Key Facts
- •Endcape Limited (Claimant) sued Musgrave Generators Limited (Defendant) for breach of contract and trespass to goods.
- •The trespass to goods claim was settled before trial.
- •Two main claims remained: (1) profit sharing from Interpower stock sale; (2) profit sharing from Babcock contract introduction.
- •The Claimant alleged oral agreements for 50% profit sharing in both instances.
- •The Defendant denied the existence of any agreement regarding the Interpower stock and disputed the terms and existence of the Babcock agreement, claiming it was Mr. East of Power Continuity who introduced Babcock, not Mr. Hudson.
- •A draft deed of agreement was prepared but never signed.
- •The case heavily relied on witness credibility and contemporaneous documentation.
Legal Principles
Directors' fiduciary and statutory duties (acting in best interests of the company, avoiding conflicts of interest)
Companies Act 2006, sections 171-178
Formation of a legally binding contract: complete agreement on essential matters; agreement to negotiate is not binding; uncertainty cannot be cured by implying good faith negotiation.
Chitty on Contracts (34th Edition), Farrar v Rylatt [2019] EWCA 1864, Walford v Miles [1992] 2 AC 128, Morris v Swinton Care and Community Limited [2018] EWCA Civ 2763
Outcomes
Claim regarding Interpower stock dismissed.
Insufficient evidence to establish a concluded agreement; Claimant's evidence inconsistent with the pleaded case; unusual arrangement given the liquidator's involvement.
Claim regarding Babcock contract upheld.
Court found a valid oral agreement for 50% profit sharing on contracts introduced by Mr. Hudson; contemporaneous correspondence supported the Claimant's case; Defendant's evidence was found to be not credible; the court considered Mr East's evidence unreliable due to the method it was submitted.