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	England and Wales High Court (Commercial Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Burntcopper Ltd (t/a Contemporary Design Unit) v International Travel Catering Association Ltd [2014] EWHC 148 (Comm) (06 February 2014) URL: http://www.bailii.org/ew/cases/EWHC/Comm/2014/148.html Cite as: [2014] EWHC 148 (Comm)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		06/02/2014

Judge Mackie QC :

1. This is a dispute about the meaning of a contract in the exhibition business which the parties have complicated by claims of implied term, collateral contract, rectification, estoppel, waiver, misrepresentation and quantum meruit. The Claimant provided management services to a business which the Defendant sold. The Claimant says that this was a breach of contract and claims damages. I am concerned with liability, not at this stage with damages which the Claimant puts at something over £1,000,000.

The background

2. The Claimant ("CDU") is in the business of providing operation management services for exhibitions. Mr Pravin Patel and Ms Teresa Edwards are CDU's directors and shareholders. The Defendant ("ITCA") is a representative body for the catering and transport industry which, until 6 June 2011, also organised trade shows and conferences, in particular an annual European trade show. Mr Lee Walton is ITCA's Company Secretary and Mr Terry Coyle its treasurer and Permanent Senior Board Member.
3. Between 1981 and 2011 CDU was the exclusive provider of exhibition contractor management services to ITCA (and its previous entities) for the annual trade show. The show took place in different locations throughout Europe. Typical exhibitors were suppliers of pre-prepared food, snacks, crockery, amenity kits and accessories such as travel pillows. CDU had various tasks such as designing the hall layout, creating the exhibitor manual, constructing common areas such as the reception desk, cloakrooms, business centre, and seating areas, supervising the set-up and shut-down of the show, providing services to exhibitors during the show, and liaising generally to ensure the safety and success of the event.
4. Until 1999 the contracts were made orally. In that year the contract was in writing. There were further written contracts in 2003, 2007 and 2011. The written contracts were in the same form, each apart from that in 1999 for a 5-show term. After 2005 ITCA was CDU's only client but ITCA did not know this. The 2007 Contract was for a period of 5 years from 2008 to 2012. There was a provision that it would be extended for 2 years unless either party gave notice in writing on or before 1 January 2011. No such notice was given. This dispute is about the 2011 Contract ("the Contract").

Facts agreed or not greatly in dispute.

5. The parties attach importance to the events leading up to the Contract and since these are mostly uncontroversial I take an edited version of them from the skeleton of Mr Robson who appeared for CDU.
6. On 26 May 2010 Mr Walton urged CDU to start thinking about starting negotiations to renew its agreement with ITCA. On 7 June 2010 Mr Patel met Mr Willie Seeman, ITCA's elder statesman at the latter's house in Cobham. Mr Seeman asked Mr Patel to email to him a copy of the 2007 Contract. On 8 June Mr Patel emailed the 2007 Contract to Mr Seeman. On 6 August 2010 Mr Patel met Mr Walton and Mr Seeman. There was a discussion about the continued prosperity of the trade show, with Mr Seeman expressing concerns over the decrease in the amount of space that had been sold for the trade show and the challenging global market. On 16 September 2010 after a meeting Mr Patel sent to Mr Walton a draft contract including a term for 5 years. On 21 September 2010 Mr Walton emailed to confirm that the amendments were agreed. He recommended that Mr Patel email the draft to Mr Seeman, which Mr Patel did. Between 27 September 2010 and 8 February 2011 CDU sent a number of chaser emails asking when the agreement would be signed. Neither party having given notice, on 1 January 2011 the 2007 Contract automatically extended for the years 2013 and 2014.
7. On 9 February 2011 there was a conversation between Mr Patel and Mr Walton. The content of that conversation is in dispute but it is agreed that Mr Walton dictated a new clause to be added to the draft 2011 Contract, and that Mr Patel amended the draft to include what is now Clause 16 which provided that "If for some unforeseen circumstances the trade show is cancelled or does not take place during the term of this contract, this contract will not be enforced for the year in question." The amended version became the Contract on 17 February.
8. On 6 June 2011, ITCA informed CDU that the trade show had been sold to Reed Exhibitions.

Discussions between ITCA and Reed

9. From the end of April 2010 ITCA was in contact with Reed Exhibitions about possible acquisition by Reed of the Trade Show. As Reed put in an email on 20 July "[…] I understand that it was a good meeting and that you are interested in exploring the possibility of us managing the ITCA event(s) for a number of years with an option to acquire." A non disclosure agreement was signed and ITCA was concerned about this issue as it said to Reed "I would like to point out that it is imperative that news of our discussions is kept strictly between the addresses on this email (and as dictated by the NDA), as news breaking now would jeopardise everything and there would be no need for further meetings".
10. On 6 September 2010 ITCA sent Reed revised sales figures… "In order for you to make a meaningful offer, we suggest that you take it that ALL commitments (of which there are two, my company's fees and the stand contractor) will be covered by ITCA out of the proceeds, so there is no need for your to take this into account". On 7 September 2010 Reed asked questions including: "with regards to your commitment and that of the stand contractor, can you confirm these relate to 2011 only and not beyond." On 8 September 2010 Mr Walton replied: "Re commitment – there is no commitment beyond 2011 other that [sic] with the two contracts that are held by ITCA and you can ignore this element as they would be settled by ITCA and not you directly". By this point ITCA had it in mind that it would be liable for the claims of CDU as part of any deal with Reed.
11. Reed withdrew from these negotiations in September 2010. An email from Reed's Jacki Hulbert dated 20 September 2010 says "…we have concluded that an outright acquisition would be difficult for us as the event has been declining over the last 3 events…". Around this time ITCA says that it was considering whether to join with its US counter-parts and have a trade show in Europe and the USA in alternate years. Mr Patel does not recall that it was mentioned to him. Clearly Reed had in mind an acquisition and ICTA were happy to discuss it until Reed withdrew.
12. From 15 December 2010 onwards Reed and ITCA were again in contact about reopening discussions about a deal. On 15 December Ms Hulbert emailed Mr Walton, reopening contact:

"It seems timely to schedule a chat to see if you had had any further thoughts or development plans and whether there was scope to revisit options for working together. As you know, we are always looking for development opportunities in our portfolio and I still believe there may be some way of working together that is attractive to all parties – we just need to figure out what it is! I hope you agree with my view and look forward to hearing from you with a view to arranging to meet up again in the New Year"

13. On 5 January 2011 Ms Hulbert suggested a meeting "at the show or shortly after" … "I think it would be useful for us to visit in any case so that we can be thinking more on how we could work together in the light of the latest edition which is usually easier when you have seen the event in action so to speak".
14. Representatives from Reed attended the 2011 trade show arranged by ITCA. The Reed representatives were to be the director of the Reed event which would combine with the ITCA event and Ms Hulbert of "Strategy and Acquisitions". It is common for competitors to attend each other's events and Mr Walton recalled that Ms Hulbert did not in fact attend. A meeting was arranged between ITCA and Reed for 21 February 2011. Mr Walton emailed on 10 February 2011 asking if Ms Hulbert could "send an advance agenda for the Monday meeting…thinking about where we were and wondered if something has changed? Would be grateful for some information as the day … is rather crammed … and we would like to know if for some reason things have moved on from our last discussions".
15. Ms Hulbert replied on 14 February "Hi Lee. It's been almost 6 months since we met and obviously you will have held your event by the time we meet, so interested in how it has gone and whether you have any thoughts on how we might work together or whether there would be any appetite for selling the event if terms and details could be agreed between us."
16. Three days later the Contract was signed.

The Contract of 17 February 2011 ("the Contract")

17. The Contract must of course be read as a whole but the provisions relevant to the dispute are:

"This Agreement is for the provision by CDU to ITCA of Exhibition Contractor management services for the International Travel Catering Association Ltd (ITCA) Trade Show which takes place annually. Its location various within Europe year by year. ..

This Agreement is for the five annual Trade Shows held in Europe in the period 2012 to 2016 inclusive and shall be extended automatically for a further two years unless either party gives notice to the other in writing on or before the 1^st January 2015. This Agreement supersedes any existing contract between the two parties.

Either party shall be entitled to terminate the Agreement upon written notice to the other if:

i) the other party becomes or is declared bankrupt or insolvent, or has a receiver, liquidator or trustee or similar officer appointed to manage its assets or affairs, or makes an assignment for the benefit of its creditors, or seeks the protection of any applicable bankruptcy or insolvency legislation, or passes a resolution for winding up or ceases to carry on the whole or substantially the whole of its business; or

ii) the other party commits any material breach of any term or condition of this Agreement, and fails to remedy, or commence efforts to remedy, such breach within 90 days of receiving such written notice.

Neither party shall be liable for any delay or for the consequence of any delay in performing any of its obligations under this Agreement if such delay is due to any cause whatsoever beyond its reasonable control…..

14. Neither party may assign this Agreement without the consent in writing of the other party.

15. CDU shall at all times be an independent contractor and not a partner of ITCA.

16. If for some unforeseen circumstances the trade show is cancelled or does not take place during the term of this contract, this contract will not be enforced for the year in question."

Events after the Contract was entered into.

18. The continuing contacts between Reed and ITCA led to action in March. At a meeting at the end of that month ITCA and industry representatives debated a variety of issues at length and, among other things, recommended that ITCA should negotiate the sale of the Trade Show to Reed. The minutes of the next ITCA board meeting record that ITCA had been losing substantial amounts of money and that it was likely that the trade show in 2012 would reduce in size once more.
19. On 6 June 2011 ITCA entered into an asset purchase agreement and sold its European Event Business including the Trade Show to Reed. The Agreement contained restrictive covenants preventing ITCA from holding or being concerned with a European Trade Show for 5 years. On the same day, Mr Walton met Mr Patel and Ms Edwards to explain that the Trade Show had been sold and that the 2011 Contract was therefore at an end. By letter dated 13 June 2011, ITCA gave written notice to CDU that it would no longer be having a Trade Show in Europe.

The issues

20. CDU says that ITCA, by selling the subject matter rendered performance impossible and thus broke the Contract. The Contract essentially provided that CDU would provide exhibition contractor management services for a travel catering show for a period of five years from 2012 to 2016; and that ITCA would pay CDU for those services. Four months after signing the Contract, ITCA sold the trade show to a third party thereby preventing performance of the five year contractual term.
21. In the alternative CDU relies on a representation that it says was made on ITCA's behalf. CDU now says that ITCA represented expressly, implicitly or by conduct that it:

"… intended to and would hold a trade show for each year of the 5-year contractual term unless there were circumstances which were unforeseen at the time of signing the 2011 Contract which caused the trade show to be cancelled or not to take place"

CDU claims that the representation became a term of the contract and seeks damages under the Misrepresentation Act 1967. CDU also says that there was a misrepresentation by means of non-disclosure of facts known to ITCA but not to CDU. These facts were that there had been negotiations with a third party in relation to the sale of the trade show.

22. ITCA does not seem to dispute (rightly) that sale of the show by ITCA would generally amount to a breach of contract. However ITCA denies that the 2011 Contract is enforceable. Clause 16 expressly provided that it would not be enforceable in the event the Trade Show did not take place or was cancelled. That show did not take place after 2011 due to "unforeseen circumstances". ITCA says that if it is wrong about the construction of Clause 16, then that clause does not accurately record the oral agreement or understanding reached on 9 February 2011 and ITCA seeks rectification accordingly. Alternatively the Oral Agreement was a collateral contract. Alternatively CDU is estopped and / or has waived its rights to enforce the 2011 Contract. Alternatively, ITCA says that it has terminated the 2011 Contract in accordance with an implied term giving ITCA a right to terminate in the event the Trade Show was sold. The claims of misrepresentation are denied.

Interpretation of the Contract

23. While I would now generally turn to the disputed facts, none of these go to the factual matrix, and as Counsel did, I will deal first with the meaning of the Contract. I will refer briefly to some of the evidence relating to these points but this is not, except in some of the judgments made by witnesses about undisputed facts, controversial.
24. There is no dispute about the relevant principles. As Lord Hoffmann famously put it:

"Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract". Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912 – 913."

To which I would add. Where there are competing meanings the Court will choose the more commercially sensible of rival interpretations of express terms (Rainy Sky SA v Kookmin Bank [2011] UKSC 50 [2011] 1 WLR 2900)

25. The Contract is formal but not drawn up by lawyers and entered into in the context of the undisputed facts and background which I have summarised.
26. Ms Page for ITCA submits that on a proper construction of Clause 16, "unforeseen circumstances" attaches only to "trade show is cancelled" and not to the alternative scenario whereby the trade show "does not take place". Accordingly it is enough to invoke Clause 16 that the Trade Show "does not take place", which it did not. I observe at once that that seems to me an unnatural reading of the words. Further if ITCA wanted the meaning now argued for it should have said something like "or otherwise" before "does not take place". There is also no apparent reason to distinguish between two different characterisations of the show not taking place or commercial sense in permitting one but not the other to end enforcement of the contract whether or not due to unforeseen circumstances.
27. Ms Page says that if that is wrong the starting point is the meaning of "unforeseen circumstances". She says that the words should not be given an over-literal interpretation, but should be construed against the factual background as two ordinary businessmen might use the phrase colloquially to mean "circumstances not known beforehand" or a "change of circumstances". Even if a literal meaning were adopted, the word is "unforeseen" not "unforeseeable": accordingly CDU must show that the sale was actually foreseen / known about, not simply that it was a possibility. She also argues that it cannot have been the intention of the parties to introduce a literal concept of foreseeability into their agreement. This introduces questions of possibilities and probabilities into a contract which requires commercial certainty. Further it is consistent with the rest of the contract for "unforeseen circumstances" to be interpreted as circumstances not recorded in or provided for by the 2011 Contract itself. For example clause 3 provides for termination in various identified circumstances relating to the parties themselves, Clause 16 complements this by providing that the contract will not be enforceable if the trade show itself is cancelled or does not take place for other reasons not known beforehand. Finally "unforeseen circumstances" is not qualified by any requirement of reasonableness, hence for an event to have been foreseen, the parties would have had to have known that it would actually take place.
28. Mr Robson for CDU responds that the ordinary and natural meaning of the word "unforeseen" is that which is unanticipated or not foreseen in advance. He submits that this is the proper construction of the clause in the commercial context of this contract. The Court must construe the clause in the context of the whole contract. ITCA's construction would undermine the effect of clause 3 which is intended to limit and define the circumstances in which the 2011 Contract can be terminated. If ITCA's construction of Clause 16 is correct, the 2011 Contract can "not be enforced" (which is on ITCA's case akin to termination) in a much broader set of circumstances. This would significantly deprive clause 3 of effect. He also disputes ITCA's claim that a more literal interpretation "creates uncertainty and complexity". A court is able to interpret and apply the clause as part of its everyday judicial function. There is no jurisdictional or practical difficulty in doing so.
29. As I see it the expression "unforeseen circumstances" is one of ordinary English language to be given its natural meaning. It does not assist to reformulate the words into similar expressions which may have different shades of meaning. Was the show cancelled for unforeseen circumstances? This must mean circumstances not foreseen by either party- if it were otherwise almost any intentional breach might be excused. I reject the submissions which seek to qualify or complicate the words used. There is as I see it no complication or difficulty in applying this expression to the facts which is not present in most contractual disputes. I bear in mind that the exercise is different from the similar tasks with which courts are familiar in other contexts such as asking whether something was reasonably foreseeable as being not unlikely to result. The question to decide is simply this and is common ground. Were the cancelling circumstances unforeseen by ICTA? There is disagreement between the parties about the point at which it is to be decided whether or not circumstances were unforeseen , at the time the Contract was signed or when the cancelling circumstances took place? I am inclined towards the latter view but do not need to decide it as the outcome is the same in this case either way.

Were the consequences unforeseen by ICTA?

30. ICTA has to make good its claim that the consequences were not foreseen. ITCA argues that the sale of the trade show to Reed was an unforeseen event. It is important to distinguish between the likelihood of (i) Reed wanting to re-enter negotiations with ITCA for a sale; (ii) ITCA deciding that it wanted to try and sell the event to Reed; and (iii) a sale actually being agreed. There were no ongoing negotiations with Reed between 20 September 2010 and 17 February 2011. Even though in December 2010 Reed asked for a meeting with ITCA, it is clear that Mr Walton did not know what Reed wanted to discuss until February 2011, hence his email on 10 February 2011 asking for an agenda in advance of the meeting and asking "if something has changed". It was only on 14 February 2011 that Reed said that they were wondering whether "you have any thoughts on how we might work together or whether there would be any appetite for selling the event if terms and details could be agreed..." But this expression of interest by Reed does not make a sale foreseeable. Reed had made similar expressions of interest in the past including in 2006 and the summer of 2010 – and nothing had come of them. Equally, Mr Walton knew that the sales figures for Nice 2011 were worse than projected to Reed in September 2010 and that the declining sales figures had been the reason why Reed withdrew from the negotiations at that time. In answer to the question whether if Reed made an offer, ITCA's board would vote in favour of selling, Mr Walton said "I suppose there was a possibility, although I thought it extremely unlikely". The first suggestion by Reed's email was not a sale at all, but that ITCA and Reed "might work together". "Working together", is quite the opposite of an outright sale. It is acknowledged that ITCA agreed to send name badges to Reed but there was nothing unusual about this, Mr Walton explained that Reed had been to the ITCA Trade Show for the last 5 years. When asked, Mr Coyle explained that this was common practice amongst competitors in the travel exhibition market. Equally, although much was made in cross-examination of the fact that Ms Hulbert's email signature states "Strategy and Acquisitions", it was Mr Walton's evidence that she did not actually turn up at the 2011 Trade Show, suggesting Reed were not interested in acquiring the event. As Mr Walton said, "the trigger" for ITCA to sell the Trade Show to Reed was the recommendation of the Strategic Workshop held on 29/30 March 2011. The likelihood of a sale becomes more remote when one considers the hurdles that in fact had to be crossed between Reed's approach and the actual sale.
31. CDU argues that the circumstances were not unforeseen. First it is ITCA's own case that part of the reason why Clause 16 was introduced was Reed, and its possible purchase of the trade show. ITCA's own assessment of the need for Clause 16 is perhaps the best indicator of the fact that it had foreseen the possibility of the sale of the trade show. Mr Walton's statement makes no reference to any external cause of Clause 16 other than Mr Patel's eagerness to extend the contract. Secondly CDU says that the evidence shows beyond doubt that, on any reasonable view, the sale of the trade show was foreseen as at 17 February 2011. Mr Coyle and Mr Walton admitted in cross-examination that on 17 February 2011 they knew the sale of the trade show to be a possibility. CDU relies simply on the undisputed chronology set out above. Reed had of its own volition returned to the negotiating table, and had done so very soon after its earlier departure in September 2010. Reed had not stated in any of its communications that there would be a requirement that sales for the Nice show should have improved. Reed had paid for the attendance at the trade show in Nice of the two individuals who would closely be involved in any potential deal. ITCA had arranged for their attendance by providing badges. The language of Reed indicates a commercial hunger for a deal. In particular "[we are] interested in […] whether there would be any appetite for selling the event if terms and details could be agreed between us."
32. When evaluating the facts I do so against the background of the commercial realities of the acquisition and disposal of UK businesses over the last few decades. Reed's acquisitions team would not communicate with ITCA to pass the time of day. ITCA sought to play down the significance of Reed's renewed contact in December 2010. Mr Walton's witness statement suggests that there was no interest expressed of any kind by Reed between 20 September 2010 and 17 February 2011. That was plainly wrong. Mr Walton accepted in cross-examination that his use of the words "expressed an interest" was wrong. He said that he "wish[ed] he had used other words".
33. The language of the emails is that of commercial courtship as ITCA must have known. I accept that Reed would have attended a rival's show as a matter of course to keep an eye on the competition but it is obvious that the meeting and the emails leading up to it were for a different purpose. The fact that the acquisitions manager leading the approach did not attend the meeting is nothing to the point. It was Reed not ITCA which had broken off discussions the previous Autumn. The suggestion that the idea for the sale only came at the ITCA meetings in late March is fanciful. The resolution to negotiate with Reed obviously followed from Reed's approach.
34. I bear in mind the repeated claims in cross examination by Mr Walton and Mr Coyle that they believed that a deal was unlikely and at best no more than a possibility. Those views are not of much relevance, may understandably have been coloured by time and the pressures of the litigation and, on the material before me are somewhat pessimistic. The fact that a series of decisions had to be taken before a sale came about does not mean that the circumstances were not foreseen. They plainly were. Clause 16 was devised as a result of the potential deal with Reed and at the same time as it was beginning to develop. Mr Walton's evidence, to which I refer in more detail below, makes it quite clear that it was the Reed matter that led to the clause being proposed. He and Mr Coyle wanted a clause terminating CDU's rights under the Contract if Reed acquired the show. But if they had said that Mr Patel would obviously have rejected the clause. It is very clear indeed that the circumstances in which the trade show was cancelled or did not take place were not unforeseen.

Trade Show

35. CDU argues that if it is wrong about "unforeseen" Clause 16 still does not apply as the trade show has not been cancelled and continues to take place. Mr Robson submits that the "trade show" in Clause 16 ought to be construed as referring not merely to the title or brand of the show, but rather to its substance. Ms Edwards sets out in her evidence a variety of reasons why the trade show in 2012 was substantively the same as the trade show in 2011. It had merely been rebranded. For example ITCA's President's Report said: "Reed Exhibitions has acquired the ITCA European tradeshow and that with immediate effect, the ITCA event will be renamed World Travel Catering Expo and take place in Hamburg […]". ITCA's board minutes for a meeting on 31 March 2011 mention that "Reed's sales and marketing force would add to the likelihood of the show continuing and either maintaining or increasing its size". The Sponsorship Agreement between ITCA and Reed provided in its preamble that "WHEREAS (B) As a result of the acquisition Reed will be incorporating the ITCA Event into the Event (as defined below) and organising future Events, including the Event to be held in March 2012".
36. Ms Page submits that this approach is wrong as a matter of construction. The trade show which is the subject of Clause 16, can only be the trade show which is the subject of the 2011 Contract. Clause 1 of the 2011 Contract provides that the contract is for "the provision by CDU to ITCA" of services "for the International Travel Catering Association (ITCA) Trade Show…" (Emphasis added). Thus, the trade show which is the subject matter of the 2011 Contract is the "ITCA Trade Show" which must be construed as meaning the Trade Show belonging to ITCA. The fact that "ITCA" precedes "Trade Show" denotes that it is possessive. Any suggestion that the "ITCA Trade Show" could mean a trade show owned or organised by anyone other than ITCA would be contrary to the ordinary and natural meaning of the words in clause 1 and inconsistent first with clause 1 which requires the services to be provided "to ITCA", not to a third party and secondly with clause 14 (prohibition of assignment), as there would be no need for clause prohibiting assignment if the "ITCA Trade Show" included within its definition a trade show owned and organised by a third party.
37. Ms Page also says that the characterisation of the Reed Event in various publications as "WTCE – incorporating ITCA" or a "re-branding" of the ITCA Trade Show, does not affect the legal analysis. A post-contractual and post-sale statement by ITCA or any third party cannot affect the interpretation of Clause 16. She also point to various features which she argues show that the Reed Event was in substance different from the ITCA show.
38. Trade show is not defined but I agree with Ms Page that it means the ITCA trade show for which CDU is to provide services. It does not refer to a show owned by a third party. In the commercial context in which the Contract was entered into the parties cannot have contemplated that the clause would apply to a show not in the hands of ITCA. Indeed it is the sale of the show beyond the reach of both parties that gives rise to CDU's claim. It is unnecessary for me to choose between the competing factual submissions about the substance of the show. One would of course expect Reed to exploit the goodwill of the show it was acquiring by continuing to use the ITCA name while integrating the two shows and it is unsurprising that business people spoke in terms which reflect that.
39. This argument fails but it is of course only an alternative to CDU's primary case.

Disputed facts and evidence-Defences of rectification, oral agreement, collateral contract and estoppel and one aspect of Claimant's alternative claim in misrepresentation

40. All these claims turn entirely or in part on the only really disputed facts in this case, what was said and agreed in the telephone conversation on 9 February 2011.
41. I heard evidence from four witnesses, Mr Patel and Ms Edwards for CDU and Mr Walton and Mr Coyle for ITCA. There is also an undisputed statement from Ms Cameron for ITCA. The witness statements contain much material that is not directly relevant or inadmissible to interpretation of the Contract and I do not refer to this. I have touched on the evidence of Mr Coyle above but the important evidence is that of the other three witnesses. Mr Patel gave evidence about the history of CDU's dealings with ITCA and the contracts over the years. As to the telephone conversation on 9 February his statement said this;

"First, Lee told me I needed to reduce the benchmark to 3000 square metres and second, the Board was insisting that an extra paragraph needs to be inserted into the contract. I assumed the amendment reducing to 3000 square metres had been prompted by ITCA's review of the final floor plan.

I asked Lee what they wanted to add and Lee started dictating wording, presumably something given to him by the Board… I had to tell him to hold on whilst I grabbed a pen and some paper to note down what he wanted. I wrote down Lee's dictation and read it back to him to make sure I had taken it down correctly. Lee then said, "right, put that down as the final clause".

I asked Lee why this wording was needed. He explained that should the square metres (size) of the show really drop one year then they may have to consider cancelling the show for that year in question and then give it a push the following year. I responded with the comment that surely ITCA would not have to worry unless it dropped below 2500 square metres, as above this figure the show should still be profitable. Lee did not dispute my understanding that this new wording would only apply if sales dropped below 2500 square metres. He did not disabuse my belief that whilst the Board wanted the comfort of a provision of this nature, the likelihood of it was remote. Lee stressed that the Board had asked to include Clause 16 and once it was inserted, we would be able to sign the contract in Nice at the ITCA trade show.

Lee stressed that the Board had asked for this clause to be inserted and that the contract would be signed at the show in Nice. I confirmed to Lee that I would discuss it with Teresa and get her to type it into the contract and would send him a Pdf copy with it in. Lee concluded the call saying take two copies with you to Nice for signing and I will see you on Sunday

I then spoke to Teresa about the phone call as I wanted her feedback on the requested amendments and she would in any event be the person who would type up the amendments on the draft. She expressed surprise that Lee was calling this late in the day, the night before we were leaving for Nice after ITCA had been sitting on the "agreed contract" for months."

42. He repeated that account in evidence and, following his cross examination, I have no doubt that he honestly believed it to be true.
43. Ms Edwards agreed with that part of Mr Patel's account as was in her knowledge and clearly believed it to be true.
44. Mr Walton's statement said this;

"Some time on 9^th February 2011 or possibly shortly before, I had a conversation with Pravin. I told him that we could not sign the Contract the way it is but we could sign it if there was an additional clause. He said something like "A clause saying what?". I said words to the effect that if ITCA had no Trade Show then the Contract would be at an end. He said very quickly "Of course" or something of that nature. His response was very brief and he did not challenge or question anything.

I recall being at my office in Godalming and writing out what it was that we wanted to put into the Contract. I recall telephoning Terry Coyle and I read out the wording to him and he asked me if I thought that the wording was good enough. I said that I thought it was. I cannot be 100% certain as to how I communicated the wording to Pravin Patel. I believe I emailed it to him. He emailed back, which I believe was on the same day at 19:35 on 9^th February, attaching ac copy of the Contract into which he had added my wording. He says "I have added paragraph 16 on page 2". He goes on to say that the benchmark figure on page 3 is reducing down to 3,000 square metres, as he and I had already discussed. He said that he was taking two copies of the Contract to the Trade Show in Nice and "Hopefully this time Terry Coyle will sign it". I am absolutely certain that I sent Pravin the wording proposed to cover the fact that the Contract with CDU would end if ITCA did not have a Trade Show. As I have said, I believe this was sent by email."

44. He later realised that his initial recollection had been at fault about a significant detail and added this in his second witness statement;

"I wish to make a correction to paragraph 12 of my First Witness Statement. In this paragraph I said that I could not be 100% certain as to how I communicated the wording of Clause 16 to Mr Patel. I thought I had sent it by email. I now believe that I must have read it to him over the telephone as I have searched my sent email and have not located any email from me to Mr Patel containing the draft wording, nor has the Claimant disclosed any such email. I am certain, however, that I provided the wording for Clause 16 to Mr Patel…

In Mr Walton's first witness statement he said;

"The only change from earlier contracts was that we (and specifically Terry Coyle and myself) were aware of the interest being expressed by Reed and others, in acquisition of the Trade Show and by virtue of which Reed had required that we sign the NDA, and IFSA merger interest. However, it was because Pravin was chasing us to enter into a new contract and because we wanted to help him if we could and as I was aware of the interest from Reed etc. that I insisted to him that we must have what became Clause 16."

45. I have carefully considered the detailed submissions from Counsel about whose recollection is to be preferred but do not repeat all of them. As I see it the position is as follows. All three witnesses on this issue were fair and honest in their evidence generally. They told me what they honestly recalled was said in the conversation. It was a brief though important telephone exchange between two busy executives at an exceptionally busy time, the evening before leaving for the main event of the year. The recollection of Mr Patel is supported to a degree by that of Ms Edwards but neither side has any contemporaneous documentary record. In his first statement Mr Walton was not sure of the date of the call and incorrectly thought he had emailed the text. His initial recollection was limited to one short paragraph. Mr Patel's account is more consistent with commercial probability but the detail he recalls suggests a degree of reconstruction. As at that date, even if CDU had obtained no new contract, the existing agreement would have protected it if the next two shows had been cancelled. Why agree to a new deal with a clause by which the contract would end if there was no trade show? However the same considerations, and the length and circumstances of the call make it improbable that Mr Walton would have given the specific assurances about 2500 feet that Mr Patel recalls. What is quite clear is first that Mr Patel made no agreement of the kind recalled by Mr Walton and secondly that Mr Patel asked why Clause 16 had been proposed and was given an answer that was not correct.
46. A new clause was being put into a contract that had stood the test of time. Mr Patel must have asked what the point of the proposed new clause was. The true answer would have been that ITCA wanted to escape liability to CDU if the Reed interest materialised. ITCA's answer was not the true one. The Non Disclosure Agreement prevented it from disclosing the Reed interest but not from saying that if someone bought the show ITCA wanted to ensure that it did not have to compensate CDU. ITCA did not say that but instead gave a less than candid response that must have reassured Mr Patel. One can speculate that CDU's perception that the Contract needed to be signed urgently and the trust that Mr Patel had in Mr Walton caused the Claimant to be less on guard that it might otherwise have been. I have no doubt that the question of 2500 feet was raised in the conversation but I am not satisfied that Mr Walton put matters as explicitly as Mr Patel now recalls. Overall I prefer the account of Mr Patel. I am sure that he did not give the assurances that Mr Walton recalls about trade shows. I do not find proved what Mr Patel recalls about the 2500 feet issue.
47. The terms on which the parties worked were set out in the Contract. As the lawyers will be very aware the remedy of rectification is often sought but rarely granted. A claim in rectification is particularly unpromising where, as here, there is no relevant documentation and the pre contractual expression of accord is said to be oral and in a brief and unrecorded telephone conversation, the substance of which is disputed. It is unnecessary for me to set out the different requirements of law for each defence relied on as it is common ground that these alternative claims must fail as a result of my findings of fact that the conversation was not as recalled by Mr Walton.

Implied term

48. ITCA seeks to imply this term;

"The Defendant would be entitled to terminate the 2011 Contract on reasonable notice without liability to the Claimant in the event that the Defendant sold the Event Business including the Trade Show."

49. Ms Page submits that the clause contended for meets the legal test in Att-Gen of Belize v Belize Telecom Ltd [2009] UKPC 10. The contract, read as a whole, against the relevant background, would reasonably be understood to mean that ITCA would have such a right of termination. ITCA says that the proposed clause is so obvious that it "goes without saying": the officious bystander eavesdropping on the 9 February 2011 conversation and asking "what if ITCA sold the trade show, would it be entitled to terminate?" would have been met with the response "of course" from both parties, as this is in its practical effect what Clause 16 is supposed to provide. It is obvious that this was the intention of the parties, from the wording of Clause 16 itself and from the 9 February conversation. It is a perfectly reasonable and equitable clause to imply against the factual background in which ITCA had informed CDU that there was a risk that there may not be a trade show in the future and CDU had decided that despite this, they would continue with negotiations and enter into the Contract.
50. Mr Robson submits that this argument should be rejected. Far from having intended this to be a term of the 2011 Contract, CDU's intention was that the Contract should not be terminable in the event that the trade show was sold. The Contract does provide for the rights of the parties to terminate the 2011 Contract without liability but these are set out in clause 3. It is not said in clause 3 that one trigger for the rights of the parties to terminate is sale of the event business including the trade show. This suggests that it was not the obvious but unexpressed intention of the parties that ITCA should be able to terminate the 2011 Contract on reasonable notice. If that had been the parties' intention it would have been included in clause 3.
51. The 2011 Contract does address the question of what is to happen in circumstances where one party's business is sold. Thus clause 3(i) (properly construed) determines that in that event it is the other party which has a right to terminate: not the party which has sold the business. If the alleged term were to be implied then it would substantially deprive clause 3 of force because it would mean that if one party has sold its business then either party may terminate the contract (at least on reasonable notice). This would give rise to inconsistency between the term that is sought to be implied by ITCA and the express terms of the 2011 Contract. Mr Robson submits that the implication of the term proposed would involve an impermissible re-writing of the parties' contract.
52. There is no dispute about the relevant law. The factors which will be considered by the Court in determining whether a term should be implied are set out by Lord Hoffmann in Belize (see Paragraphs 25 to 27) and include, subject to the wider considerations mentioned, the following: "(1) It must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that it 'goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract". These factors are not an exhaustive list nor a test. There is only one essential question. The term should be included only if that "is what the instrument, read as a whole against the relevant background, would reasonably be understood to mean". Counsel have on this, as on other issues, produced or referred to many cases but I do not need to address them as the position is clear.
53. I reject this claim essentially for the reasons put forward by Mr Robson but add this. The text of the proposed implied term is precisely what ITCA wanted to achieve when putting forward Clause 16. It is what ITCA would have proposed if it had been straightforward in its business dealings. But of course CDU would have rejected that out of hand- which is why it was not proposed in terms. So it is absurd for ITCA to contend that a provision of that kind was so obviously agreed by the parties that it went without saying. As ITCA knew full well CDU would never have agreed to it. The clause is not even obviously reasonable. It is an attempt to truncate a fixed term contract. This defence fails.

Misrepresentation

54. This claim is secondary to CDU's primary case. It is brought under s. 2(1) of the Misrepresentation Act 1967 which provides:

"2(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true."

55. Mr Robson relies on the following principles of law which I summarise from his skeleton argument. A representation may be express or implied. In the case of an implied statement, the court has to consider what a reasonable person would have inferred was being implicitly represented by the representor's words and conduct in their context: see IFE Fund SA v Goldman Sachs International [2007] 1 Lloyd's Rep 264 per Toulson J at [50]. There are exceptions to the rule that a person who is about to enter into an agreement is under no duty to disclose material facts which he knows but which the other party does not know. The exceptions to that rule include the following: First, a person may make a representation by conduct if he fails to correct an impression given by his conduct (Walters v Morgan (1861) 3 DF & J 718). Second, a person may have a duty to disclose material facts which come to his notice before the conclusion of a contract if they falsify a representation previously made by him: With v O'Flanagan [1936] 1 Ch 375.Third, a person is guilty of misrepresentation, though all the facts stated by him are true, if his statement is misleading as a whole because it does not refer to other facts affecting the weight of those stated (see for example Nottingham Patent Brick Co v Butler (1886) 16 QBD 778).
56. The misrepresentation claim is, as I have set out above, that ITCA represented to CDU that it intended to and would hold a trade show for each year of the 5-year contractual term unless there were circumstances which were unforeseen at the time of signing the 2011 Contract which caused the trade show to be cancelled or not to take place; and/or that ITCA was under a duty to disclose to CDU the real possibility that the trade show might be sold.
57. CDU relies on the context of the long relationship between the parties. Each year ITCA had held a trade show. At each stage since 1999 when the parties entered their first written contract, the contract had been for several years. It was on that basis that CDU was able to cost its offering in a competitive way. A further aspect of the context is the personal nature of the relationship between the parties and the personal ties between Mr Walton and Mr Patel. Throughout 2010, Mr Walton told Mr Patel on a number of occasions that he was negotiating a contract with Nice Acropolis Exhibition Centre to carry out the next three exhibitions in the same exhibition centre. On 6 August 2010 the parties agreed that Mr Patel would come up with a suggestion on how to agree the price for a new contract and a trigger mechanism to enable an annual increase. The reference to the annual increase implies an intention and commitment to a long term relationship. On 17 September 2010 Mr Patel sent to Mr Walton a draft of the new contract. This included the term that there would be five annual trade shows. It stated at clause 3 that the agreement was for "the five annual Trade Shows held in Europe in the period 2012 to 2016" (emphasis added). Mr Walton replied saying "Looks ok to me – suggest you send Monday as we have Board meetings etc this week…". There is also reliance on the February telephone call but on an assumption about what was said that I do not accept.
58. CDU submits that the representation was untrue. At the time of signing the 2011 Contract (namely 17 February 2011) ITCA had foreseen the possibility that it would sell the trade show to Reed. ITCA should have disclosed to CDU the possible sale of the trade show. It failed to do so, despite the fact that it knew that the sale of the trade show would (at least up until 9 February 2011) render performance of the 2011 Contract impossible. But for the above representation/non-disclosure CDU would not have entered into the 2011 Contract in the way that it did.
59. ITCA rejects this argument. Ms Page submits that none of the conduct amounts to the representation contended for and she addresses the details one by one. She says that CDU was fully aware that there was a risk that the Trade Show would not take place in the future. They were informed of this at the meeting on 6 August 2010 and subsequently. When Mr Patel and Ms Edwards gave their oral evidence they both accepted on numerous occasions that they had not relied on anything said or done by ITCA at all when entering into the 2011 Contract. There was no duty on ITCA to disclose the prior discussions with Reed or any possibility that the trade show may be sold. It remains the general rule that that non-disclosure does not constitute misrepresentation and none of the exceptions apply to this case.
60. Even if a duty to disclose arises it was discharged by ITCA informing CDU that ITCA may not have a trade show in the future at the meeting on 6 August 2010, during the telephone conversation on 9 February 2011, by communicating the very wording of Clause 16 itself and, although disputed, by Mr Walton informing Mr Patel about the possibility of the alternating biennial shows with IFSA.
61. CDU must always have known that there was a commercial risk that the show would be cancelled. Even long term commercial arrangements come to an end. Generally parties to contracts have no obligation to disclose threats or opportunities which come to their notice and which may affect the relationship. For many years and until at least 17 February 2011, CDU had contracts giving it a degree of protection against cancellation of the show. No doubt confidence in the future waxed and waned over time and the parties communicated views to each other. By the summer of 2010 there were uncertainties notably the interest shown by Reed and the fact that sales were declining. There was resumed contact between ITCA and Reed in December 2010 but uncertainty whether anything would come of it. As I see it there was no duty on ITCA to disclose any of this to CDU and the particular matters relied on by Mr Robson are conventional incidents of business life which were neither representations nor, as the CDU witnesses accepted, factors inducing the company to contract.
62. The close personal friendship between Mr Walton and Mr Patel does not create any additional obligation of disclosure in a commercial contract, the factor is irrelevant. If the position were otherwise there would be a sliding scale of disclosure turning on how well the parties got on socially. The fact that the relationship between the companies was of long standing does not of itself impose an additional obligation of disclosure. It follows that I reject the claim for misrepresentation as pleaded. This is of course of no immediate relevance since I have held that the contract allegedly induced by misrepresentation has the effect for which CDU contends.
63. I add this about an aspect of misrepresentation not pleaded because Mr Patel recalled the more specific and detailed conversation which I addressed earlier. I have referred above to the decision by ITCA on 9 February 2011 not to disclose the real reason for wanting Clause 16 despite being asked about this by CDU. At that point ITCA was under no duty to give any reason and, I accept could not disclose the interest of Reed because of the Non Disclosure Agreement. But once ITCA had decided to answer it was under a duty to tell the truth. Disclosure of the truth, that it wanted to be able to avoid compensating CDU if it sold the show, was I see it required by the law of misrepresentation as summarised above and would not have involved breach of any duty to Reed.
64. Such a claim for misrepresentation would have been supported by a wider consideration given my view that CDU was entitled to candour once ITCA was telling it the reasons for Clause 16. There remains debate about the role of good faith in the law of contract but the following observation by the then Lord Justice Steyn in First Energy (UK) Ltd v Hungarian International Bank Ltd. [1993] 2 Lloyd's Rep. 194, at 196, has never been doubted:

"A theme that runs through our law of contract is that the reasonable expectations of honest men must be protected. It is not a rule or a principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. If affords no licence to a Judge to depart from binding precedent. On the other hand, if the prima facie solution to a problem runs counter to the reasonable expectations of honest men, this criterion sometimes requires a rigorous re-examination of the problem to ascertain whether the law does indeed compel demonstrable unfairness."

Quantum meruit

65. CDU claims, alternatively to its other claims, a reasonable sum for the work done under the Contract. The claim no longer arises as CDU has succeeded on its main case so I will refer to it only briefly. The claim is put in two ways. First it is said that there was an implied term that in the event that the Trade Show did not take place due to unforeseen circumstances CDU would be entitled to be paid for the work it had done in the reasonable expectation of the 2012 trade show taking place. Alternatively it is said that CDU incurred expenses and/or conferred a benefit on ITCA in good faith and in the expectation that it would be rewarded for that benefit which it is entitled to recoup. The parties have argued this issue in some detail ITCA defending mainly on the basis, which is not an answer at least to the first ground, that there was no request for the work to be done. There is also a considerable dispute about the value of the work which was done which I stood over to be argued if and when necessary. The total value of this aspect is about £10,000.

Conclusion

66. CDU's claim succeeds as Clause 16 of the Contract does not apply and, on the facts the rectification and other defences of ITCA fail. CDU's alternative claim for misrepresentation as pleaded fails. The further alternative claim in quantum meruit would probably have succeeded.
67. I shall be grateful if Counsel will submit, not less than 72 hours before hand down of this judgment, corrections of the usual kind and a draft order, both agreed if possible, together with a note of any other matters they wish to raise at the hearing.
68. The Court is most grateful to Counsel and solicitors for the admirable preparation and presentation of this case.