James E McCabe Ltd v Scottish Courage Ltd

Summary judgment is appropriate where a claim has no realistic, rather than fanciful, prospect of success. The court must avoid a mini-trial, particularly where difficult factual disputes or further disclosure may affect the outcome. A contractual term cannot be implied where it conflicts with an exhaustive express pricing regime. An implied term must be necessary to make the contract workable and capable of sufficiently precise formulation; reasonableness alone is insufficient. Where an anti-competition clause is assumed to be void, severance depends on whether removing it would fundamentally alter the agreement. A clause integral to the exclusive distributorship and reciprocal obligations may not be severable.

The claimant distributed the defendant’s beer in Northern Ireland under agreements dated 27 October 1998 and 23 June 2003. The defendant applied for summary judgment on three issues: alleged implied obligations concerning pricing and marketing; alleged failures to give notice of direct sales to multiple retailers; and the effect of an allegedly unreasonable restraint of trade clause.

The applications were heard shortly before trial. The central questions were whether the pleaded issues were suitable for summary determination, whether the agreements permitted the alleged implied pricing obligation, and whether the restraint clause could be severed if unenforceable.

1. Summary judgment. Under CPR 24.2, the court asks whether the claim has a realistic prospect of success. It must not conduct a mini-trial. Difficult factual disputes and issues potentially affected by incomplete disclosure are unsuitable for summary determination. Delay alone does not create a compelling reason for trial where the legal issue is suitable for determination and there is no realistic prospect of success.
2. Price restrictions. The Amendment Agreement established an express pricing and marketing regime, including fixed prices, RPI adjustment, specified discounts and defined marketing support. That regime left no room for an implied term requiring further discounts or price support to make the distributorship commercially viable or to ensure the minimum purchase obligation could be met. Such a term would contradict the express agreement, was not necessary merely because it might be reasonable, and could not be formulated with sufficient precision. The claimant therefore had no realistic prospect of succeeding on this allegation, and summary judgment was granted on it.
3. Multiple retailer notice. Clause 1.4 created an exception permitting direct sales to Northern Irish retailers requesting supply from a Great Britain distribution centre, subject to prior notice. The meaning and application of the clause raised factual disputes concerning requests, notices, knowledge, direct supplies and the extent of the sales. Those issues could not fairly be resolved summarily. The application was dismissed.
4. Restraint of trade and severance. Clause 18 concerned regulatory intervention and did not replace the ordinary common-law rules of severance. Applying the approach in Byrne v Inntrepreneur Beer Supply Co Ltd, if clause 7.1 were an unreasonable restraint, its removal would fundamentally alter the agreement. The non-compete obligation was integral to the exclusive distributorship, exclusive purchasing obligation and minimum purchase arrangement. The court therefore declared it non-severable, but declined to dismiss the entire claim on the assumed premise that clause 7.1 was invalid.