F&T Terrix Ltd v CBT Global Ltd
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 14 December 2021 |
| Neutral Citation | [2021] EWHC 3379 (Comm) |
| Docket Number | Case No: BL-2021-MAN-000002 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 3379 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
CIRCUIT COMMERCIAL COURT (QB)
Manchester Civil Justice Centre,
1 Bridge Street West, Manchester M60 9DJ
HIS HONOUR JUDGE Stephen Davies
SITTING AS A JUDGE OF THE HIGH COURT
Case No: BL-2021-MAN-000002
Melody Ihuoma (instructed by Fieldfisher LLP, Manchester) for the Claimant
Roy Dano Chalmers (company representative) for the Defendant
Hearing dates: 18–19 November 2021
Written closing submissions 26 & 29 November 2021
Draft judgment circulated: 8 December 2021
APPROVED JUDGMENT
This judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on BAILII. The date and time for hand-down is deemed to be 2pm on 14 December 2021.
I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Stephen Davies
Introduction
This claim and counterclaim arise out of a contract, made in June 2020 at the height of the first Covid lockdown, for the sale of 100,000 pairs of nitrile protective gloves by the defendant to the claimant at £8 per boxed pair, total £800,000. The claimant contends that the defendant breached the contract by failing to deliver. The defendant contends that the claimant breached the contract by failing to comply with a requirement to provide a bank escrow for the balance of £720,000 payable after the deposit of £80,000. The claimant claims the return of the deposit and damages. The defendant counterclaims damages.
The trial took place over 2 days. The defendant had been legally represented until October 2021, when its solicitors ceased acting. The trial had been listed as an attended trial, but the day before the defendant applied to adjourn on the basis that its two directors and witnesses had been exposed to someone suffering from Covid. I refused, but directed that the trial should take place remotely. On day 1 the defendant renewed its application to adjourn, this time to seek and obtain legal representation. I refused, on the basis that it would not be fair to do so, especially since the defendant had failed to adduce evidence that it had made reasonable efforts to obtain legal representation or to inform the claimant of its intentions and was unable to pay the costs thrown away by the claimant if I was to adjourn.
The claimant was represented by counsel, Ms Ihuoma, who produced an impressive, detailed and helpful opening written submission and who presented the case for the claimant with skill and fairness. The defendant was represented by one of its two directors, Mr Chalmers, who conducted the case for the defendant with determination and vigour. Having allowed Mr Chalmers some time to prepare his cross-examination and due to the non-availability of the claimant's second witness on day 1 the evidence took the full 2 days allocated. I acceded to Mr Chalmers' preference for closing principal and responsive written submissions, which I have received and read. I now produce my judgment.
The claimant's principal witness was its director Mr Richard Coffey. He was a reasonable witness but was prone to argument and avoidance in his answers and did not in my view have a particularly clear or objective recollection of the detail of events. The claimant also called Mr Gary Taylor who was a representative of the defendant but who also acted, in effect, as an intermediary between the two parties. He was a reasonable and, I thought, genuinely fair-minded witness who, most usefully, had been able to produce the WhatsApp text messages he had exchanged with Mr Chalmers over the relevant period, which proved invaluable in filling in the gaps between emails.
The defendant's principal witness was Mr Chalmers. Like Mr Coffey he was prone to argument and avoidance in his answers and did not in my view have a particularly clear or objective recollection of the detail of events. The defendant's second witness was its other director, Mr Jean-Pascal Tetti, who had less detailed involvement and suffered from the same flaws in his evidence as Mr Coffey and Mr Chalmers.
In short, this is a case where the surest guide to the truth lies in the contemporaneous documents and the inferences which can be drawn from those documents, especially where consistent with the evidence of Mr Taylor. Where I have to choose between the conflicting evidence of Mr Coffey and Mr Chalmers I must exercise particular care.
The defendant has not helped itself by its inability to disclose anything in the way of documentary evidence relating to its dealings with its supplier, Precious Mountain Ent Corp of Taiwan, beyond what appears to be a draft unsigned supply agreement. I am prepared to accept the evidence of Mr Chalmers and Mr Tetti that the majority of their communications with Precious Mountain was by WhatsApp text message. However, I am simply unable to accept their vague assertions that they had been unable to produce these messages due to having replaced their smartphones (according to Mr Chalmers on more than one occasion) since summer 2020 and having failed to back up or been unable to retrieve those messages. Their unwillingness to provide this relevant information, especially in circumstances where they knew from an early stage that there was a dispute which was likely to end in litigation, and their failure to disclose any documentary evidence of their dealings with Precious Mountain beyond the draft written agreement, does not assist their case.
The non-delivery — the relevant facts
Although there was some dispute as to the details, the initial contact between the parties came about and the parties then entered into a contract because: (a) the claimant was searching for a supplier of protective gloves because they believed they had buyers to whom they could sell them on at a profit; (b) Mr Taylor was a representative for the defendant, who had also become acquainted and friendly with Mr Coffey and, having been approached by Mr Coffey, recommended the defendant as a reputable supplier, as indeed he believed them to be; (c) the claimant was keen to proceed at the defendant's asking price and was also prepared to pay an initial deposit of £8,500 up front in order to demonstrate its genuineness.
On 8 June 2020 Mr Chalmers for the defendant emailed Mr Coffey of the claimant, confirming receipt of the £8,500, attaching an invoice and what he described as “a detailed procedure which roadmaps this transaction”, and confirming that on receipt of the deposit he could confirm delivery to London Heathrow for Monday 15 June 2020. The roadmap was set out in the attached document, entitled “acquisition process”, which set out a number of specified “steps” with accompanying “points to note”. Step 1, the claimant sending a purchase order, had already been undertaken. Step 2 was for payment of the balance of the deposit of £72,500 to bring the overall deposit up to 10%.
Step 3 is key and worth setting out in full. It read: “Concurrently with the deposit, Buyer evidences 90% balance payment in escrow at bank”. The accompanying “point to note” read: “Buyer to have LC or SBLC to evidence available credit payable to CBT, assignable to the manufacturer”. It is common ground that LC is short for Letter of Credit and SBLC is short for Standby Letter of Credit.
Step 4 read: “CBT confirms Purchase Order with the Manufacturer”, with the point to note reading: “CBT and Manufacturer have already agreed the order and required deposit and payment capability evidence to commence the order”.
The following steps detailed the process whereby the defendant would agree with the manufacturer and notify the claimant of the delivery details and the certification / inspection process, with step 8 stating that “on completion of [any inspection process required by the claimant under step 7] or on collection, escrow payment of 90% released and paid directly to supplier”.
Finally, step 9 referred to future dealings, stating that: “Buyer confirms order for following week of between 100,000 – 200,000 boxes”, with the point to note reading: “The price of GBP 8 is guaranteed for 3 months for a purchase quantity of between 100,000 – 200,000 boxes of gloves. A price guarantee and extension to tenor shall be agreed at start of month 3”.
The claimant's email of 9 June 2020 confirmed that it would pay the deposit and that “Gary [Taylor] will be in touch reference to mechanics”.
Both parties plead that the contract was thus formed by an exchange of correspondence and conduct on 8 and 9 June 2020, whereby on the 9 June 2020 the claimant accepted the defendant's offer made on 8 June 2020.
The defendant's email sent later that day at 15:56 hours confirmed receipt of payment. Mr Chalmers added: “I have been on the call with Gary and he has informed of the details you require”. He said that delivery had been arranged to London Heathrow for 15 June 2020. He said that he would send a follow-up email shortly with further details on the glove specification and branding and “pictures of the product packaging” — which was also referred to as “proof of life” or “POL”. The claimant replied, thanking the defendant and saying “look forward to the final information”.
The second email, in fact sent the next day on 10 June 2020 at 19:33 hours, described itself as an “official email to confirm your order”. It confirmed the delivery details and the glove specification as stated above. It said that “proof of life” will be provided once the product is ready; the explanation made clear that what was being referred to was a video-clip showing the...
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