Advanced Multi-Technology for Medical Industry v Uniserve Ltd
| Jurisdiction | England & Wales |
| Judge | Nicholas Thompsell |
| Judgment Date | 04 July 2024 |
| Neutral Citation | [2024] EWHC 1725 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: BL-2021-000092 |
and
and
Mr Nicholas Thompsell
sitting as a Deputy Judge of the High Court
Case No: BL-2021-000092
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
Rolls Building
Fetter Lane
London, EC4A 1NL
David Lewis KC and Edward Knight (instructed by Trowers & Hamlins LLP) for the Claimants
David Walsh and Edward Mordaunt (instructed by Holman Fenwick Willan LLP) for the Defendant
Fraser Campbell (instructed by Capital Law Limited) for the Third and Fourth Parties
Hearing dates: 13 – 24 May 2024
INTRODUCTION
This case relates to events during a dark period for the world, when COVID-19 was spreading rapidly across the globe and governments everywhere were improvising their responses to this dreadful threat. A key element of this response was the procurement of Personal Protection Equipment (“ PPE”) including masks.
I shall refer to the First Claimant by its trading name, “ Hitex”. Hitex was a manufacturer of medical supplies in Jordan. Early in 2020 it turned to the production of medical masks. Hitex entered into a contract for the sale and purchase of masks (the “ Supply Contract”) with the Defendant (“ Uniserve”) at the height of the COVID-19 pandemic in April 2020. The contract had been arranged by the Second Claimant, which I will refer to as “ Caramel” acting through the Third Claimant, (“ Mr Popeck”), who was and remains Caramel's sole shareholder and director. These parties were to be rewarded by Uniserve by means of an introduction and supply agreement (“the Commission Contract”) entered into alongside the Supply Contract.
Mr Popeck was an experienced businessman who operated principally within the fashion trade acting generally as a middleman buying from manufacturers or other wholesalers and selling to retailers. At this point he had had no experience in supplying PPE, but he was astute to the opportunity for profit caused by the soaring demand for PPE that was evident by this time.
Uniserve is an English company which, at that time, had focused on providing logistical support in relation to the transport of goods. It was well connected with the UK Department of Health and Social Care (the “ DHSC”) and also saw the opportunity to profit by moving into the supply of PPE.
Under the Supply Contract, Hitex agreed to supply 80 million masks to Uniserve on various dates in April to July 2020. Hitex claims that Uniserve, in breach of contract, failed to receive and pay for the great majority of the masks and claims damages of US$23,100,000 and interest.
Uniserve's defence is that Hitex failed to meet its contractual obligations as regards delivery of the masks and that it terminated the Supply Contract for Hitex's breaches.
Uniserve has a counterclaim against Hitex for the sum of US$300,000 which it paid to Hitex in respect of an invoice which was assigned to Caramel and also claims that it was induced to enter into the Supply Contract and the Commission Contract by a fraudulent or negligent misrepresentation.
Caramel and Mr Popeck also claim £19,250,000 from Uniserve, which they contend is due under the Commission Contract, or alternatively damages, and interest. Uniserve denies that that, or any, sum is due under the Commission Contract or that it is in breach of it.
The Third Party (“ Maxitrac”) acted on behalf of Uniserve in arranging the Supply Contract and later was involved in the management of that contract. The Fourth Party (“ Dr Stead”) was Maxitrac's sole director and shareholder.
The relationship between these parties and Uniserve originally arose by means of an agreement evidenced by an exchange of emails between Mr Iain Liddell (“ Mr Liddell”) of Uniserve on 29 March 2020, which has been referred to as the “ Initial Agreement”, and later was governed by a written agreement dated 2 June 2020 (the “ Maxitrac Contract”). Dr Stead guaranteed Maxitrac's obligations to Uniserve under the Maxitrac Contract.
Uniserve has brought Part 20 proceedings against Maxitrac and Dr Stead for declarations that they are liable in damages or to indemnify Uniserve to the same extent that Uniserve is liable to the Claimants and that Dr Stead is liable to Uniserve as guarantor of Maxitrac. Those claims are denied.
PROCEDURAL HISTORY
Hitex's claim was originally issued in December 2020. Hitex's Particulars of Claim have been amended and re-amended. During the course of the trial there was a further small amendment to its pleadings which, in the absence of objection on the part of Uniserve, Maxitrac or Dr Stead, I allowed.
The case has proceeded in the usual manner for cases of this type, and I will not recount the full procedural history. However, two elements of the procedural history are worth noting.
The first is that Ms Joanne Wicks KC (then QC), sitting as a deputy judge of the High Court, heard an application for summary judgment brought by the Claimants against Uniserve and provided her judgment in relation to that application on 10 February 2022.
The learned judge did not grant Hitex the summary judgement it sought but did give summary judgment in respect of a claim that had been advanced by Caramel against Uniserve for the sum of US$300,000 (plus interest) which was part of the price under the Supply Contract and had been the subject of an invoice which she found had been validly assigned to Caramel by Hitex. She also made a finding in relation to a matter which I will discuss further below.
The second is that Uniserve has through an order of Mr Peter Knox KC dated 16 December 2022, following an ex parte hearing, obtained a worldwide freezing order against the assets of Maxitrac and of Dr Stead. This was continued by Meade J following a return hearing at which neither of those parties were represented. Maxitrac and Dr Stead subsequently applied for the freezing order to be discharged. This matter was heard before Mr Richard Farnhill sitting as a deputy judge of the High Court and he dismissed the application.
THE KEY ISSUES
As between the Claimants and Uniserve the key issues may be summarised as follows:
i) Was Uniserve induced to sign the Supply Contract by a fraudulent or negligent misrepresentation?
ii) Was Hitex in breach of its original delivery obligations?
iii) Was there acceptance by Uniserve of an alternative delivery schedule effectively amending the original contract, or alternatively is Uniserve subject to any form of estoppel to prevent it relying on the original delivery schedule?
iv) Was Hitex in breach of its revised delivery obligations?
v) Did Uniserve terminate that contract (and thereby the Commission Contract) for breach?
vi) If damages are due, what is the measure of those damages?
As between Uniserve and Maxitrac/Dr Stead, the principal issues may be summarised as follows:
i) Were/was Maxitrac and/or Dr Stead in breach of contractual or other obligations to Uniserve in agreeing or purporting to agree a variation to the delivery dates in the Supply Contract?
ii) Were/was Maxitrac and/or Dr Stead in breach of contractual or other obligations to Uniserve in failing to terminate the Supply Contract?
iii) If Maxitrac is found liable in relation to either such matter, but Dr Stead is not himself directly liable, is he liable as a guarantor under the Maxitrac Contract?
It is agreed by all parties that the points between Uniserve and Maxitrac/Dr Stead have importance only if Uniserve is found to be liable to the Claimants.
These issues largely follow the chronological course of events. I will deal with the facts and the relevant law as we trace through the events.
Please note that, unless specifically otherwise stated, all references in this judgment to dates are references to dates in 2020.
THE EVIDENCE
A great deal of evidence was available to the court, but many things were missing which would have been useful to get to the bottom of certain points.
In relation to written evidence, as well as copies of the relevant agreements, the court had access to a substantial body of emails between the parties and other witnesses which form a helpful contemporaneous measure. There were also some recordings of telephone conversations which had been made by Dr Stead, which were also helpful as a contemporaneous record. Given Dr Stead's evidence that he recorded all his telephone calls except when he was out of his office, it was slightly surprising that he did not disclose a greater number of relevant telephone calls. I accept his evidence that he did not record conversations when he was outside his office but given that the United Kingdom was on lockdown at this period, it is surprising that he was taking (and initiating) important calls that were not recorded.
Another important piece of evidence comprises what were referred to as daily “Production Reports”, although this was something of a misnomer as these reports, the court heard, effectively recorded movements in and out of the main warehouse, rather than recording the production on particular day. The court heard that the machine operators producing the masks also produced handwritten daily reports of the masks they have produced that day. It would have been very helpful to the court to have had these reports and it is unclear why they were not made available.
The court heard from witnesses including:
i) for the Claimants: Mr Popeck; Mr Al Ghrabili (the Chief Executive Officer and general manager of Hitex); and Mr Ashraf Khader, who was at the relevant time the Operations and Export Manager for Hitex; and
ii) for Uniserve: Mr Liddell, who is the founder of Uniserve and its managing director; and Mr...
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