Aston Martin Lagonda Limited v Premier International Motors Group Co WLL

Commercial contracts are construed objectively by reference to their language, purpose, relevant background and commercial context. A contractual notice requirement is not a condition precedent unless the contract, properly construed, makes performance of the notice essential before the relevant right arises. Where a contract provides for sale proceeds and any resulting shortfall to be assessed after all assets are sold, the assessment may be collective rather than asset by asset.

A reference to prevailing or contemporary market value ordinarily concerns the value at the time of sale, not the date of the agreement. Best endeavours requires more than reasonable endeavours, but a sale at the required market value ordinarily precludes a separate breach based only on the sales process. Costs recoverable as incidental to sale must be reasonably and proportionately incurred.

Aston Martin Lagonda Limited claimed shortfalls and storage costs under two agreements with Premier International Motors Group Co WLL concerning the transfer and sale of 33 heritage Aston Martin vehicles. Premier denied liability and counterclaimed for breach of contract, conversion under the Torts (Interference with Goods) Act 1977, and relief concerning a credit note.

The court determined the proper construction of the 2015 and 2016 agreements, including the effect of notice provisions, the meaning of prevailing and contemporary market value, the assessment of sale proceeds, liability for costs and commissions, assured provenance certification, best endeavours, interest and the credit note. The principal questions were whether Aston Martin had breached its contractual obligations and what sums were recoverable.

1. Construction. The agreements were separate contracts, although the 2015 agreement formed part of the admissible factual matrix for construing the 2016 agreement. The court applied the established objective approach, giving proper weight to the contractual language, purpose, relevant background and commercial common sense.
2. 2015 agreement. The debt remained a US dollar debt for substantive purposes, although payments under the agreement were to be made in sterling. The five-business-day notice in clause 2.7(b) was not a condition precedent to Aston Martin’s power of sale. At most, failure to give notice could found damages. The vehicle prices were to be assessed by reference to prevailing market prices at the date of sale. The shortfall was to be assessed collectively across the vehicles.
3. The power of sale permitted recovery of costs and expenses connected with the sales, including import VAT, transport, insurance, logistics, storage and commissions. Restoration and repair costs had to be reasonably and proportionately incurred. Commission was recoverable at 5 per cent for retail sales and £5,000 per auction sale. The vehicles were sold collectively at no less than their relevant market value, and the storage costs were reasonably and proportionately incurred.
4. 2016 agreement. Achieving Assured Provenance Certification was not a condition precedent or binding obligation before sale. Aston Martin nevertheless had a best endeavours obligation to sell as close to contemporary market value as possible. That value was assessed at the date of sale and collectively across all vehicles. A vehicle sold at contemporary market value could not also give rise to a breach based solely on the best endeavours process. Commission was recoverable on the same basis as under the 2015 agreement, but storage costs were not recoverable because Aston Martin owned the vehicles and controlled when they were sold.
5. The credit note had been exhausted through the parties’ inter-company accounting. No final separate agreement concerning the proposed set-offs was established. The conversion claim and all pleaded breach claims were dismissed. Shortfalls arose under both agreements, with the precise sums and consequential matters to be determined after judgment.