Northamber PLC v Genee World Limited & Ors.

The court construed the Exclusivity Agreement and held that Northamber’s exclusivity for Genee World Products in the UK began on 1 July 2017; there was no transitional period to 1 January 2018. The judge found that Northamber had not breached the agreement (payment and stock obligations were not broken) and that Northamber validly exercised contractual set-off rights in clause 6.2. Genee sold products in breach of the Exclusivity Agreement to UK customers other than Northamber (including supplies to IES), and those sales fell within the period 1 July 2017 to Genee’s liquidation on 12 November 2018.

Northamber’s claim against IES for inducing breach failed: the placing of orders by IES with Genee did not amount to inducement to breach. The judge found Mr Singh did induce Genee to breach the Exclusivity Agreement for a limited period after the court injunction (post 10 September 2018) and, insofar as those inducements occurred after the injunction, he was not acting bona fide within his duties as director and could not rely on justification. Conspiracy claims failed. Damages against Mr Singh were quantified by reference to the margin Northamber would have earned (5%): recoverable loss was £24,567.74.

Background and parties

• Northamber PLC (claimant) distributed IT equipment in the UK. Genee World Limited (first defendant, in liquidation) manufactured/imported Genee World Products. Mr Ranjit Singh (second defendant) was Genee's director. Interactive Education Solutions Limited (IES, third defendant) was a reseller formerly connected to earlier companies run by the same family.
• Northamber and Genee entered a Reseller Agreement (2016) and an Exclusivity Agreement (signed 13 July 2017, effective from 1 July 2017). The Exclusivity Agreement made Northamber the exclusive UK distributor for Genee World Products except for four named excluded accounts and included provisions on MOQ, stockholding (clause 5.4), early payment discount (clause 6), set-off rights (clause 6.2) and a contractual compensation rate on breach (clause 9.2).

Nature of the claim and relief sought

Northamber claimed Genee breached the Exclusivity Agreement by selling in the UK to parties other than Northamber and the Excluded Accounts, and sought compensation (25% of lost revenue per clause 9.2). It also sued Mr Singh and IES for inducing Genee’s breach and for conspiracy. Interim injunctions had earlier restrained Genee from selling in breach and Genee later went into creditors’ voluntary liquidation.

Procedural posture and issues decided

This was a first instance trial. The judge identified and decided nine principal issues: whether Northamber breached the Exclusivity Agreement (payment, stock, set-off); whether the Oxford meeting agreed termination of the Exclusivity Agreement; whether the 25 July 2018 letter validly terminated the agreement; whether Genee breached the Exclusivity Agreement by direct sales to IES and others and, if so, until when; the factual reasons why Northamber did or did not supply IES; the knowledge and inducement elements against Mr Singh and IES; conspiracy; and quantification of loss.

Court’s findings and reasoning

• Evidence approach: the court emphasised reliance on contemporaneous documents over witness recollection (Gestmin guidance).
• Contract construction: clause 1.1 was read objectively — exclusivity operated from 1 July 2017 (no transition period). Clause 5.4 (stock) was interpreted by a narrow margin to require Northamber to endeavour to hold 10 days' stock on average across product lines, not 10 days per product line. Clause 6.2 gave a contractual right of set-off against Genee’s receivables for overdue sums owed by IES. Clause 7 of the Reseller Agreement continued to govern payment terms (45 days) and could not be retrospectively varied so as to require pay-down within 7 working days.
• Termination attempts: the 25 July 2018 letter did not validly terminate the Exclusivity Agreement (required 90 days’ notice expiring on 31 December); the asserted grounds for termination were not established.
• Invoice discounting/factoring context: LBCF’s restrictions on funding to Genee/IES were caused by ledger, insurer and reconciliation issues; the court did not attribute a single-party blame but accepted those restrictions materially strained Genee/IES cashflow.
• Inducement and conspiracy: Genee breached the Exclusivity Agreement when it supplied UK customers other than Northamber and the Excluded Accounts from 1 July 2017 to liquidation. IES’s simple placement of orders did not amount to inducement of Genee to breach. Mr Singh, as Genee’s director, induced breaches; however the judge applied the Said v Butt / Companies Act duties analysis (including section 172) and found that Mr Singh’s conduct was within the scope of authority and/or bona fide for earlier periods but, insofar as inducements continued after the injunction (post 10 September 2018), he acted not in good faith and could not rely on justification; conspiracy claims failed.
• Loss and remedies: the judge quantified Northamber’s recoverable loss in tort by reference to the margin Northamber would have made (5%), awarding £24,567.74 against Mr Singh for the period found to be attributable to him.

First instance: the claimant’s case succeeded in part. The Exclusivity Agreement became effective from 1 July 2017 and was not validly terminated by Genee’s 25 July 2018 letter. Northamber did not breach the agreement and validly exercised contractual set-offs. Genee breached the Exclusivity Agreement by supplying UK customers other than Northamber and the Excluded Accounts. IES did not induce those breaches; IES’s orders alone did not amount to inducement. Mr Singh induced Genee to breach the Exclusivity Agreement and was liable for inducements taking place after the Injunction (post 10 September 2018) because those acts were not bona fide within his duties as director and were not justified. Conspiracy claims failed. Damages recoverable from Mr Singh were assessed at £24,567.74.