SERE Holdings Ltd v Volkswagen Group United Kingdom Ltd

Permission to amend an application should generally be granted where the proposed case is properly arguable and any prejudice can be compensated in costs. The court may refuse an amendment where the proposed case is bound to fail, but should avoid a mini-trial.

An entire agreement clause stating that the written contract constitutes the parties’ entire agreement may exclude legal effect for pre-contractual or collateral agreements. The same reasoning may prevent an estoppel by convention, based on a shared assumption about future conduct, from supporting an injunction. An implied term requiring co-operation or non-prevention remains arguable where its interaction with a statutory or regulatory distribution regime cannot be resolved summarily.

The claimant operated a SEAT dealership under agreements with the defendant. It initially sought an injunction on the basis that the defendant was appointing a new dealer in breach of the agreements. It later accepted that the proposed competitor was an existing dealer opening an additional outlet, making the original application unsustainable.

The claimant sought permission to amend its particulars of claim and injunction application to rely on alleged collateral agreements, implied terms, estoppel by convention, and related causes of action. The defendant did not oppose amendment of the particulars of claim, but opposed amendment of the injunction application on legal and discretionary grounds. The issue was whether the proposed injunction case was fairly arguable and, if so, whether the prejudice caused by an adjournment could be addressed.

1. Amendment principles. Applying the overriding objective and the approach in Cobbold v London Borough of Greenwich and Coflexip SA v Stolt Offshore MS Ltd, the relevant question was whether any proposed cause of action was fairly arguable as a legally sound basis for the injunction. This was materially similar to the summary judgment test of no real prospect of success under CPR Part 24. A proposed case shown in short order to be bound to fail should not be allowed.
2. Collateral agreements. Clause 14.7 was sufficient to prevent reliance on alleged oral or collateral agreements made during negotiations. Following the reasoning in Inntrepreneur Pub Co (GL) v East Crown Ltd, a clause stating that the written agreement constituted the entire agreement meant that the contractual terms were to be found in that agreement and nowhere else. The second sentence, excluding rights arising from pre-contractual statements save for fraud, reinforced that conclusion.
3. Estoppel. The proposed estoppel by convention concerned an assumption about the defendant’s future conduct. The decisive difficulty was that the estoppel would have to give legal effect to substantially the same promise which the entire agreement clause excluded as a collateral agreement.
4. Implied terms and the BER. The general implication that contractual parties will not prevent performance, and will co-operate where necessary to enable it, was accepted, with reference to Mackay v Dick. The proposed terms were weak but not unarguable, since their interaction with the selective distribution regime under Commission Regulation No 1400/2002 could not be resolved against the claimant in short order.
5. Discretion. The amendment was very late. The resulting adjournment would prolong a practical restraint on the proposed competing outlet, causing prejudice which could not be compensated by costs alone. Permission was therefore offered only if the claimant gave a suitable cross-undertaking in damages, fortified by a personal guarantee. Costs and the defendant’s application for an extension of time were reserved.

First-instance decision. No appellate history is stated in the judgment.