Globe Motors Inc. and Others v Trw Lucas Varity Electric Steering Ltd and Another

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeJudge Mackie
Judgment Date23 Mar 2015
Neutral Citation[2015] EWHC 553 (Comm)
Docket NumberCase No: 2011 FOLIO 645

[2015] EWHC 553 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

LONDON MERCANTILE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

His Honour Judge Mackie QC

Case No: 2011 FOLIO 645

Between:
Globe Motors Inc (1)
Globe Motors — Portugal — Material Electrico Para a Industria Automovel Lda (2)
Safran Usa Inc (3)
Claimants
and
Trw Lucas Varity Electric Steering Limited (1)
Trw Limited (2)
Defendants

Mr Paul Lowenstein QC and Mr Rajesh Pillai (instructed by Baker & McKenzie) for the Claimants

Mr Paul Downes QC and Ms Emily Saunderson (instructed by Wragge Lawrence Graham & Co) for the Defendant

Hearing dates: 28 January 2015

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.

Judge Mackie QC:

1

This judgment deals with the limited exercise required by paragraph 465 of the main judgment ("the Judgment") 1 handed down on 11 November 2014:

"465: Having regard to these considerations, the impressions gained from looking at the various ways the claim is put forward, and all the matters mentioned in this section of the judgment and bearing in mind that the exercise is full of imponderables I am inclined to see the best measure of Globe's loss as being Pinto B subject to any adjustments and a significant discount to take account of the uncertainties and contingencies. It would not be fair to either party for me simply to take the figures as they stand and to apply a fairly random discount. The parties need to be able to explain their cases on Pinto B more coherently and to make submissions on the application of this proposed approach. I have already mentioned the unsatisfactory way in which this aspect emerged at the trial."

2

With my agreement the parties have filed written submissions and Globe has also put in a submission in reply. There has been no further evidence or application to admit it. I have been greatly assisted by a day of oral submissions. References below in bold are to paragraphs in the Judgment. This damages judgment must be read with the Judgment as, for the most part, I will not repeat what I have already said.

3

I remain of the view that Pinto B is the least unsatisfactory route to measure the damage suffered by Globe as a result of TRW's breach of contract. Before turning to how that route is taken there are some preliminary matters to resolve.

Fairness

4

TRW's further written submissions challenge the fairness of the approach which Globe took to quantum towards the end of the trial:

"The Defendant takes a fundamental objection to the Claimants being allowed to change their case in the way that they are attempting to do: in the course of closing submissions, without the new case having been foreshadowed in an amended Statement of Case, or in the witness evidence and without a fair opportunity to consider it and explore it in cross-examination with the Claimants' witnesses. This objection was taken in the course of closing argument."

5

TRW says that this leads to unfairness in the following ways:

a. The Defendants have been deprived of the opportunity of cross-examining Mr Keegan and Mr Pinto on the Pinto B methodology and whether this would ever have formed the basis for the price of the Globe Gen 2 motor.

b. The Pinto B methodology, based on the Porto 2003 Gen 1 BOM, cannot unambiguously be established on the documents without witness evidence to explain the other documents that are inconsistent with it.

c. The internally inconsistent methodology used in the Pinto B approach (using a 2003 Gen 1 BOM to arrive at the selling price and a 2005 Gen 1 BOM to calculate costs) has not been explored with the witnesses.

d. The deliberate decision to ambush the Defendants with the change of case, and not give notice of it at the earliest possible point is a further factor weighing against the Claimants being able to advance their case in this way.

6

Globe rejects these arguments. It points out that assessment of damages is a hypothetical counter-factual exercise. I add that the Pinto B approach is not invalidated simply because it is not how the exercise would have been carried out had the contract been complied with. It is more reliable than the competing methods and is the one chosen by TRW's own expert.

7

Globe says that, having decided these matters, this Court is now functus officio and so precluded from entertaining further argument on them. I disagree as I consider that the wording of the judgment left me free to revisit the issue if I thought, in the light of the further matters I wished to have dealt with, that allegations of unfairness were on reflection well founded.

8

Globe points out that TRW raised these objections on the last day of trial, (albeit having only received the final claim the night before). TRW then elected to proceed, having been given the opportunity by the Court to take another course if it preferred such as to address Globe's case at a later time in writing or to take some other approach. Globe points to this exchange:

" So what he is saying is not we are not ambushing, not we haven't held this back, what he is saying is effectively implicitly, yes, we did, but this is the sort of game that is being played in this case and I deny. Anyway, let's look at the material and see where it gets them.

Judge Mackie

I don't underestimate the strength of feeling between people at the end of a long case but my main concern is, not how it came about, but to ensure that to the extent to which you haven't had an opportunity to deal with it, you get that opportunity.

MR DOWNES: I will show

Judge Mackie

Are you able to deal with it, or do you want to deal with it in writing or what?

MR DOWNES: I am going to deal with it. I am going to say to your Lordship that it doesn't amount to a row of beans, particularly if one takes account of the way in which this has come in."

9

Mr Downes points out correctly that this passage in the transcript has to be seen in the context of other passages but in substance it records the position. I accept to a degree Mr Downes' point that it is no answer to suggest, as Mr Lowenstein does, that he had a chance to cross examine witnesses on the relevant material and did so. He could not do so effectively without knowing how the damages claim would later be formulated. However one reason for not seeking an adjournment or for not seeking to recall witnesses might have been an assessment that this was not going to advance TRW's case given the provenance of the Pinto B approach and the lack of utility in cross examining further about matters of detail arising many years ago when the witnesses would be unlikely to have useful or reliable live recollection. There can be few points in this area of the case which, after more than thirty days of evidence, could not be as well made on the documents.

10

The issues and details had been debated over a very long space of time and in truth each party knew exactly what the other was claiming and was able to deal with it. The trial was very long and there was a considerable break in the middle. Given the unsatisfactory situation set out in the Judgment to which both sides had contributed, I saw nothing unfair in the way the issue turned out. Furthermore there was no application, following the Judgment, for further evidence to be heard.

11

Although I reject the claim that there has been any relevant unfairness to TRW, the result of the tactical manoeuvring by both sides was that Pinto B did not receive the same evidential scrutiny which it would have attracted if pursued by Globe from the outset. While the component parts of Pinto B were often the subject of cross examination the claim was never examined head on. That necessarily adds to the caution I should apply when assessing damages on the Pinto B basis put forward by Globe late and without assistance from any expert, other than limited written validation of the underlying method by Mr Fisher. That caution will be reflected in the discount discussed below.

12

In their written submissions both sides have taken the opportunity to debate at greater length than they did in their closing trial submissions matters I have already taken into account in reaching the conclusions in the Judgment. In the interests of proportionality I will not try to summarise and decide the very detailed points now being made.

13

I remind the parties of the evidential difficulties and realities of a very old and very detailed case like this which I mentioned at the outset of the Judgment. As the parties have been regularly warned since the start of this case, there is necessarily imprecision and the making of broad assumptions in the damages exercise which must make the end result approximate. That is one of the many reasons this case should have settled long ago.

Assessment

14

Assessing the amount of the damages involves considering price, volumes of Products sold and cost – see 424. Globe has gathered together its alternative claims and the figures they produce in Appendix Q.

15

The volumes are all TRW's DEAS Gen 2 purchases since June 2005 — see 425. TRW puts this at 3,036,843 motors over 10 years and Globe agrees.

16

The costs are those put forward by Mr Pinto in evidence which at 426 I said that I accepted "broadly". Mr Downes says that this evidence was not unchallenged at trial in respects which his submission sets out. The objections to the evidence about costs, not part of general points addressed elsewhere, were claims that Mr Pinto had failed to take account of efficiency savings, that there were inexplicable differences in tooling and other aspects to the calculations, that he may have included in his costs calculations impermissible raw material cost movements, that he was heavily reliant on other...

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