Clothing Management Technology Ltd v Beazley Solutions Ltd Trading as Beazley Marine UK

JurisdictionEngland & Wales
Judgment Date26 March 2012
Neutral Citation[2012] EWHC 727 (QB)
Docket NumberCase No: 2010 Folio 1290
CourtQueen's Bench Division
Date26 March 2012
Clothing Management Technology Limited
Beazley Solutions Limited Trading as Beazley Marine UK

[2012] EWHC 727 (QB)


His Honour Judge Mackie QC

Case No: 2010 Folio 1290




Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Richard Sarll (instructed by Browne Jacobson) for the Claimant

Mr Tim Marland (instructed by Waltons & Morse) for the Defendant

Hearing dates: 6 to 9 February 2012

Approved Judgment

I direct that pursuant to CPR PD 39A para 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.


This is a claim by a British clothing manufacturer against Insurers for the invoice value of garments which were being manufactured at a factory in Morocco. The owners of the Moroccan manufacturing company disappeared leaving its workers unpaid. The workers occupied the factory and refused to finish the garments. In time the garments seemed irretrievable and the Claimant claimed against Insurers for their loss. The situation is unusual but the problems it presents have been complicated because the policy between the Claimant and the Defendant is one of marine insurance and numerous defences have been raised including questions of actual ("ATL") and constructive ("CTL") total loss and of valuation.



The Claimant ("CMT") is a clothing manufacturer and supplier owned by Mr George Shread, who has been in the business for some 40 years, and his wife Carol. CMT was set up in 1989 and is based in Kirkby-in-Ashfield Nottinghamshire. CMT makes sample garments, shows them to customers including Debenhams, BHS and Sainsbury's who then place orders. Sample garments are then sent to overseas factories with the necessary raw materials to be mass produced and sent back to the UK.


The Defendant ("Insurers") is an underwriter at Lloyd's of London sued on its own behalf and on behalf of the members of two syndicates.

Facts agreed or not much in dispute


CMT has suppliers in Romania and in Morocco. The largest supplier in Morocco, Beltrame, was owned by Mr Aziz Ibin Ghazala and managed by his brother Ahmed who is known as "Hamada". CMT found Beltrame to be a good supplier from 2003 until the summer of 2008. In July 2008 Hamada visited CMT and, according to the evidence of Mr Shread which, for reasons I give later, I accept, Hamada referred to the substantial amount of work which Beltrame would be doing after the summer holidays and asked for a stage payment on account. CMT made a payment of £51,000. There was no sign of coming trouble and in the third week of August 2008 fabrics and trimmings were shipped from Kirkby to Beltrame to be processed when the workforce returned from holiday.


On 3 September Hamada sent an email to Mr Shread saying that he needed medical treatment and might take a flight to Montreal. The email added that he was "worried how to pay people the week they come back" and ended "I don't think people will continue working after all promises we didn't respect". For Mr Shread this was the first sign of trouble and the reference to "promises" was news both to him and to his Factory Liaison Manager Mr Pettit. Mr Shread called Hamada's personal assistant Amal, an experienced lady with good English whom CMT had encouraged Beltrame to employ. Amal said that Aziz had not been seen at the factory since the holidays but production had started and was proceeding satisfactorily. On 15 September Mr Shread made a previously arranged visit to Beltrame. Aziz had still not been seen at the factory and Hamada had apparently left for Canada. The factory was working satisfactorily otherwise and on 19 September Mr Shread left. On 23 September Ms Leigh Davies went to the factory to prepare for an ethical audit to be conducted by Asda. She was asked by workers if she knew where Aziz was and she noticed that production levels were slipping. She contacted Mr Pettit who was at another factory in Morocco and he joined her the following day.


On 24 September workers complained to Ms Davies and Mr Pettit about their unpaid wages and threatened to stop work. Mr Shread was on holiday in nearby Spain and he returned to the factory on 25 September to find that the workers had stopped work because they had still not received any wages since August. They said that they would neither resume work nor release finished garments unless they were paid their overdue wages and those they had earned for September. Mr Shread and Mr Pettit found the behaviour of some of the workers excitable and demanding but on 26 September a deal was done. CMT would pay to the workers direct money due for finished goods leaving the factory. Garments with an invoice value of some £95,000 left the factory during the period after 10 September. On 29 September Mr Shread and his colleagues received through Amal's email a message as follows:—

"Please accept our oppologie; we have found no word to express how much we are sorry for what happened on last Friday. We all thank you for giving us the opportunity to communicate with you & for your undersanding to what happened to the workers which makes some of them react in a bad way. Please accepte our oppologie againe about what happened. We wiche you all the best. Regards. The representatives of the workers."


On about 25 September Mr Shread had asked for copies of the relevant insurance paperwork to be sent to him. Late on 7 October Mr Shread called Mr Patrick Oddie of Oddie Dalton, CMT's insurance brokers. Mr Oddie's note records "Owners have disappeared! Factory locked and people? And selling goods. Forcible/violent entry etc. Stock work funds 180,000 in warehouse insured sent over £20,000 but this has been taken and is lost." On 8 October Mr Oddie notified insurers of the situation and sought assistance. An email from Mr Peter Philpott a Director of PCL Claims Ltd reflects some of Mr Oddies' note adding "the insured MD was intending to go over to the warehouse, but has been told not to due to fear of violence and making the matters worse." Another email, apparently from representatives of the workers was sent to Mr Shread on 8 October in which they denied that they would behave badly against him and stated that he was welcome to come to the house of any of them. It seems that there were difficulties in giving effect to the plan agreed on 26 September. After further discussions Mr Shread repeated in writing CMT's pledge to make payment in return for the goods being finished. Mr Shread left informing the workers that Mr Pettit would return to oversee matters.


Mr Pettit came back on 14 October and remained until the 24 th. When he arrived no-one was at work but production resumed and on 18 October Beltrame shipped a substantial quantity of garments, with an invoice value of £61,000, and CMT responded by paying the workers £19,500. CMT also shipped a substantial amount of further fabric to BMS Clothing in Morocco on 18 and 19 October, to be forwarded to the factory. Mr Pettit considered that things were working satisfactorily when he left. On 27 October Ms Davies went to the factory and remained until 31 October. She considered that while the workers seemed demotivated they were still producing some garments each day which were being shipped back to the UK. Mr Pettit returned to the factory on 3 November and noticed a deterioration in the workers' mood and that production levels had dropped. All further cooperation broke down after 5 November when the workers representatives demanded an immediate payment equivalent to some £80,000 in return for resumed work. Mr Pettit, having consulted Mr Shread, refused that demand. Mr Pettit spoke to another factory owner who warned him that it was likely that the workers would now take the remaining stock to set off against their substantial arrears of pay. On 10 November CMT's brokers emailed Mr Philpott of Insurers confirming that negotiations had broken down and that Mr Shread understood that the workers would be stripping the factory of all its machinery and fabric. They asked what the insured should be doing and who at Insurers was going to be appointed for the claim. Insurers showed understandable frustration at the turn of events but the lack of clarity seems to me to have been the result of the unexpected and fast turn of events. Mr Pettit retained a local lawyer Mr Ennouari who apparently made an application to the court on 28 November for recovery of CMT's machines which were still at the factory (but are not the subject of this insurance claim). At some point in 2009 CMT dropped the claim following advice from Mr Ennouari that it could take years to reach a final conclusion and that the court would naturally have some sympathies with the workers. Mr Ennouari apparently also advised that CMT had no right to install a security guard at the factory.


In September 2009 Mr Pettit returned to the factory with Mr Richard Grassick, the surveyor appointed by Insurers. They found that while much of the stock remained in the factory some goods, in particular a computer, may have been taken by the unpaid workers.

The Insurance Policy


Insurers agreed to underwrite the risk following the receipt of a presentation document compiled by CMT's brokers dated 27 May 2008. In this document, the business of the assured is described in the following way:

"The insureds are clothing manufacturers who have been in business for twenty plus years. Basically what the in sureds to is to make up sample garments at their premises in Nottingham. Garment designs are agreed with customers and then orders are placed – at which point, the sample garments are sent to manufacturers abroad, who make up the garments from raw materials as per the agreed design. Finished garments are then...

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    ...different from that in sub-s. 1.” 219 Similarly, HHJ Mackie QC stated in Clothing Management Technology Ltd v Beazley Solutions Ltd [2012] EWHC 727 (QB); [2012] 1 Lloyd's Rep 571, at paragraph 36: “ I notice that in The Bamburi … Staughton J identifies it as being established by authority......

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