Wootton Trucks Ltd & Anor v Man ERF UK Ltd

Where an interim commercial agreement expressly permits termination on notice, the court should give that provision effect according to its terms. It should not sever the provision or substitute a materially different notice period by reference to competition-law requirements unless the agreement properly requires that construction. An interim arrangement intended to operate only until revised contractual documents are adopted may naturally provide for short-notice termination after a defined transition period. A block-exemption condition requiring a notice period of at least two years does not, without more, convert an express one-week notice clause into a two-year term. If the agreed notice validly terminated the agreement, there is no serious issue to try about its continued existence and no basis for interim injunctive relief.

MAN ERF appealed against an order of Mr Peter Prescott QC, sitting as a deputy High Court judge in the Chancery Division, granting Wootton Trucks Ltd and Wootton Trucks (Reading) Ltd interim injunctions.

The parties had entered into an Interim Agreement governing their trading relationship while revised contractual arrangements were prepared following the introduction of a new motor-vehicle distribution block exemption. The agreement stated that it was terminable by either party on one week’s written notice, subject to a two-month moratorium after delivery of revised documents.

Wootton initially argued that competition law required the clause to be severed and replaced by a two-year notice period. On appeal, it relied on construction instead. The central issues were whether the express notice clause should be displaced or supplemented by reference to the block exemption, and whether interim relief remained available.

The deputy judge had held that those issues were well arguable and granted interim relief for a limited period.

Appeal allowed. The court held that the Interim Agreement was validly terminated on 28 February 2006. There was therefore no serious issue to be tried concerning whether it remained in force, and no question of balance of convenience arose.

1. The agreement expressly provided for termination by either party on one week’s written notice, while postponing service of notice until two months after MAN ERF supplied revised contractual documents. That proviso showed that Wootton was to have time to consider the revised terms and comply with the Revised Standards, after which the interim arrangement could be ended on short notice.
2. The clause was consistent with the agreement’s interim character. Implying or substituting a two-year notice period would contradict the parties’ expressed intention and make commercial nonsense in the circumstances.
3. The court also noted that Article 3.5(b) of Commission Regulation (EC) 1400/2002 required a period of “at least” two years, leaving its precise length at large. It did not itself prescribe a term that could simply be inserted into the agreement.
4. The reference to terms intended to avoid conflict with the 2002 block exemption was made on the understanding that the Interim Agreement would later be superseded by a revised agreement satisfying the exemption. It did not justify ignoring the express termination provision.
5. The court rejected both construction routes advanced by Wootton: treating the relevant paragraphs as repugnant and allowing one to prevail, or severing the notice clause and implying or substituting a new provision. The general rule that an express contractual clause prevails over an inconsistent incorporated term did not need to be applied.

The interim injunctions ought to have been refused. The appeal was allowed.

• Court of Appeal (Civil Division): Appeal allowed in [2006] EWCA Civ 1042 against the order made on 31 March 2006.
• High Court, Chancery Division: Mr Peter Prescott QC, sitting as a deputy High Court judge, found it well arguable that the Interim Agreement remained in force and granted interim injunctive relief until 14 June 2006.