Blu-Sky Solutions Ltd v Be Caring Ltd
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 30 September 2021 |
| Neutral Citation | [2021] EWHC 2619 (Comm) |
| Docket Number | Case No: CC-2020-MAN-000097 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2619 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
CIRCUIT COMMERCIAL COURT (QBD)
SHORTER TRIALS SCHEME
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: CC-2020-MAN-000097
Richard Selwyn Sharpe (instructed by Tebbits & Co, Crewe) for the claimant
James McKean (instructed by Weightmans LLP, Manchester) for the defendant
Hearing dates: 7–8 September 2021
Draft judgment circulated: 27 September 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 10 a.m. on Thursday 30 September 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
Summary
This is a claim by the claimant, a supplier of mobile phones and telecommunication services, against the defendant, a social care provider, in which it claims the sum of £180,000 plus VAT. The claim is made under a contract relating to the supply to the defendant of a mobile network service ( MNS) by the well-known MNS provider, EE. The contract involved the provision of connections for 800 mobile phones for a minimum period of 48 months for a monthly rental of £9,600.
In summary, the claimant contends that the contract was concluded by the defendant's signature of its order form ( the order form), that the contract incorporated its standard terms and conditions for mobile services ( STCs) and that, pursuant to clause 4.6 of those STCs, in the event of cancellation before connection it was entitled to what was described as an “administration charge” of £225 per connection. It is common ground that the defendant cancelled before connection, thus the claimant contends that it is entitled to £180,000, being a £225 administration charges for each of the 800 connections.
In summary, the defendant denies that there was a binding contract between the parties, denies the incorporation of the STCs into any contract, denies that clause 4.6 was incorporated as an unusual or onerous term, asserts that clause 4.6 is a penalty clause and thus void, and denies that the claimant has suffered any loss because of the cancellation of its order.
Pursuant to case management directions given by me on 21 April 2021 the claim was entered into and tried in the Shorter Trials Scheme over 2 days on 7–8 September 2021, during which time I heard from 5 witnesses: 1 from the claimant, 3 from the defendant and 1 from a third party. I also had excellent written and oral submissions from counsel for each party, including supplemental written submissions on matters of law arising during the course of oral closing submissions.
The following significant issues arise for determination:
5.1 Did the order form create legal relations between the claimant and the defendant?
5.2 Were the STCs incorporated into the contract?
5.3 Were clauses 4.6 and 4.8 of the STCs sufficiently incorporated into the contract as allegedly unusual and onerous terms?
5.4 Are the charge provisions payable on cancellation of the contract in clause 4.6 and/or the charge provisions payable on non-provision of PAC codes in clause 4.8 void as penalties?
5.5 If they are void, what, if any, recoverable loss has the claimant suffered as a result of the defendant's cancellation of the contract and/or the non-provision of PAC codes?
In reaching my decision I make the necessary factual findings and apply the law dispassionately. I say this because the defendant has emphasised the difference between the claimant (which Mr McKean described in his skeleton as a “ruthless commercial operator”) and itself as “the UK's largest employee-owned not for profit social care provider”.
In her witness statement Ms Lowrie, its CEO, expanded, saying that the claimant's “800 carers are responsible for providing various levels of care to over 1,000 vulnerable people in their own homes across the North of England. The care that is provided ranges from care for children and young people, daily visits to disabled or elderly clients which allows them to continue living in their own homes and providing palliative and end of life care”. She said that the damage to the defendant from a successful claim “would be catastrophic” and highly likely to result in redundancies having to be made.
Moreover, it became apparent during the course of the evidence that due to a series of misunderstandings none of the individuals with the defendant who dealt with this contract had appreciated that Ms Lowrie might, by signing the order form, be committing the defendant to a contract which could not be cancelled and which had the effect of potentially landing it with a six figure liability should it attempt to do so.
Whilst I do not doubt Ms Lowrie's evidence, and have sympathy for the defendant for the unfortunate position it finds itself in, that cannot and should not affect my decision. It is a statement of the obvious, I hope, that it is not my function to decide the case on the basis of a general sympathy for one party or of the potentially harsh consequences should judgment be entered against it. If, on a proper application of the facts and the law, the claimant is entitled to judgment, then that is what I must enter.
However, applying the law to the facts, I am satisfied that the claim fails, on the basis that: (a) the clauses relied upon were not incorporated into the contract, since they were unduly onerous clauses which were not fairly and reasonably drawn to the defendant's attention; (b) even if they were incorporated they are penal clauses and thus void; and (c) the claimant cannot succeed on any fallback claim to recover its — much more modest — actual loss on the cancellation.
Reasons
The rest of this judgment is divided into the following sections:
A. The witnesses
| A | The witnesses | 12 – 17 |
| B | The market in MNS and the relationship between those involved | 18 – 26 |
| C | Relevant events | 27 – 54 |
| D | The STCs | 55 – 61 |
| E | Termination and subsequent events | 62 – 72 |
| F | Issue 1 — Does the signed order form have contractual force? | 73 – 88 |
| G | Issue 2 — Were the STCs incorporated into the contract? | 89 – 92 |
| H | Issue 3 — Were clauses 4.6 and 4.8 of the STCs incorporated into the contract as allegedly unusual and onerous terms? | 93 – 113 |
| I | Issue 4 — Are clauses 4.6 and 4.8 void penalty clauses? | 114 – 125 |
| J | Issue 5 — If clauses 4.6 and 4.8 are void penalty clauses, what, if any, loss has the claimant suffered as a result of the defendant's cancellation of the contract? | 126 – 137 |
I begin by referring briefly and in what is now fairly conventional terms to my approach to the evidence. Where there are key factual disputes between witnesses which must be resolved then I shall resolve them. In resolving such disputes and in gaining an informed understanding of the factual background it is necessary to have careful regard to the relevant contemporaneous documentary evidence. In this case, as in many such cases, it is a surer guide than the retrospective recollections of the witnesses. I also have regard where appropriate to my assessment of the inherent probabilities. In a case such as the present it is particularly important not to be swayed by what the witnesses now assert that they believed the relevant contractual arrangements were, as opposed to what is demonstrated by an objective analysis of what they said to each other and what they did as regards each other at the time.
I shall refer briefly to the witnesses from whom I heard.
Mr Jones is the managing director of the claimant company. He is every inch a salesman. He was unreliable in his evidence on a number of occasions and I am not prepared to accept his evidence save where corroborated by other reliable evidence or where I am otherwise satisfied I can rely on it.
As a separate point it became apparent during the course of the hearing that the claimant's solicitor was present in the room from which Mr Jones was giving evidence. It was apparent to me that the solicitor was only present to assist Mr Jones to obtain relevant documents in the trial bundle. When the point was raised I asked him to confirm as much, and he did. In closing submissions Mr McKean suggested that he may have assisted in locating documents and that this went beyond what was permitted. He referred me to the observations of Andrew Baker J in Navigator Equities Ltd v Deripaska [2020] EWHC 1798 (Comm) at [9]. I agree that I should have been told at the outset of Mr Jones' evidence that the solicitor was going to be present and for what purpose, so that I could have made sure that the parameters were clearly understood. I also agree that it would not generally be acceptable for the solicitor to locate documents other than those which were expressly identified by Mr Jones but who did not know where in the bundle they were located. However, I am satisfied that nothing happened which cast any doubt upon the integrity of the solicitor in question.
Each of the defendant's employees who gave evidence was generally reliable. In order, they were: (a) Mr Bowles, the business support manager for the defendant who had the most direct dealings with the claimant; (b) Mr Booth, the head of performance for the defendant who was responsible for procurement and who undertook a more strategic role behind Mr Bowles; and (c) Ms Lowrie, the CEO of the defendant company.
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