MACKIE MOTORS (BRECHIN) LTD v RCI FINANCIAL SERVICES LIMITED

A framework agreement for the provision of finance does not, without more, impose any commitment on the finance provider to advance or maintain finance. Such a commitment should not be implied without overwhelmingly clear evidence of a specific agreement to lend.

The existence of a long-term or relational commercial relationship does not, by itself, justify implying a duty of good faith or restrictions on termination. Contractual implication remains governed by necessity. Unqualified termination provisions generally take effect according to their terms. At the pleading stage, a claim must have a real, rather than fanciful, prospect of success, but the court should avoid conducting a mini-trial or deciding developing questions of law on hypothetical facts.

Mackie was a franchised distributor of Renault, Nissan and Dacia vehicles. RCI provided finance to Mackie under several framework agreements and also provided customer-finance services and other support.

After RCI suspected money laundering, it stopped providing services and served notices terminating the relationship. Mackie initially pleaded competition-law and unfair-terms arguments. Following the refusal of interim relief, it proposed amended particulars advancing claims based on an implied umbrella agreement, implied terms, contractual construction, estoppel and the Unfair Contract Terms Act 1977.

RCI applied to strike out the proposed amended particulars, or alternatively for reverse summary judgment. The central issue was whether any pleaded claim had a real prospect of success.

1. The proposed amended particulars were struck out. They disclosed no cause of action because the pleaded facts were insufficient to support the legal conclusions required for Mackie to succeed.
2. The applicable pleading threshold was whether the claim had a real, rather than fanciful, prospect of success. The court could reject a pleading that was implausible, self-contradictory or unsupported by contemporaneous documents. It should not conduct a mini-trial, determine disputed oral evidence summarily, or decide controversial questions of developing law on hypothetical facts. The threshold nevertheless remained relatively low.
3. The alleged umbrella agreement was not properly particularised. Services provided outside the written contracts did not necessarily demonstrate an intention to create legal relations. The services relied upon did not have a nature which necessarily implied a contract.
4. Even assuming that the relationship was relational, a duty of good faith could not be implied merely from the existence of the relationship. The relevant question was whether the proposed term satisfied the necessity test for implication into the RCI contracts.
5. The RCI contracts were framework agreements under which RCI retained discretion whether to provide finance on each occasion. Without overwhelmingly clear evidence of a specific agreement to lend, no commitment to advance or maintain finance could be implied. The proposed term would substantially undermine the intended legal effect of the agreements.
6. The construction argument also failed. A restriction on termination would assist Mackie only if RCI were thereby obliged to continue providing finance, and the pleading contained no viable basis for that conclusion. Unqualified termination provisions ordinarily operated according to their terms.
7. The estoppel claim had no real prospect of success. Promissory estoppel could not found a cause of action; estoppel by representation did not itself create a cause of action and required a clear and unequivocal representation. The alleged statements and course of dealing did not meet that standard.
8. The amended unfair-terms argument could proceed only if one of the other contractual claims was arguable. Since none was, the unfair-terms claim remained in the same position as previously determined and could not proceed. The joinder and listing issues therefore did not arise.