Competition tribunal rejects £570,000 claim by company alleging it sold Orkney property because of local cartel abuse

About this case:

• Citation:
  [2022] CAT 40
• Judgment:
  External link
• Court:
  Competition Appeal Tribunal
• Judge:
  Lord Ericht

Blue Planet Holdings Ltd purchased the house for the exclusive use of its directors, a married couple, who found themselves in dispute with the Sinclair family, who in addition to running the haulage business also managed one of the only two convenience stores on the island. Damages of £569,729.42 were sought by the pursuer in respect of the loss of value they claimed their property had suffered.

The appeal was heard at the Court of Session by Lord Ericht, Lord Young, and Mr Peter Anderson of the Competition Appeal Tribunal. The pursuer was represented by director Kenneth Murray, Orkney Islands Council by Mark Lindsay KC and Mr Dan Byrne, and the third defender by Mr Dave Neil.

Ongoing harassment

The pursuer purchased a property known as Marygarth for the sum of £122,000 with a date of entry in November 2013. It then spent just under £800,000 renovating the property, which was valued in 2021 at £375,000. Initially, Sinclair Haulage had provided services to the pursuer without issue. However, following a dispute concerning the payment of an international banking fee, a dispute began which led to Sinclair informing Mr Murray that it did not want to do business with him.

Over time, the dispute between the Murrays and the Sinclairs escalated. In evidence, it was asserted by Mr Murray that, having endured years of “appalling behaviour” by the Sinclairs, the situation became so intolerable that they could no longer endure living in Marygarth and put it up for sale. In turn, the Sinclairs said that they decided to sell their company and leave the island due to ongoing harassment from Mr Murray.

It was the pursuer’s case that the defenders had formed a cartel providing Sinclair Haulage with a dominant market position on Sanday due to the way hauliers were appointed to the islands by the council. As a result of this conduct the pursuers had to sell Mr Murray’s home in order to escape the Sinclairs’ abusive practices and had suffered loss.

In its defence, Orkney Islands Council denied entering into the alleged cartel and asserted that it treated all licenced hauliers equally. Additionally, the dispute was not in substance a competition law dispute at all but rather a neighbourly dispute with the appropriate remedy being damages and interdict in the Sheriff Court.

For Sinclair Haulage it was argued that it did not have a monopoly on Sanday, it was simply the only company on the island that had sought and paid for the legally required insurances and qualifications to operate HGVs. A second, unlicensed operator existed on Sanday which did not use HGVs that Mr Murray had been using.

Personal reasons

Lord Ericht, delivering the opinion of the Tribunal, observed: “The jurisdiction of this Tribunal is in competition law matters. It is not here to grant remedies for the breakdown of the personal relationship between the Murrays and the Sinclairs or for their conduct towards each other. It is Blue Planet Holdings Limited, and not Mr Murray personally, which is a party to the proceedings in this Tribunal. It is Sinclair Haulage which is a party, and the Sinclairs are no longer directors or shareholders in Sinclair Haulage. The breakdown of the relationship is relevant to these proceedings only to the extent that it is relevant to the competition law issues between the parties.”

He continued: “Mr and Mrs Murray’s reasons for the sale of the house are personal to the Murrays rather than being reasons for a limited company to sell at a substantial loss. On Mr Murray’s own submissions, the pursuer’s loss is caused by the breakdown of the personal relationship between the Sinclairs and the Murrays rather than breach of competition law.”

On the proposed damages sought by the pursuer, Lord Ericht added: “Even if the pursuer is correct to say there has been a breach of competition law, that would not entitle the pursuer to the sum which it seeks. The pursuer would be entitled to the sum of money which would put it in the same position as it would have been had it not suffered the breach. That would not be the difference between what the pursuer spent on the house and what it is now worth. It would be the difference between the price the pursuer paid for haulage services provided to it by Sinclair Haulage and any lower price which would have been charged by another haulier operating within the hypothetical market in which there is no breach of competition law.”

He concluded on this head of claim: “In relation to Marygarth, the pursuer appears to have expended considerable capital sums well in excess of the ultimate re-sale value of the property. If that is seen as a loss to the pursuer, it is a loss caused by the pursuer’s decision as to the scope and nature of the renovations rather than from any breach of competition law. For these reasons, we find that there are no reasonable grounds for the claim for damages for £569,729.42 and we strike out that claim.”

The Tribunal went on to refuse another claim for £840.20 relating to other miscellaneous breaches.