quantum, as indicated at paragraph 119 above.

Subject to any further submissions which may be made in relation to breach and damages, in the light of my comments in paragraph 119 above, I would dismiss Mileform's claim.