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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Calor Gas Ltd v Express Fuels (Scotland) Limited & Anor [2006] ScotCS CSOH_170 (02 November 2006) URL: http://www.bailii.org/scot/cases/ScotCS/2006/CSOH_170.html Cite as: [2006] ScotCS CSOH_170, [2006] CSOH 170 |
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OUTER HOUSE, COURT OF SESSION [2006] CSOH 170 |
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A615/04 |
OPINION OF LORD HODGE in the cause CALOR GAS LIMITED Pursuers; against EXPRESS FUELS ( Defenders: ________________ |
Pursuers: Sandison, Advocate; DLA Piper Rudnick Gray Cary
Defenders:
[2] The
Temporary Lord Ordinary R. F. MacDonald QC granted the pursuers interim
interdicts on
[3] In
July 2005 the pursuers lodged a Minute for breach of interdict. Each of the defenders lodged Answers to that
Minute; those Answers are in identical
terms. A procedure roll debate took
place at the instance of the pursuers, who submitted that the defences were
irrelevant and that the court should hold de
Factual
background in the pleadings
[4] As the debate progressed it
became clear that the central question was the interpretation of the
interdicts. In order to set that issue
in context it is necessary to give a summary of the nature of gas supply trade
as disclosed in the admitted averments.
[5] Dealers in gas supplied by the pursuers and their competitors sell gas to the public by supplying the customer with the gas in a cylinder owned by the supplier. The customer pays the dealer the purchase price of the gas and in addition a hire charge for the use of the cylinder. When the customer has used up the gas in the cylinder, he may return the cylinder to any of the supplier's dealers and exchange the empty cylinder for a full cylinder, paying only the purchase price of the gas. The hire charge which he has already paid is carried forward in relation to the replacement cylinder. If, however, the customer of one supplier seeks to buy gas from a dealer selling the gas of another supplier he obtains from the new dealer a cylinder belonging to the other supplier. He has to pay the new dealer a hire charge for the other supplier's cylinder. In accordance with normal practice the new dealer should advise the customer to return the empty cylinder belonging to the original supplier to one of the original supplier's dealers.
[6] It is also material to record that the defenders make the following averments in the principal action:
"To handle unwanted cylinders belonging to other suppliers is a normal aspect of the competitive process. It allows members of the public to switch suppliers at their choice, based on their preference. Prohibiting the handling of cylinders is a barrier to switching and is a practice which has the effect of limiting customers' freedom of choice. As such it is an exclusionary practice".
While the pursuers do not respond to these averments which therefore fall within their general denial, it appears that their motive for imposing contractual restraints on former dealers and seeking interdict must at least in part be the wish to protect their trade connection by hindering customers from switching to rival suppliers. In the debate the pursuers' counsel did not suggest otherwise. Thus it appears likely that the defenders have obtained commercial benefit from receiving the pursuers' gas cylinders from customers seeking to switch to supplies from Flogas. It is also relevant that one of the defences in the principal action, which is scheduled for a proof hearing next May, is that the pursuers' agreement with the first defenders (which prohibits handling the pursuers' gas cylinders after its termination) is void for infringement of competition law.
[7] The first interdict is based on a provision of the pursuers' principal dealer agreement which provides that upon termination of the agreement the dealer "will cease to sell, supply, handle, distribute or install" the gas cylinders. The second interdict against both defenders is based on the allegation that the defenders induced customers and dealers who were in contractual relations with the pursuers to breach their contracts. The pursuers aver that this delict was committed by the defenders (a) taking possession of the pursuers' gas cylinders from their customers, when the customers' "cylinder refill agreement" with the pursuers obliged them not to part with possession of the gas cylinders except to the pursuers or one of the pursuers' authorised dealers and (b) removing the pursuers' property from Calor Gas retailers when persuading them to take supplies of gas from Flogas. The defenders deny those averments.
[8] In the Minute for breach of interdict the pursuers aver a course of conduct by the defenders in the six months after interim interdict was pronounced and continuing thereafter. Among the allegations which the pursuers make is the averment that they employed investigators to visit the defenders' premises on several occasions to buy gas supplied to the defenders by Flogas. On each occasion the investigator making the purchase handed over an empty gas cylinder belonging to pursuers and the defenders' employees accepted it. The defenders deny this averment which is therefore not relevant to the debate at procedure roll. What is proper for consideration is what defenders admit or aver that they did.
[9] The defenders deny breach of the interdict and aver that since September 2004 they have taken the pursuers' gas cylinders into their custody solely with a view to contacting the pursuers and returning the cylinders to them. They sent faxes, which I was shown, to the pursuers on seven occasions between October 2004 and March 2005 inviting them to uplift their gas cylinders. The aggregate number of cylinders referred to in the faxes was eight hundred and five. The defenders also aver that they wrote to their customers advising them that they no longer traded in gas supplied by the pursuers. They also aver that since October 2004 they have displayed a notice in their premises stating that customers should not leave their Calor Gas cylinders there. They aver that members of the public have continued to leave gas cylinders outside their yard or have brought them onto their premises and refused to return them to the pursuers' nearest dealer. They aver that their drivers on delivering gas to customers' homes have been faced with customers who, when told that the defenders did not handle the pursuers' gas cylinders, have stated that they will not keep the pursuers' empty cylinders in their homes. The drivers have therefore taken the gas cylinders into their custody to prevent them being abandoned. They aver that they have uplifted abandoned gas cylinders at the request of the police and that they have discussed the problem of abandoned gas cylinders with the Health and Safety Executive. They aver that it is normal practice for responsible members of the gas industry to take abandoned gas cylinders into their yards and then contact the gas company which owns the cylinders. They aver that they have not breached the interdict or in any event they have not done so wilfully.
Parties'
submissions
[10] Mr Sandison for the pursuers, addressing the averment that there had been no wilful breach, referred to Director General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456. In that case the House of Lords approved the distinction drawn by Warrington J in Stancomb v Trowbridge Urban Borough Council [1910] 2 Ch 190 between wilful conduct on the one hand and casual or accidental and unintentional acts on the other and held that deliberate conduct by an employee was wilful even although it did not involve a direct intention to disobey an order. He submitted that the defenders' averments amounted to an admission of handling or taking into their possession the pursuers' gas cylinders. While the defenders asserted that they had done so solely to return the cylinders to the pursuers, that was irrelevant. He referred to The King v Poplar Metropolitan Borough Council [1922] 1 KB 95 (Lord Sterndale at pp.103-104) in support of the proposition that the defenders' motive for their acts was irrelevant if, objectively assessed, those acts involved a breach of interdict. While it might not be a breach of the interdicts to take into custody cylinders which members of the public had abandoned outside the defenders' yard or within the yard as that might arguably amount to involuntary possession, the defenders had failed to give adequate specification of the number of occasions on which that had occurred. Further, the acts of the defenders' delivery drivers and the uplifting of cylinders at the request of the police amounted to voluntary handling or taking of possession and were caught by the interdict.
[12] Mr Sandison in reply submitted that the defenders were
incorrect in seeking to give a technical meaning to the words of the
interdicts. He referred me to Mcintyre v
Decision
[13] The test in deciding a
challenge to the relevancy of defences is whether the defence must necessarily
fail even if the defenders prove all of their averments. See Jamieson
v Jamieson 1952 SC (HL) 44 and
[15] It is well established in law that the interim interdicts
should be interpreted in a practical way, in accordance with the ordinary and
natural meaning of the words used, and not in any technical sense unless it is
clear from the context that a technical meaning was intended. See McIntyre
v
[16] It is clear from the pleadings in the principal action and the admitted averments in the Minute and Answers that what the pursuers were seeking to do was to prevent the defenders from interposing themselves between the pursuers and their customers. In particular, they were seeking to prevent the defenders from relieving the pursuers' former customers of their empty cylinders when providing them with gas cylinders from another supplier and thus facilitating such customers to switch to that supplier.
[17] The contractual prohibition against "handling" the cylinders applies only to the first defenders. That prohibition falls to be interpreted in the context of the termination clause and the contract as a whole. What is prohibited in the contract is selling, supplying, handling, distributing or installing (among other things) the cylinders. While I am prepared to accept that the contract envisaged that the prohibited activities would be activities carried out in the course of the first defenders' business, I am not persuaded that the contract sought to prohibit such activities only when they were carried out with a view to profit directly from the activities themselves. Having regard to the obligation on the pursuers' customers in their "cylinder refill agreements" (Form 167 Agreements) to return the cylinders to the pursuers or their authorised dealers (a stipulation which must have been within the defenders' knowledge), it appears to me that the prohibition against handling extends at least to receiving the cylinders from former customers of the pursuers and obviating the need for such customers to visit a dealer in the pursuers' products. By so handling the gas cylinders, the first defenders facilitated the switching of gas supplier. This is implicit in their averments quoted in paragraph 6 above. In my opinion such handling of the gas cylinders, for example by the first defenders' delivery drivers, with the intention of returning them to the pursuers falls within the scope of the contractual prohibition and thus the first interdict.
[18] Turning to the second interdict which is directed against both defenders, I accept that Professor Reid's statements in paragraphs 123 and 125 of Volume 18 of the Stair Memorial Encyclopaedia, that for a person to acquire possession of a thing he must intend to exercise control over the thing for his own benefit, are vouched by the institutional writers to whom he referred and which Mr Johnston cited in his submission (see paragraph 11 above). That is our law. There are circumstances where the distinction between possession and custody is very important, for example in the transfer of ownership of corporeal moveable property. But I am satisfied that it is not correct to interpret the interdict in a strict sense which would draw a distinction between possession on the one hand and custody on the other. It appears to me to be highly artificial to say, in this context, that while they held the cylinders, the defenders were the mere custodiers of them and that either the pursuers or their former customers were the possessors (see Lord Ivory in Miller & Co's Trustee v Western Bank of Scotland (1856) 19 D 152, at p. 161). In seeking a prohibition against taking possession of or otherwise interfering with the cylinders, the pursuers clearly wanted to prevent the defenders from interposing themselves between the pursuers and their customers by, among other steps, relieving those customers of the empty gas cylinders which belonged to the pursuers. It must be borne in mind that the pursuers' delictual claim against the defenders in article 5 of the principal action was one of inducing the customers to breach their contracts with the pursuers which required them to return the cylinders to the pursuers or the pursuers' dealers. If I were to interpret the second interdict in a way which drew the technical distinction between "possession" and "custody" I would not be following the authoritative guidance set out in paragraph 15 above. In addition, I cannot ignore the words "or otherwise interfering with" which are part of the interdict. Thus even if I were wrong in declining to give a technical meaning to the phrase "taking possession of", the defenders' admitted acts of interposing themselves between the pursuers and their former customers by taking the empty cylinders amount "interfering with" the cylinders.
[19] In reaching the view that the interdicts have been breached, I have borne in mind the dictum of Lord President Emslie in Murdoch v Murdoch 1973 SLT (Notes) 13 that
"where interdict is granted by the court the terms of the interdict must be no wider than are necessary to curb the illegal actings complained of, and so precise and clear that the person interdicted is left in no doubt what he is forbidden to do."
In my opinion, having regard to the context averred in the principal action, both defenders should have been in no doubt that the second interdict prohibited them from taking the pursuers' cylinders into their possession or custody. The first defenders similarly should have been in no doubt about the prohibition against handling in the first interdict. There may have been cases where the defenders have a reasonable explanation for doing so, such as when the members of the public abandoned gas cylinders outside or within their premises, and such circumstances may be a relevant consideration in mitigation of the consequences of breach of the court's orders. But that does not alter the fact that, on the interpretation of the interdicts which I favour, the defenders' averments provide no relevant defence to the allegation of breach of interdict.
[20] Mr Johnston suggested that the requirement of proof beyond reasonable doubt supported the need for a proof. I do not accept this submission. If there were matters which needed to go to proof, the standard of proof would indeed be proof beyond reasonable doubt. But I am here concerned with the logically prior question of whether anything needs to be proved before I can reach a concluded view on the allegation of breach. I am satisfied that I do not need proof of trade practice or of the state of mind of the employees of the defenders when they took possession or custody of the cylinders in order to interpret the interdicts and apply them to the admitted facts.
[21] Mr Sandison also attacked the lack of specification in the pleadings of the defenders. It is not necessary for my decision to express concluded views on that submission. However I consider that the defenders, when faced with the interim interdicts, could have kept records of the circumstances in which they came to hold the pursuers' cylinders and used that information to give greater specification in their pleadings as to the frequency of the occurrence of such circumstances. As their pleadings stand, they aver some circumstances which are in my opinion breaches of the interdicts and some which arguably are not; but the frequency of the occurrence of incidents in each category is unclear. In addition, in the principal action I am surprised by the defenders' apparent failure in Answer 5 to address the terms of the pursuers' standard form "cylinder refill agreement" with their customers, which must have been within their knowledge. Greater candour may assist their position in further hearings on this matter. Their averred concerns for health and safety while relevant in mitigation are not relevant to the question of breach. If such concerns predominated, it might have been appropriate to have sought recall of the interim interdicts.
Conclusion
[22] I conclude that the
defenders have not averred a relevant defence to the allegation of breach of
interdict. I therefore uphold the
pursuers' second plea-in-law in their Minute and repel the defenders' three
pleas-in-law in their respective Answers. I will put out the case by order for
discussion of further procedure.