Errington v David Brown Gear Systems Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Edwards-Stuart |
| Judgment Date | 06 October 2014 |
| Neutral Citation | [2014] EWHC 4255 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-13-417 |
| Date | 06 October 2014 |
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Edwards-Stuart
Mr Tom Owen (instructed by Dentons) appeared on behalf of the Claimant
Mr Richard Leiper (instructed by Bond Dickinson) appeared on behalf of the Defendant
This is an application by the first and second defendants, who are effectively one party for these purposes, to strike out certain parts of the Particulars of Claim relating to the loss of future business. The claimants were represented before me by Mr Tom Owen who was instructed by Dentons and the defendants were represented by Mr Richard Leiper instructed by Bond Dickinson.
The approach to be applied on an application such as this is not in doubt and, subject to one point, is conveniently summarised in the judgment of Stuart-Smith J in Edward Iliffe & Ors v Feltham Construction. At paragraph 2 he said this:
"The principles are very well known and do not require to be set out in detail here. For the claimants to succeed they must establish that the defendant had no real prospect of successfully defending the claim and that there is no other compelling reason why their case should be disposed of at a trial. The word 'real' has been much analysed. The defendant must have some prospect of a chance of success which must not be so slim as to be false, fanciful or imaginary. Put another way, the defendant's case must be more than merely arguable and must carry some degree of conviction. Evidence is admissible on the application and the court should have regard for the possibility that further evidence would be available if the case went to trial".
And at paragraph 3:
"The court's powers are not limited to granting or refusing permission to defend where the defendant's case may be described as real but seemed improbable, the court can make an order permitting it to defend the action conditional on it bringing a sum of money into court or taking some other specified stand in relation to this defence. The court hearing the application also has the power to give further directions about the merit of the case pursuant to CPR 24.6(b).
The facts very briefly stated are as follows. The claimant's predecessors in title, because this is a claim made by assignment, were a company called Karen Engineering Limited, whom I shall refer as KEL, who manufactured metal components. The ones that are the subject matter of this claim are torsion bars. In late 2007, the claimants, KEL, received an enquiry from a company called Ferrabyrne for the supply of certain torsion bars that were then to be incorporated into rolling stock. For that to happen, the torsion bars needed to be subjected to a particular type of heat treatment to very closely specified requirements. That work, that is to say the heat treatment, was ultimately subcontracted to the defendants. There is a dispute between the claimants and the defendants as to whether the type of treatment to be applied to the torsion bars was merely to the surface or edge or whether it was to the entirety of the torsion bars. The claimants claim it is the latter, the defendants say the former. In any event, so far as the ultimate client, Ferrabyrne, was concerned, their requirement was that the torsion bars should be heat treated throughout. When it later emerged, after many bars had been supplied, that they had not been treated in this way and this was disclosed to Ferrabyrne by KEL, the bars that had been supplied had to be withdrawn from circulation and KEL had to provide replacement bars at its own cost under conditions of some urgency.
In the event, Ferrabyrne did not pay the full price for those replacement bars, presumably contending that it had other losses that it wished to set off against them, and it placed no further orders over and above those it had already placed in January and April 2008. The claim that is the subject of this application is the claimant's claim for loss of future profits from orders that it contends that Ferrabyrne would have placed over the next few years. The total sum claimed is £886,900, made up of the alleged profit on six types of torsion bar, and the claim was based on assumed quantities, quoted prices and the profit KEL would have made on each type of bar. The claim went on to say that Ferrabyrne also asked KEL to quote for the manufacture of lever arms for the supplied torsion bars and each torsion bar required two lever arms.
The application to strike out this claim for the loss of future business is made broadly on three grounds. First, that the claim is so lacking in conviction that there is no real prospect of the claimants making out a case that the defendant's breach of contract caused this loss of future orders from Ferrabyrne. Second, the losses claimed are, in any event, too remote. The defendants say it hinges on an alleged telephone conversation between a Dr Clark of the defendants and someone from the claimants and that conversation is itself denied. Further, there is inconsistency in the claimant's case as to whether it was Mr Errington senior or Mr Errington junior who, in fact, made that crucial initial telephone call. Third, the claim for the loss of future profits does not fall within the terms of the Deed of Assignment dated 24 September 2010 by which the liquidator of KEL assigned certain claims to the current claimants.
I will take these points in reverse order and I will start with the assignment. As I have said, the Deed of Assignment was made on 24 September 2010. Under the heading 'background', the Deed says this:
"The Assignor has a claim against David Brown Engineering Limited, a company incorporated and registered in England and Wales with company number 00762476 whose registered office is at Park Road, Lockwood, Huddersfield HD4 5DD ('DBEL') and against Ferrabyrne Limited, a company incorporated and registered in England and Wales with company number 00971894 whose registered office is at Fort Road Industrial Estate, Wick, Little Hampton, West Sussex BN17 7QY ('FL') brief details of which are set out in the Schedule to this deed ('the Claim')."
So, although what is assigned or what was to be assigned is defined as "the Claim", it is quite clear that it embraces at least two claims, one against the defendants and the other against Ferrabyrne.
The schedule to the Deed describes the claim in these terms. (1) between October 2007 and June 2009, Ferrabyrne ordered parts from the assignor which, among other things, Ferrabyrne required to be heat treated to 42–44 RC (the parts). (2) the assignor contracted the defendants to supply the parts to the assignor en route to being supplied to Ferrabyrne. The defendants supplied the parts to go with the certificates to the assignor in which the defendants confirmed that the parts had been heat treated to 42–44 RC. (3) between October 2007 and June 2009, the assignor delivered the parts to Ferrabyrne. Ferrabyrne subsequently alleged that contrary to the information stated in the certificates supplied by the defendants, the parts had not been suitably heat treated and asked the assignor to supply replacements. (4) the assignor supplied replacements to Ferrabyrne and Ferrabyrne refused to pay the assignor in full for the replacements. By reason of Ferrabyrne's refusal to pay, the assignor has suffered loss and damage. Alternatively, the assignor has a claim against Ferrabyrne in debt. (5) the assignor has a claim against the defendants and against Ferrabyrne in respect of the matters set out at paragraphs (1) to (5) above. I have modified the strict terms of the schedule by substituting the parties' names as they have now been referred to. It is also very clear that the very last sentence should refer to paragraphs (1) to (4) above and not paragraphs (1) to (5) above.
In my judgment, it is clear from this...
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