DRL, the white goods online retailer, has said it is “relieved” after winning a case against its former logistics provider Wincanton Group at the Court of Appeal.
The dispute arose while Wincanton was contracted to deliver white goods for DRL, which employs more than 500 staff and sells both through its own websites, appliancesonline.co.uk and appliancedeals.co.uk, and through white label solutions for retailers including House of Fraser, Next and Argos.
Under the terms of the contract, Wincanton was required to offer to unpack and inspect the goods for each customer on delivery. Instead, claimed DRL, it operated a ‘dump and run service that left it with customer complaints and £3m of lost and damaged goods.
Towards the end of the contract between the two parties, argued DRL, DRL agreed to pay Wincanton £1m in order for it to continue to deliver the remaining orders and ensure a smooth handover with the incoming logistics company. Liability would be agreed at the end of the contract.
However, two days before the contract was due to end, argued DRL, Wincanton demanded a further £250,000, rising to £300,000 for the release of stock owned by DRL and due to be delivered to its customers.
DRL took its case to the High Court which agreed Wincanton’s request for a further £300,000 was a breach of the agreement and “quite unjustified and a flagrant attempt to impose improper commercial pressure on DRL to pay a further significant sum which the parties had agreed should be frozen”, it ruled that DRL was still obliged to make payment for deliveries made by Wincanton.
Now the Court of Appeal has overturned that decision and ordered Wincanton to repay DRL more than £470,000 plus costs. The final sum owed by Wincanton in relation to the claim is still to be determined and is likely to be heard by the High Court in 2012 in the absence of an agreement being reached beforehand.
DRL finance director Steve Caunce said: “DRL is relieved at the decision of the appeal court. The problems DRL encountered during the relationship with Wincanton were highly material to the business, however we sought to end the relationship in as clean and professional manner as possible.
“Given the events that occurred in the final weeks of the contract, to be found as the party that breached the agreement in the first hearing was very hard to take. We therefore welcome the recent decision.”
Law firm Pannone represented DRL. Andrew Vickerstaff of Pannone said: “I am delighted that common sense has finally prevailed. The Court of Appeal has now overturned the decision of the High Court on this issue and agreed that in the face of such unjustified and improper demands that DRL's board was fully within its right to consider the relationship at an end and cease further payments to Wincanton.”
Wincanton today said: "Because litigation remains extant, we do not consider it an appropriate time to comment."