Hamilton and others (Appellants) v. Allied Domecq Plc (Respondents) (Scotland)
33. At the hearing of the reclaiming motion the defenders' counsel submitted that Mr Hamilton's mistake about the date and place tended to suggest that the Lord Ordinary should not have relied on his recollection of what was said. Lord Marnoch considered that, at the very least, this was a matter that must be taken into account when assessing the reliability of his evidence. Since there was nothing to show that the Lord Ordinary had taken the point into account, Lord Marnoch considered that the matter was at large for the Division and he, for his part, would have found it difficult to attach any importance at all to Mr Hamilton's evidence on the point: 2006 SC 221, 257, para 122. By contrast, while aware of these criticisms of Mr Hamilton's evidence, Lord Hamilton proceeded on the basis that, so far as it went, it was both truthful and accurate: 2006 SC 221, 246, para 97. The Lord Justice Clerk agreed with both Lord Hamilton and Lord Marnoch. In adopting his approach, Lord Hamilton had regard to the fact that, in cross-examination, Mrs Swanson had adopted what he described, at p 243, para 88, as
Considering the opportunity which the Lord Ordinary had to observe Mr Hamilton giving evidence, and considering also the attitude adopted by Mrs Swanson at the proof, I prefer to approach the matter in the same way as Lord Hamilton. Proceeding, therefore, on the assumption that Mr Hamilton's evidence is to be regarded as truthful and accurate so far as it goes, what does he say that Mr Beatty said on the matter?
34. The first important passage comes in his evidence in chief where he was asked what he had said to Mr Beatty about why the pursuers wanted to go into the deal with the defenders:
Although the point was taken up in cross-examination, Mr Hamilton's later evidence added nothing of significance.
35. Taking this passage in his evidence at its highest in favour of the pursuers, it merely shows that Mr Beatty said that it was in Allied's interests to cover the distribution in all sectors and that this was something that they would do. The reply is hardly surprising: since the defenders were going to put £6 million into a company that hoped to sell large quantities of bottled water, it would plainly be in their interest to cover distribution in all sectors. What is missing is any indication that the defenders would distribute the product to both the on-trade and off-trade sectors simultaneously from the outset. I respectfully agree with Lord Hamilton's analysis of the passage: 2006 SC 221, 247, para 99.
36. Mr Clark suggested that an inference that there would be distribution to the on-trade immediately could be drawn from another passage in Mr Hamilton's evidence in chief where he was discussing the Britannia problem. Mr Hamilton said that he had discussed this problem with Mr Beatty
Mr Clark said that there was no suggestion of a gap in time between any deal over Britannia and the pursuers getting access to the on-trade. The simple fact, however, is that the passage does not contain anything which shows Mr Beatty actually saying that the strategy would be that Gleneagles would have access to the on-trade as well as to the off-trade from the beginning.
37. Mr Clark also drew attention to a passage in the cross-examination of Mr Hamilton:
Again, whatever the exact import of the passage may be, there is nothing which actually points to Mr Beatty having said that the defenders would arrange distribution to the on-trade through Britvic from the outset.
38. Mr Clark indeed acknowledged that there was only one place in the transcript where he could point to any specific words which might suggest that Mr Hamilton had referred to distribution to the on-trade being envisaged from the outset. The passage in question comes in Mr Hamilton's re-examination:
39. Both Lord Hamilton, 2006 SC 221, 248, para 102, and, indeed, Mr Clark in his submissions at the hearing seemed to think that the significance of the evidence was somehow reduced because it was given in re-examination. For my part, I would attach no particular importance to that factor: the value of evidence depends on its quality, not on the stage at which it is given.
40. On the other hand, I note that the question which elicited the important answer asked what Mr Beatty's "response" had been to Mr Hamilton saying that they needed access to the on-market. A response can come in various forms. Perhaps unsurprisingly therefore, the very first word of Mr Hamilton's reply ('Basically') immediately shows that he is not purporting to recall exactly how Mr Beatty responded - far less to give the exact terms of anything which Mr Beatty might have said. Mr Hamilton is just recalling that the purport of Mr Beatty's response was that he understood that access to the on-trade was a component of getting the company off the ground. A measure of interpretation by Mr Hamilton may well be involved.
41. Lord Hamilton considered, 2006 SC 221, 248, para 102, that "'getting the company off the ground' could equally refer to making Gleneagles a commercially viable entity (the ultimate objective), as it could to the strategy to be adopted from the outset to achieve that end.'" I doubt that. If - as Lord Hamilton thought and as may well be the case - Mr Hamilton was giving his interpretation of Mr Beatty's response, then his interpretation would undoubtedly have been that Mr Beatty was saying that there would be access to the on-trade from the outset. So Mr Hamilton would have used the words "off the ground" with that meaning. On the other hand, if Mr Hamilton was purporting to recall some specific words of Mr Beatty, I do not agree that they could "equally" refer to the ultimate objective of making Gleneagles a commercially viable entity. The phrase "off the ground" is a comparative newcomer to our language and must be a somewhat decayed metaphor from flying. Whatever its ultimate destination, a 'plane, or indeed a bird, gets off the ground at the beginning rather than at the end of its flight. In my view the more natural meaning of the evidence would be that Mr Beatty understood that access to the on-trade was to be a component of the strategy from the beginning.
42. Nevertheless, as Lord Hamilton notes, it is interesting to see that, after this particular answer, with a little further prompting, the witness said that there was an acceptance by Mr Beatty that the pursuers needed this in the deal. Yet, the one thing that is certain is that neither this nor anything else about distribution was to be found in the deal as finalised in the subscription agreement.
43. Weighing up all these considerations, I do not regard this passage, even on its face, as providing a sufficiently clear basis for the Lord Ordinary's finding that, by what he said, Mr Beatty led Mr Hamilton and Mr Douglas to believe that he agreed with Mr Hamilton that Gleneagles should try to penetrate the on-trade as well as the off-trade from the beginning. It is much too oblique an answer. If it was to be the linchpin of the pursuers' case, the answer should have been clarified.
44. I am reinforced in that view by the fact that - as Mr Keen QC pointed out - when senior counsel came to cross-examine Mr Beatty, he did not put it to him that he had said that access to the on-trade would be a component of getting the company off the ground. Nor did he challenge his recollection that the strategy would be to concentrate on the off-trade and then move on to the on-trade:
45. The Lord Ordinary accepted, at para 15 of his opinion, that Mr Beatty was a credible witness, but made no overall assessment of his reliability. He also noted, at para 45, however, that it was not suggested to Mr Beatty that he was mistaken in giving this unqualified evidence that the initial move was always intended to be into the off-trade. That being so, it is hard to resist the conclusion that, if Mr Beatty had in fact represented that there would be simultaneous distribution to the on-trade and off-trade from the outset, he would have been not merely negligent, but dishonest. Of course, there is no hint of an allegation of dishonesty or fraud in the pursuers' pleadings or in their conduct of the case. Moreover, as Lord Marnoch noted, any such conclusion would seem to be inconsistent with the certificate of credibility which the Lord Ordinary gave Mr Beatty: 2006 SC 221, 259, para 125. All this confirms that it would not be safe to rely on the single answer in Mr Hamilton's re-examination as a basis for finding that the pursuer has established the necessary misrepresentation by Mr Beatty.
46. For these reasons, which are, in very large measure, the same as those given by the Second Division, I am satisfied that the evidence did not warrant the Lord Ordinary's finding that Mr Beatty misrepresented the position to Mr Hamilton. I would accordingly dismiss the appeal. The appellants must pay the respondents' costs.
LORD WALKER OF GESTINGTHORPE
47. I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Rodger of Earlsferry, and for the reasons he gives I too would dismiss the appeal.
LORD NEUBERGER OF ABBOTSBURY
48. I have had the advantage of reading in draft the opinion of my noble and learned friend Lord Rodger of Earlsferry, and for the reasons he gives I too would dismiss the appeal.
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