J WANSTALL & SONS v FRIDAYS LIMITED

THE APPLICATION AND THE SUPORTING EVIDENCE

The application made by the Defendant is an application:

The application is supported by a Witness Statement of David Friday who amongst other matters states that a meeting took place at The George in Cranbook on the 30^th May 2019. He goes on to state:

“22.

At the meeting, we discussed the Salmonella outbreaks, the possible routes of contamination and infection, and the costs each party had suffered as a result.

23.

Doug accepted that Harefield Farm was the first infected flock and the likely source of further contamination and infections. I accepted that it was possible that contamination had moved within our supply chain (it being impossible to rule this out entirely). Doug outlined the costs linked to the outbreak, especially the rendering of the Deer Park flock and the disruption to his business. I outlined the costs to our business, such as the disruption caused, the reduced availability because of Harefield, the disruption because of Deer Park supply and the issue of eggs being poor quality.

24.

We also discussed the biosecurity barrier in hen houses that was Doug's responsibility and should exist and be implemented between outside the bird area and inside and that that was a critical barrier that must have been breached for infections to have occurred.

25.

We agreed that the best way to proceed was to focus on our trade moving forward. Doug believed that he could run a successful business in supplying eggs to us and I believed purchasing eggs from Doug helped me to operate a free-range packing business. Doug stated that he needed financial support in the form of a £100,000 loan to be re-paid over one year and suggested this could be deducted from egg payments.

26.

In return, Doug would commit to not pursuing Fridays for losses associated with the outbreaks, including through legal channels, and he would not engage in any negative PR activity against Fridays. I also accepted that Fridays would not pursue Doug for the costs it had borne. I said that I would come back to him on how much support we could offer.”

The Claimant relies upon a Witness Statement from Doug Wanstall in opposing this application and amongst other matters he states:

“3)

Paragraphs 22-30:

The record of our lunchtime discussion at paragraphs 22-25 is broadly accurate but both of us explained the deficiencies we perceived in the other's bio security and what could be done to reduce the risk of another salmonella outbreak. I concluded that each of us understood and would address the other's position and that there was therefore a way forward. We did not discuss anything whatsoever touching upon financial claims against each other still less the abandoning of them. The whole focus of our discussion was how to ensure that we could continue to trade together. If, as Mr Friday claims at paragraph 27, "the only purpose of this discussion was to bring Doug's claims to an end" it was not something which Mr Friday voiced or even hinted at.

I note that when Mr Friday briefed his father about the meeting- paragraph 28 - he did not mention anything about the compromise agreement which he now alleges had been reached - even though he now says it was the central topic of the meeting.”

David Friday’s response to Doug Wanstall’s Witness Statement states in relation to paragraph 3(3) quoted above that:

“12.

As to paragraph 3 (3), I reiterate my account of the meeting between Mr Wanstall and me where commitment not to pursue for losses was discussed, which is consistent with correspondence beforehand and thereafter. The statement that this "brings the zoonosis issue to a close" (page 24/DF1), was a statement that the claim that Mr Wanstall was clearly threatening in relation to the alleged losses mentioned in his 14 September 2019 email was now settled.

13.

This discussion at the meeting about the losses incurred by Mr Wanstall occurred following, and as a result of, written threats of redress and reference to legal advice being taken. Obviously, the agreement of a financial settlement / payment was finalised explicitly for the purpose of dealing with the claim that was quite clearly being advanced by Mr Wanstall.

14.

Given that Mr Wanstall now says that the agreement related to bio security, I do not understand why he says that Fridays was willing to advance the money to Mr Wanstall. The only reason that Fridays agreed to such a payment was to settle Mr Wanstall's claim in relation to the losses he alleged during the meeting.

15.

Further, the summary of the update to our Managing Director certainly concerned the Settlement Agreement. The absence of reference to the term "compromise agreement” in no way defines what was or wasn't discussed. As my first statement sets out at paragraph 28, I recounted how Mr Wanstall and I discussed " ...the costs to both sides ...". Where the essence of Mr Wanstall's claim is that he incurred losses owing to the salmonella outbreak, it follows that the payment was agreed to settle these.”

The Claimant is a partnership (that is challenged by the Defendant who alleges that any agreement was with Doug Wanstall personally) that carries on trade as farmers and food producers from Bank Farm, Ashford, Kent and various other sites in England in particular egg farms at Harefield Farm and at Deer Farm. The Claimant produces some 200,000 eggs a day and was an important supplier to the Defendant.

The Defendant is a leading producer of eggs and egg products to retailers, food service providers, wholesale, manufacturing customers and other egg packers in the United Kingdom and abroad. The Defendant owns and operates rearing farms (where day old chicks are reared to nearly egg laying maturity); laying farms (where eggs are produced by laying hens); packing centres (where eggs are packed and graded to a saleable quality) and two chilled food factories including an egg boiling plant.

The Defendant produces approximately 80% of its ungraded eggs for packing from its own laying farms, it also has agreements in place with external providers (known as 'contracted producers') who primarily supply free range ungraded eggs to them. The Claimant was a contracted producer until on or about 5^th September 2019.

.3 A SHORT CHRONOLOGY.

The factual background to this matter is far from clear. The Defendant complains that:

“In an email dated 20th May 2019, from Doug Wanstall to David Friday, Mr Wanstall set out a dispute that he was raising in relation to the infection of the flocks at C's Harefield Farm and Deer Farm with Salmonella:

.1 The email is headed "Urgent attention required" and Mr Wanstall sets out the details of the infection at Harefield Farm in July 2017.

.2 The email is addressed to the British Egg Industry Council ("BEIC") and also David Friday and James Friday. The email states in terms that:

"I will be seeking redress for the costs and losses, for the fact that our treatment has been unfair and for flagrant double standards, the question is how best to go about it." [119]

.3 He goes on to set out details of the infection at Deer Farm in March 2019.

.4 He states that Friday's packing centre was tested and proved positive on or around 15th April 2019.

.5 He alleges that the Claimant received egg trays with "significant egg shell, yolk and mould residues"

.6 The gist of the email is that Fridays must have been the source of the salmonella outbreak because it is the only common factor.

.7 The email concluded:

"This problem will not simply go away or be brushed under the carpet and I am happy to talk further at any time to reach a resolution, I suggest that happens sooner rather than later"

However that email was addressed to Mark Williams of the BEIC and David and James Friday. The email contains a list of complaints against the BEIC and ends by stating:

“The personal and financial stress on me has been significant, almost to breaking point. I feel let down by an organisation that I have only ever supported. I will be seeking redress for the costs and losses, for the fact that our treatment has been unfair and for the flagrant double standards, the question is how best to go about it. I don't want a fight, nor for this to go public, but I will not simply roll over and accept that this is all my fault and see my poultry business ruined. Needless to say I am taking advice and am considering my options.

This problem will not simply go away or be brushed under the carpet and I am happy to talk further at any time to, reach a resolution, I suggest that happens sooner rather than later.”

I construe this letter as asserting that Doug Wanstall will be seeking redress for costs and losses from an “organisation” that is BEIC and not from David Friday. It is certainly strongly arguable that this letter is seeking redress for costs and losses from BEIC and not from David Friday. At this stage there appears as yet no claim made against the Defendant and at this stage no dispute with the Defendant.

The Defendant submits that:

“Following receipt of that email, David Friday arranged a lunch meeting with Doug Wanstall and he attended that lunch on 30th May 2019. At that meeting there was a discussion about the issue raised in the 20th May 2019 email. There is a dispute as to what was said at that meeting; however, it is not in issue that following that lunch there was a chain of emails wherein Doug Wanstall expressly accepted an offer of a loan of £50,000 and agreed that brought an end to the "zoonosis matter" (email 3rd June 2019 and 4th June 2019.”

I observe that although David Friday now claims that the Claimant foregoing its claims was expressly discussed, as the central issue, at the pub meeting he neglected to mention this when he reported on the meeting to his managing director (and father) Malcolm Friday. See paragraph 28 of David Friday’s Witness Statement which stated

“28.

I then organised a meeting with the Managing Director at Fridays, Malcolm Friday. We discussed the meeting and I recounted how Doug and I discussed the costs to both sides and how Doug had indicated that he was under financial stress and had asked us for support in the form of a loan, that could be repaid by way of deductions from future amounts due to Doug as payment for eggs.”

It is alleged that a settlement was concluded in the following chain of emails:

I construe this chain of emails applying the key principles applicable to the interpretation of contractual provisions summarised by Lord Hodge in Wood v Capita Insurance Services Limited [2017] AC 1173 as an arrangement looking forward not backwards. The zoonosis issue (the zoonosis matter) referred to is the outbreak of salmonella.

These emails do not refer to a dispute between the parties as to the costs and losses of that outbreak but rather to a state of affairs which the parties had resolved so as to enable them to trade together going forwards.

If that is not the correct interpretation of these emails it is certainly strongly arguable that these emails do not settle any dispute between the parties, if in fact the parties were at this stage in dispute.

There is no mention in these emails of a dispute as to the costs incurred by either the Claimant or the Defendant as a result of the Salmonella outbreak and there is no mention of a dispute as to the costs incurred by either the Claimant or the Defendant being compromised or settled. I do not consider that correspondence after this exchange of emails assists in construing these emails.

The Defendant seeks to rely upon an email dated the 14^th September 2019 from Doug Wanstall to David Friday which stated:

“The amount was paid as some small help as were in such a dark hole financially. I said to you that it would never cover our losses but that I was not going to turn it away. The agreement was very loose but as I understood it, whether a loan or faster payment, it would be paid back over a year. My financial problems have not gone away, they were caused by salmonella.”

“At that time I didn’t think we would ever prove where the salmonella originated from or how it spread…”

In terms of the construction of the Settlement Agreement, this email is post-contractual and so inadmissible on the question of construction. However, the Defendant relies upon the email for three reasons. The Defendant contends that:

This email is inadmissible on the question of construction. In any event, it shows that there is a strong argument to the effect that in June 2019 Doug Wanstall was unable to formulate a claim against the Defendant arising out of the salmonella outbreak let alone compromise a dispute with the Defendant in respect of the losses the Claimant and the Defendant had suffered as a result of the salmonella outbreak.

The Defendant very helpfully in its detailed written submissions summarised the relevant law as follows:

“The principles applicable to applications for summary judgment were summarised by Lewison J in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] and approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2010] Lloyd's Rep. LR. 301. The key principles are:

1.

The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All E.R. 91.

2.

A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8].

3.

In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman.

4.

This does not mean that the court must take at face value and without analysis everything that a Claimant says in his statements before the court. In some cases, it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10].

5.

In reaching its conclusion the court must consider not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No.5) [2001] EWCA Civ 550.

6.

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 3.

7.

On the other hand, it is not uncommon for an application under Pt 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim.”

On the evidence before me I consider that the Claimant has a realistic prospect of success in establishing that during the exchange of the four emails set out above the parties did not reach a binding settlement agreement in respect of the costs incurred by the Claimant and the Defendant as a result of the salmonella outbreak.

I reach that conclusion because:

In the circumstances I am unable to identify an unequivocal agreement to compromise a clearly defined dispute relating to the costs and losses suffered by the Claimant and Defendant as a result of the salmonella outbreak..

I accordingly dismiss the Defendant’s application:

I will hear Counsel as to the appropriate form of order and on the issue of costs if not agreed at a further hearing to be fixed by the parties.