New York Laser Clinic Ltd v Naturastudios Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Cavanagh |
| Judgment Date | 30 October 2019 |
| Neutral Citation | [2019] EWHC 2892 (QB) |
| Date | 30 October 2019 |
| Court | Queen's Bench Division |
| Docket Number | Case No: TLQ18/0230 |
[2019] EWHC 2892 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Cavanagh
Case No: TLQ18/0230
Juliette Levy (instructed by Cerulean Law) for the Claimant
No appearance or representation for the Defendant
Hearing dates:8, 10, 11, and 15 October 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.
INTRODUCTION
This is a claim by the Claimant against the Defendant for damages for breach of collateral warranty, and/or negligent misstatement, arising out of statements made on behalf of the Defendant which the Claimant alleges induced the Claimant to take delivery of six laser diode devices, known as grade IV Magma Diode Laser (“Magma Lasers”), for use in the Claimant's aesthetic laser hair removal business. The Claimant contends that the Magma Lasers did not live up to the assertions made by the Defendant's representatives about their performance and benefits, and, indeed, had to be withdrawn from service by the Claimant. In the alternative, if, contrary to the Claimant's primary case, the Magma Lasers were fit for purpose, the Claimant seeks damages for negligence on the part of the Defendant in the provision of training in the use of the Magma Laser to the Claimant's staff.
The Claimant company operates three clinics in London which provide non-invasive, aesthetic, procedures to the Claimant's clients. Between February 2015 and November 2016, the Claimant also operated a fourth clinic, in Reading. The shares in the Claimant are owned by Mrs Donna Talfourd-Cook, her husband Mr James Talfourd-Cook, and Mrs Talfourd-Cook's brother, Mr Danny Willingham. All three are directors. Mrs Talfourd-Cook and Mr Willingham founded the business and Mrs Talfourd-Cook runs the business on a day to day basis. Mr Talfourd-Cook, who is a Chartered Accountant, is in charge of financial and procurement matters for the business. At all material times, the great bulk, at least 75%, of the income received by the business was derived from the provision of laser hair removal services to clients. As its name suggests, this consists of making use of laser technology to remove unwanted hair from parts of a person's body.
The Defendant company, which is incorporated in Scotland, was, at the relevant time, involved in the supply of devices, including diode lasers, to aesthetic clinics, and in the provision of training in how to use them. These lasers are used to carry out laser hair removal. The chief executive and sole shareholder of the Defendant is Mr James Anderson. The national sales manager for the UK is Mr Simon Ringer.
The Claimant was represented by Ms Juliette Levy. I am grateful to her for her very helpful submissions, both oral and in writing. As I will explain, the Defendant did not appear and was not represented.
I will set out the relevant facts in greater detail later in this judgment. In brief, however, a meeting took place on 11 September 2015 at the Claimant's Baker Street premises, at which Mr Ringer encouraged Mr and Mrs Talfourd-Cook to consider purchasing a number of Magma Lasers for the Claimant's business. The Magma Laser were made by an Israeli company, Formatk, and the Defendant was (at the time) the sole UK distributor. A further meeting took place on 24 September 2015 at the Reading Clinic. On this occasion, Mr Ringer and a colleague, Kevin Williams, demonstrated a Magma Laser.
The Claimants say that the Defendant's representatives made a number of representations about the performance and results to be expected from Magma Lasers and that these, along with similar statements that were set out in a brochure which was handed to Mrs Talfourd-Cook by Mr Ringer on 11 September 2015, induced them to decide to buy six Magma Lasers for the clinics. These were bought via hire purchase, and so the contracts for purchase of the Magma Lasers were between the Defendant and the hire purchase companies, not between the Defendant and the Claimant.
I will set out the nature of the representations in due course, but it is common ground that the Talfourd-Cooks were told that the Magma Lasers can be used on those with an active tan – as I will explain, this was something which, if it were true, would mean that Magma Lasers were a major improvement upon existing lasers. The Claimant says, but the Defendant disputes, that a number of other representations were made, including that the Magma Lasers could be used on all skin types, including type VI (the darkest skin type), that they were fast (full legs could be treated in 20 minutes), effective (up to 86% hair removal could be achieved after only three treatments), safe (it was impossible to burn a client through the use of a Magma Laser), and that the devices were affordable (as they were competitively priced with a lifetime of 3 million pulses).
The Claimants further contend that each of the representations was false. The six Magma Lasers were delivered to the Claimant and were used for a number of months in 2016 (and, to a very small extent, into early 2017). The Claimants say that they were not safe to use, especially on those with darker skin types or with those with active tans (and, indeed, several clients suffered burns); also, the procedures took much longer than the Defendant had claimed; the procedures were not effective; and the devices were not as cheap to run as had been promised.
The Claimant's primary case, therefore, is that the Magma Lasers were not fit to be used to perform laser hair removal safely. The Claimant contends that the statements by the Defendant's representatives about the benefits of using Magma Lasers were exaggerated and false (though the Claimant does not allege, and does not need to prove, that the Defendant deliberately set out to mislead the Claimant). The Defendant, on the other hand, has pleaded that the difficulties encountered by the Claimant were the result of a failure by the Claimant's clinicians to use the Magma Lasers properly. The Defendant pleads that this was principally the result of a decision by Mrs Talfourd-Cook to disregard the guidance that the Defendant had given for use of the Magma Laser, and to make use of protocols of her own devising which the Defendant said meant that the Lasers were not used properly.
As I have said, the Claimant arranged for the purchase of the Magma Lasers by hire purchase companies on their behalf. It is for this reason that the Claimant has not brought a standard breach of contract claim against the Defendant for delivery of sub-standard equipment. When the proceedings herein were commenced, the Claimant's primary claim was one of negligent misstatement. Subsequently, the Claim Form was amended to plead breach of collateral warranty. This new claim is now the primary cause of action that is relied upon by the Claimant. This is because the Claimant says that, if it succeeds with its breach of collateral warranty claim, the Claimant is entitled to recover damages for loss of profits, calculated by reference to the profits that would have been earned if the Magma Lasers had performed in accordance with the warranties. The sum claimed under this head, in the Claimant's skeleton argument, is £3,876,830. The Claimant acknowledges that, if it succeeds only on the basis of negligent misstatement, the measure of its loss will be significantly smaller, consisting of the losses resulting from entering into the hire purchase commitments and the losses resulting from having to mollify unhappy clients, by offering free treatments and refunds, and other wasted expenditure. The sums claimed under these heads are £401,609.69, in total.
In the alternative, but very much as a subsidiary argument, the Claimant contends that, if, contrary to its primary case, the Magma Lasers were fit for their purpose, the Defendant was liable in negligence because the fault lay with the inadequate training that the Defendant's representatives had carried out. If this claim were to succeed, the measure of damages would be the same as for negligent misstatement.
The structure of this judgment
In this judgment, I will deal with the issues in the following order:
i) The procedural history;
ii) The law relating to a claim for collateral warranty;
iii) The law relating to a claim for negligent misstatement;
iv) The law relating to a claim for negligence;
v) The law relating to remedy: in particular, in a collateral warranty claim such as this, can a Claimant recover damages for loss of anticipated profit?; and
vi) Findings of fact and conclusions.
THE PROCEDURAL HISTORY
The Claim Form in these proceedings was issued on 21 December 2015. At that point, as I have said, the main claim was for negligent misstatement, with a subsidiary claim for negligence in relation to the provision of training. In late 2018, the Claimant applied for leave to amend the Claim Form so as to add the claim for breach of collateral warranty. Permission to amend was granted by Mr Jason Coppel QC, sitting as a Deputy High Court Judge, on 21 December 2018. The Defendant appealed against this decision to the Court of Appeal but, on 13 February 2019, the Court of Appeal dismissed the Defendant's appeal, although the Court granted the Defendant's request for a postponement of the trial. In the meantime, on 21 January 2019, the Defendant filed an Amended Defence.
A case management hearing took place on 19 July 2019 before Ms Leigh-Ann Mulcahy QC, sitting as a Deputy High Court Judge. The Defendant played a full part in this hearing. A further case management hearing took place before Ms Mulcahy QC, on...
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