Hamad M. Aldrees & Partners v Rotex Europe Ltd (Company Number 04307924)
| Jurisdiction | England & Wales |
| Judge | Sir Antony Edwards-Stuart |
| Judgment Date | 14 March 2019 |
| Neutral Citation | [2019] EWHC 526 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2016-000101 |
| Date | 14 March 2019 |
[2019] EWHC 526 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Sir Antony Edwards-Stuart
Case No: HT-2016-000101
Mr Graham Chapman QC & Mr Tim Chelmick (instructed by Pinsent Mason LLP) for the Claimant
Mr Piers Stansfield QC and Mr Nicholas Bacon QC (instructed by DTM Legal LLP) for the Defendant
Hearing dates: 15 th February 2019
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.
Insert Judge title and name here:
The matters covered by this judgment
This is a judgment on costs and other consequential matters arising out of a judgment that was circulated in draft on 11 February 2019.
This case, and particularly the production of this judgment, has had a chequered history. The trial took place in February/March 2018, but unfortunately following the service of written final submissions, leading Counsel for Rotex was taken ill and was unable to take any further part in the case. Consequently Rotex had to instruct fresh leading Counsel for the purposes of presenting Rotex's oral closing submissions.
As a result of this, the oral closing submissions did not take place until Friday, 22 June 2018. The first draft of the judgment was circulated to the parties, on the usual terms, on 16 October 2018. In that judgment I concluded that, whilst Aldrees had failed to prove its claim for some £38 million, it did suffer losses as a result of the breach of contract by Rotex that were far, far smaller than the loss claimed. I concluded that these actual losses were subsumed in the claim as advanced in the pleadings and at the trial.
However, since this was not the way that the case had been put by Aldrees, even in the alternative, I considered that Rotex was entitled to be heard, not only on the new way of formulating the claim, but also whether it would be fair to Rotex to permit Aldrees to recover damages on this basis at such a late stage in the proceedings.
Unfortunately, it was not possible to arrange a further hearing until 11 January 2019. I heard counsel for the parties on that day, following exchanges of written submissions by both parties, and then circulated a revised draft judgment on 11 February 2019. In that judgment, I concluded that it would not be unfair to Rotex to permit Aldrees to recover damages on the reduced basis but I decided that it would not be fair, or practicable having regard to the state of the evidence, to permit Aldrees to recover any damages in respect of the additional costs of having to use synthetic 170 μm meshes for the bottom decks (which formed part of the new way of putting the claim).
However, at the hearing on 11 January Aldrees raised a further point in relation to the application of a 15% uplift to certain production figures that I had adopted for the purposes of the claim. I felt that this point had not been properly explored at the hearing on 11 January and so I reserved it for further argument at the hearing that had been provisionally fixed for 15 February 2019 for the determination of questions relating to interest and costs.
This judgment therefore concerns:
(1) The 15% uplift;
(2) Interest;
(3) Costs; and
(4) An application by Aldrees for permission to appeal.
The 15% uplift
The point arises in this way. I found that the effect of the off-centre feed to the machines and the need to fit 170 μm meshes to the bottom decks resulted in a 15% loss of product during production. I held that Aldrees was entitled to recover damages for this loss from the date when each machine was brought into commercial production until November 2014.
However, Mr Chapman, who appeared as before with Mr Tim Chelmick for Aldrees, submits that a similar uplift should be added in respect of the period of delay before each machine was brought into production because, if there had been no breach of contract, the machines would have produced a higher yield during that period.
Mr Stansfield, who appeared with Mr Nicholas Bacon QC, for Rotex, submitted that it was inappropriate to make any further changes to the draft judgment that went beyond the way in which the claim had been formulated in my first draft of the judgment. The purpose of the further hearing had been to give Rotex an opportunity to address the new way of putting the claim and to make any submissions about whether or not it would be fair to allow it. It was not the intention, submitted Mr Stansfield, to give Aldrees a yet further opportunity to embellish the claim or to advance a new one.
Mr Chapman submitted that this was no more than a variant of the way in which the claim had been formulated and that Aldrees was doing nothing more than achieving logical consistency.
On this point, I prefer the submissions of Mr Stansfield. The court has already shown considerable indulgence to Aldrees by reformulating part of its claim in a way that it considered to be fair: the exercise was not intended to be a springboard for subsequent development of that new way of formulating a claim.
However, Mr Stansfield also had a further point on the merits. He submitted (correctly) that the loss had been assessed by the court on the basis of the figures that had been put forward by Mr Turk, namely that during 2014 each machine had been capable of producing 30–40 tph of product, which corresponded to a maximum throughput of about 50 tph. 50 tph was the figure that Rotex had given in its quotation as the throughput that the machines could achieve.
However, to increase the figures taken by Mr Turk by 15% would mean that the upper end of the range, in terms of assessed throughput, would become significantly greater than 50 tph — the level of throughput promised by Rotex. Accordingly, submitted Mr Stansfield, this would have the effect of compensating Aldrees by reference to a higher figure for throughput than the figure which Rotex had promised.
Mr Chapman submitted that Mr Stansfield was simply re-presenting the argument that I had rejected at paragraph 400 of the draft judgment. Whilst there is some force in this submission, I consider that it does not really dispose of Mr Stansfield's point. I consider that, if the matter was being approached afresh, it might be possible to adjust the figures so as to remove the anomaly identified by Mr Stansfield: but in my view this is neither the time nor the place to do it. The conclusions that I reached in the draft judgment should not now be the subject of a minute analysis and possible consequent recalculation (for which neither party is contending – beyond the straight 15% uplift sought by Aldrees). It may be that the approach which I have adopted has slightly underestimated the loss sustained by Aldrees; but I am quite satisfied that to adopt the proposal suggested by Mr Chapman would result in an overestimate of the loss. In these circumstances, I consider that I should accept Mr Stansfield's submissions and leave the figures as they are.
Interest
The rival contentions of the parties are some way apart. Aldrees contends that it should have interest at an overall rate of 5%, whereas Rotex contends that the rate should be 3%.
I was referred to the decision of Marcus Smith J in Britned Developments v ABB [2018] EWHC all 2913 (Ch). At paragraphs 16 and 17 he said this (omitting the references in the footnotes):
“16. Section 35A of the Senior Courts Act 1981 provides that this court may include in any sum for which judgment is given “simple interest, at such rate as the court thinks fit…on all or any part of the debt or damages in respect of which judgment is given…for all or any part of the period between the date when the cause of action arose and…the date of the judgment”.
17. Section 35A thus confers a broad discretion on the court. This discretion has been considered in a number of cases, and the following propositions emerge:
(1) An award of interest is not punitive and the use to which the party paying interest would have put the funds (and the returns that such party may or may not have made) is irrelevant.
(2) There is a convention that at least the starting point for the award of simple interest (at least where the award is in £ sterling) is Bank of England base rate plus 1%. However, where the award is in another currency, like US$, the US$ Prime Rate plus 1% will be used as the starting point.
(3) This conventional rate will, usually, be less than what a claimant would have to pay as a borrower, but more than a claimant could earn as a lender. The appropriate benchmark, however, is not to regard the claimant as the lender of monies (inferentially, to the defendant), but rather as having had
to borrow money in order to fund the loss that has been vindicated by the award of damages in the judgment. It is this that informs the court's departure from the conventional starting point: the overall aim is to determine a fair rate to compensate the claimant.
(4) When considering the departure from the conventional starting point, a broad brush approach must be taken. In Fiona Trust, Andrew Smith J put the point as follows:
“A “broad brush” is taken to determine what rate of interest is just and appropriate: it would be neither practical nor proportionate (even in a case involving as large sums as these) to attempt a minute assessment of what will precisely compensate the recipient. In particular, the courts do not have regard to the rate at which a particular recipient of compensation might have borrowed funds. This policy is adopted in order to control the extent of the inquiry to ascertain an...
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