Hamad M. Aldrees & Partners v Rotex Europe Ltd (Company Number 0437924)
| Jurisdiction | England & Wales |
| Judge | Sir Antony Edwards-Stuart |
| Judgment Date | 13 March 2019 |
| Neutral Citation | [2019] EWHC 574 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2016-000101 |
| Date | 13 March 2019 |
[2019] EWHC 574 (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 Masons LLP) for the Claimant
Mr Simon Hargreaves QC, Mr Piers Stansfield QC and Miss Jennie Wild, (instructed by DTM Legal LLP) for the Defendant
Hearing dates: 27 th, 28 th February, 1 st, 5 th – 8 th, 12 th – 14 th March, 22 nd June 2018 (and further submissions on 26 th, 28 th June 2018)
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.
Introduction
This is a case about machines for the screening and sorting of silica sand. The Claimant, Hamad M Aldrees & Partners (“Aldrees”), is a company registered in the Kingdom of Saudi Arabia which specialises, amongst other things, in the business of extracting, sorting and trading in silica sand. It sells the sorted sand to manufacturers, particularly those who manufacture float glass.
The dispute is about the performance of five 1 machines which Aldrees purchased from the Defendant (“Rotex”), which manufactures and supplies mineral separating machines for sorting raw materials, such as sand. Aldrees complains that right from the outset the machines were not capable of achieving the throughput stated in Rotex's quotation, or anything like it. Apart from one minor point, Rotex disputes the claim in its entirety: put very simplistically, Rotex's case is that the sand used by Aldrees as the feed material was very different from that which it had sent to Rotex for testing and that, in addition, Aldrees required the machines to produce a product to a specification which was tighter than that which it had given to Rotex.
However, Rotex accepts that the machines which it supplied did not accord with the description given in its quotation in that the meshes for the bottom screens were made of a thicker wire than that specified, with the result that the total aperture space of the mesh was much lower than it should have been. Unfortunately, this error was not discovered until about four years after Aldrees initially attempted to put the machines into production. However, even though the error was not discovered as soon as it should have been, Rotex says that it had no effect because, for different reasons, the relevant meshes were changed during commissioning and prior to commercial production.
Although the claim made by Aldrees is for nearly £40 million, it has been unable to access or produce its production records for the first year or so, with the result that conclusions about the actual performance of the machines during that period have to be based largely on inferences drawn from the contents of contemporaneous documents.
Although Aldrees has throughout presented this as a straightforward case, in my view it is nothing of the sort. Rotex's opening submissions ran to about 200 pages and its closing submissions were even longer. The closing submissions by Aldrees ran to 115 pages, with a further 35 pages of Reply Closing Submissions. These were followed by further submissions of varying length from both sides. In order to deliver this judgment without undue delay and to keep it to a manageable length, I do not propose to deal with every point that has been raised but only those that I regard as necessary in order to decide the case. For the same reason, I have also not addressed every issue set out in the list of agreed issues.
At the trial Aldrees was represented by Mr Graham Chapman QC and Mr Tim Chelmick, instructed by Pinsent Masons LLP, and Rotex was represented by Mr Simon Hargreaves QC and Miss Jennie Wild, instructed by DTM Legal LLP. But unfortunately, after the submission of written Closing Submissions, Mr Hargreaves was unable to represent Rotex any longer owing to illness. Fortunately, Mr Piers Stansfield QC was able to take his place and made the oral closing submissions on behalf of Rotex. This inevitably resulted in some delay with the result that the oral closing submissions did not take place until 22 June 2018, over three months after the conclusion of the evidence. The court is very grateful to all counsel and solicitors for their assistance, but particularly to Mr Stansfield for mastering an exceptionally complicated brief in a very short time.
An outline of the case
Before I go into the details, it may be convenient to start with a brief outline of the dispute.
In early 2010 Aldrees was making enquiries about the purchase of new machines for sorting sand which it extracted from its open cast mine in the desert. The machines were required to produce silica sand with a particle size of between 100 μm and 500 μm, containing no more than 2% of product outside that specification. In addition, Aldrees wanted these machines to handle a throughput of 50 tph (tonnes per hour), or alternatively 66 tph: there is a dispute about the promised feed rate.
Aldrees was put in touch with Rotex to whom in due course it sent a sample of the sand which formed its feedstock for Rotex to analyse. The person who carried out the analysis at Rotex was Mr Neil Smith. Mr Smith prepared an initial quotation for three machines, which was sent to Aldrees on 22 April 2010.
Further discussions followed, during which the number of machines increased to five, although one was intended to process limestone, and finally agreement was reached. There is an important issue about when the contract was concluded and, therefore, whether or not it incorporated Rotex's general Terms and Conditions.
The machines were delivered the following year, but Aldrees was not in a position to install them until about September 2012. Mr Smith visited Aldrees in June 2013 with a view to commissioning the machines, but there is some uncertainty about what was achieved during this visit. At any rate, thereafter Aldrees attempted to put the machines into production, but without success.
Mr Smith paid another visit to Aldrees in December 2013 and, by the end of February 2014, Aldrees had put two of the machines into commercial production following various modifications that had been recommended by Rotex during the previous few weeks or so, including changing the bottom meshes.
There is a crucial issue about the output of these machines during the course of the next nine months. This is because Aldrees has been unable to produce any production records for that period (to which it says it does not have access), and so the only contemporaneous written evidence about the performance of the machines consists of notes in the minutes of the weekly meetings of Aldrees' directors, together with two e-mails in which its production manager, Mr Mustafa Turk, recorded that the machines were capable of producing 30–40 tph. An output of 40 tph equates to a feed rate of about 50 tph, which is the throughput which, according to Rotex, it told Aldrees that each machine could achieve. A letter to Rotex written by locally instructed lawyers in December 2014 complained about the supply and quality of meshes, but said nothing about any underperformance of the machines.
It is Aldrees' case that during this period the machines did not achieve a throughput of 50 tph, or anything like it, and that they never achieved a throughput of more than about 20–25 tph at any time subsequently. It therefore claims damages for misrepresentation and breach of contract. The claim is for loss of profit over the ten year life of the machines in a sum approaching £40 million.
In July and August 2017 experts from each party visited the Aldrees site. Aldrees' expert, Professor Lieberwirth, carried out tests on the machines. Before his visit arrangements had been made for screen meshes to be sent to Aldrees corresponding to the configuration set out in Rotex's quotation, so that one machine could be tested in a state that was as near as possible to that in which it had been delivered.
However, as Professor Lieberwirth discovered following his visit, both the bottom screen meshes with which the machines had been originally fitted and those meshes sent to Aldrees for his tests, were not the meshes described in the quotation. The bottom meshes actually supplied were made of much thicker wire, which significantly reduced the overall area of the apertures. An unfortunate consequence of this was that Professor Lieberwirth's tests were devised and conducted in the erroneous belief that he was testing the relevant machine with the mesh configuration described in Rotex's quotation.
Rotex's expert, Mr Olmen, did not carry out any tests on the machines on site, although he analysed the feed and the product that they were producing, but instead arranged for further tests to be carried out in Rotex's laboratory using “replicated” sand; that is to say, sand taken from stock and sized to correspond with the feedstock used by Aldrees.
It was not until a few months before the trial that Rotex accepted that the wrong bottom meshes had been supplied in the first place, but it asserts that this made little difference because different bottom meshes were fitted in January/February 2014, prior to the start of commercial production with the first two machines.
The principal witnesses
Mr Fahad Aldrees
Mr Fahad Aldrees is the Chief Executive Officer of the family business set up by his father. He was appointed CEO in April 2009. Mr Aldrees is obviously an intelligent man; he gave his evidence in English, in which he is fluent — although once or twice,...
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