Coilcolor Limted v Camtrex Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hildyard |
| Judgment Date | 06 November 2015 |
| Neutral Citation | [2015] EWHC 3202 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 5970 of 2015 |
| Date | 06 November 2015 |
[2015] EWHC 3202 (Ch)
The Honourable Mr Justice Hildyard
Case No: 5970 of 2015
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
IN THE MATTER OF COILCOLOUR LIMITED (No 02695346)
AND IN THE MATTER OF THE INSOLVENCY ACT 1986
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
David Alexander QC and Matthew Abraham (instructed by Temple Bright LLP) for the Applicant
Lance Ashworth QC and Steven Reed (instructed by Gateley Plc) for the Respondent
Hearing date: 27 October 2015
This is an application by Coilcolor Limited ("the Company") to restrain the presentation of a winding-up petition against it by Camtrex Limited ("Camtrex").
The basis of the application is that the alleged debt to Camtrex is bona fide disputed on substantial grounds and/or that there is a genuine and substantial cross-claim that exceeds the amount said to be due to Camtrex.
Camtrex contends, to the contrary, that the debt to Camtrex is due, that there is no genuine dispute founded on substantial grounds in that regard, and that there is thus no basis for any restraint on its right as a creditor to present a winding-up petition against the Company based on the Company's failure to pay long outstanding invoices.
Although the issue is not an unfamiliar one, the hearing of the application occupied the best part of a day, and ranged over issues of some factual and legal detail, as well as well-known cases as to the approach and practice of the Companies Court in dealing with applications of this kind. I reserved judgment to enable me to review the documentation carefully, but also because I considered the debate as to the use and abuse of a winding-up petition to be worthy of reflection.
I have had the benefit of submissions, oral and in writing, from Mr David Alexander QC and Mr Matthew Abraham of Counsel for the Applicants and Mr Lance Ashworth QC and Mr Steven Reed of Counsel for the Respondents.
Parties
The Company supplies high quality pre-finished steel, including coating, profiling and slitting a wide variety of substrates.
The Company purchases steel coils and processes them to supply to its customers for use in a variety of applications. As its name implies, the Company typically provides painted coils. The quality of the steel coils is essential. Furthermore, at least some (but Camtrex says not all) purchase orders sent by the Company state that the coils "must be suitable for coating by reverse roller method". As I understand it, the stated requirement is intended to ensure a good paint finish. It is of some potential importance (for reasons which will appear later) that any defect in the coils may well not emerge until the Company's own processes are completed.
The Company primarily sources its materials from companies based in China and Western Europe. However, due to lead times that arise in relation to orders from abroad, the Company sometimes spot buys from stockholders in the UK, such as Camtrex, to make up any supply shortfall.
The Respondent, Camtrex, is a Class 1 steel supplier and sells 65,000 tons of steel per annum to the automotive, white goods and construction industries.
Camtrex does not manufacture steel; it merely buys from a producer and sells to a consumer.
Trading relationship
It is not in dispute that Camtrex first began supplying steel coils to the Company in 2004 and they have traded with each other intermittently since that time.
Between 2004 and 2014 inclusive, 78 invoices were raised in respect of supplies of steel by Camtrex to the Company.
There has been a significant amount of trading between the Company and Camtrex in 2015, in the course of which 37 invoices were raised in respect of orders placed by the Company.
Over the years the Company has occasionally raised issues with the quality of the materials which Camtrex has provided. However, until now, all such issues have always been resolved amicably, with Camtrex removing defective materials supplied by Camtrex and giving credit for those defective materials.
The present dispute
The matters relied on by the Company as giving rise to the present dispute between the parties can be summarised as follows:
(1) From April 2015 onwards, the Company's quality control identified an increasing number of what it regards as defective steel coils supplied by Camtrex.
(2) Following the identification of alleged defects in the materials supplied, there was correspondence between the parties which resulted in some non-conformity reports ("NCRs") being raised by the Company. Some of these NCRs were resolved, but others remain unresolved.
(3) Following an email on 2 July 2015 from the Company informing Camtrex that there were numerous outstanding issues, the parties attended a meeting which took place on 9 July 2015 to discuss the ongoing problems.
(4) Following the meeting some of the defects were accepted and others were disputed or remained to be verified;
(5) On 18 August 2015, in a conference call, it was agreed that, rather than continuing to raise NCRs, the Company would review all stock provided by Camtrex and put together a schedule showing all allegedly defective stock supplied.
(6) However, it also appears from correspondence that certain coils provided by Camtrex have different Galv Weights from those expected and specified in Camtrex's description: the Company claims compensation for these defects also.
The Company contends that it is entitled to set-off or cross-claim in respect of goods supplied unfit for purpose; and that this is all it has been seeking to do. The Company maintains that its set-off or cross-claims plainly have real substance, and can only fairly be adjudicated at a trial. It makes the further point that Camtrex has not taken the trouble to assess the defects on the ground; it has simply dismissed the claims.
Nevertheless, Camtrex continues to maintain that the complaints raised by the Company are for the most part contrived some time after the event and with a view to avoiding or delaying payment. Its position is that having initially engaged with the Company to resolve issues that the Company claimed to have, it became clear to Camtrex that many of the issues being raised had no foundation in fact, even disregarding the terms of trading between the parties. For example, the Company raised a complaint about steel coils which Camtrex had not supplied, but rather had been supplied by Tata.
Further and in any event, Camtrex maintains that the complaints relied on by the Company are precluded by the terms of trading between the parties (see later). Camtrex relies on what I understand to be its standard terms and conditions, which it contends were incorporated in each and every of its contracts with the Company.
Indeed, during the hearing, Mr Ashworth did not shrink from the proposition that Camtrex's case at this stage really is focused on the terms and conditions and its contention that these preclude any set-off and even any cross-claim, with the result that no factual inquiry can be justified.
As to the incorporation of these terms, Camtrex's case is that there can be no substantial doubt that dealings between the parties were governed by terms and conditions printed on the reverse of all acknowledgments of orders and all invoices and also on all delivery notes. Camtrex contends that:
(1) It is common ground that the parties have traded with each other intermittently for in excess of 10 years.
(2) To place an order the Company would email or telephone Camtrex to enquire whether Camtrex had certain coils of steel available. Once the availability of coils had been confirmed, the Company would raise a purchase order and send it by email to Camtrex. The purchase orders contain no reference to any terms and conditions.
(3) It is Camtrex's standard procedure that when an order is received an Acknowledgment is sent by post to the customer along with Camtrex's standard terms and conditions (paragraph 13 of Ms Thomas's 2 nd witness statement). The Acknowledgment states on its front: "Our terms and conditions attached apply".
(4) Upon delivery of each order Camtrex provided a delivery note to the Company. The delivery notes had Camtrex's standard terms and conditions on the reverse.
(5) Once the order had been processed, invoices were raised in respect of each purchase order. Camtrex's terms and conditions are printed on the reverse of all invoices and a larger two-page version is sent with each invoice.
Camtrex contends that there can be no substantial doubt that in light of the supply process set out above and the long course of dealing between the Company and Camtrex, it is clear that those terms have been incorporated into the contracts for supply (each of which, it insisted, are separate from any other). Indeed, Mr Ashworth submitted, it would be "simply incredible" for the Company to assert that Camtrex's terms and conditions do not govern each contract for the steel supplied: insofar as the Company was to or does assert that the terms are not incorporated, such an assertion flies in the face of the contemporaneous documents and evidence and cannot be accepted even in the absence of cross-examination.
The Company, however, does not admit that these terms and conditions ever became incorporated into its contractual relations with Camtrex, and it maintains that some at least are clearly inapposite to the nature of the goods supplied. It contends that the terms and conditions on which Camtrex relies were not signed or...
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