Top Layers Interior Ltd v Azure Maritime Holdings Sa
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE FOSKETT,Mr Justice Foskett |
| Judgment Date | 30 November 2007 |
| Neutral Citation | [2007] EWHC 2844 (QB) |
| Docket Number | Case No: HQ0603045 |
| Court | Queen's Bench Division |
| Date | 30 November 2007 |
[2007] EWHC 2844 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN's BENCH DIVISION
Mr Justice Foskett
Case No: HQ0603045
Mr Peter Irvin (instructed by TLT Solicitors) for the Claimant/Respondent
Mr Luke Parsons QC and Mr Christopher Smith (instructed by Blake Lapthorn Tarlo Lyons Solicitors) for the Respondent/Appellant
Hearing date: 23 November 2007
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
There are before me two appeals launched by the Defendant in this action against orders made by Master Eyre, the first on 26 September and the second on 23 October. There are, strictly speaking, two defendants to the action, but the Second Defendant has played no direct part in the matters that fall to be considered and, for the convenience therefore, I will refer to the First Defendant, the defendant that is materially involved in the matters before me, as 'the Defendant'.
Permission to appeal was granted in respect of both orders by Wyn Williams J on 6 November. Permission to appeal against the first order had been refused by Gray J on 1 November, that decision and the reasons for it being communicated to the Defendant's solicitors by a letter from the Appeals Office dated 2 November. The first order made by Master Eyre made provision for an interim costs order in favour of the Claimant in the sum of £25,000, that sum to be paid by 4pm on 6 November. The net effect of the position following the decision of Gray J was that there was no stay of execution in relation to that order pending the Defendant's proposed application for reconsideration of Gray J's decision and, accordingly, an application for a stay of execution was issued. That application was listed for twenty minutes before Wyn Williams J on 6 November. In fact he had longer than twenty minutes available to him and, with the agreement of both parties, he reconsidered the permission application although he had not, as he made clear to the parties, pre-read the papers other than to prepare for the stay application. As I have indicated, he did indeed grant permission, but it is right to record that it was in appropriately and understandably guarded terms given the time he had to digest the volume of documentation and to appraise the oral arguments of each side.
Permission to appeal having been granted, it is common ground that my approach to the appeal is to consider the Master's decision by way of a review in accordance with the guidance of the Court of Appeal in Tanfern Ltd v Cameron-MacDonald and anr [2000] 1WLR 1311, 1317, paragraphs 30–33.
Summary of dispute
A wholly disproportionate amount of time and cost has already been expended on what is in essence a simple case.
The Claimant company engages, inter alia, in interior design. Its premises are based in Knightsbridge, London, although it has a workroom in South East London. One of its directors is Mr Alain Judd.
The Defendant is a company registered in the British Virgin Islands. Its UK postal address is 'c/o The Pacific Group of Companies' at an address in Mayfair, London. As I understand it, the Defendant's sole asset is the motor yacht 'The Lady K II' and its contents. It acquired the yacht in December 2004 with a view to refurbishing it before offering it for charter. It would seem that the person with the controlling interest in the venture that is 'The Lady K II' is Mr Achilleas Kallakis.
'The Lady K II' is a luxury yacht capable of taking eighteen guests and is normally manned by a crew of twenty two. It was originally built in 1961 and became known as 'The Princess Tanya'. It was refurbished in 1995 and then again after it was acquired by the Defendant. A measure of the luxury afforded on board can be deduced from the charter rate being charged in 2005, namely, that of $250,000 per week plus expenses. The brochure prepared with photographs taken in May 2005 demonstrates elegance and opulence.
It is not now in dispute that the Claimant company was instructed to act in connection with the soft furnishing refurbishment of 'The Lady K II'. I say 'now' because initially, within days of the letter before action being sent to the Defendant on the Claimant's behalf seeking recovery of the sum to which I will refer below, the Defendant issued proceedings against Mr Judd personally claiming £483,000 for alleged loss of charters arising from the breaches of contract now alleged in this action. It was subsequently accepted that those proceedings were misconceived and they have now been brought to an end.
However, as I have indicated, there is now no issue but that an agreement was entered into concerning the internal refurbishment of 'The Lady K II'. This agreement arose at about the same time as the Claimant agreed to do some work at the private home of Mr and Mrs Kallakis. They live in or near to Knightsbridge and it may well be that this is how the parties came into contact initially. At all events, the Claimant agreed to produce and then arrange for the fitting of the interior soft furnishings for the yacht. The work involved the supply by the Claimant of its services, to be charged at £1000 per week, and the provision of materials on certain specified terms. Agreement was reached as to which corporate entity the invoices for the various works (including those for Mr and Mrs Kallakis personally) should be directed.
According to a schedule prepared by the Defendant's advisers, invoices totalling £167,354.07 were received from the Claimant against which payments of £108,758.57 were made. Those invoices related both to the work the subject of this action and the work carried out for Mr and Mrs Kallakis personally. It seems common ground that in relation to the work carried out in respect of 'The Lady K II' the sum of £49,153.22 is outstanding, subject to the issues raised in these proceedings.
The claim made by the Claimant in these proceedings is indeed for £49,153.22 plus interest. The Claim Form was originally issued in the Central London County Court.
The case for the Defendant for not paying that sum is (a) that the quality of the work and materials supplied was sub-standard and (b) that time being of the essence of the contract, the interior soft furnishings were not finished in time. It is said that in consequence of the second of these factors it was impossible for the Defendant 'to obtain charters for the vessel for the 2005 season save for one three week period.' The 'season', according to the Defence, runs to 30 September, but its precise commencement date is less clear although it appears to start in May.
In relation to the allegations concerning the quality of the work done (which, according to the Defendant's case, had to be to 'a faultless standard'), the following particulars were given in the pleadings:
“(a) bedcovers were incomplete;
(b) roman blinds were poorly constructed to the extent that
(i) four of them fell down;
(ii) despite instructions that they should be blackout blinds, they let light in;
(c) there was a shortfall in the number of cushions for the beds and sofas;
(d) the curtains in the main living room were insecurely hung and fell down;
(e) deckchair cushions were the wrong size and had exposed Velcro;
(f) upholstery in the main bedroom didn't fit properly;
(g) the Alcantara on the walls were not satisfactorily attached – the staples holding it up were visible.
Many items were not properly finished, were incomplete or were poorly made; and were not to the specification agreed; further particulars will be supplied upon disclosure and exchange of expert reports.”
The Defendant's case in relation to the time for completion of the work is that everything had to be complete to enable the yacht to be shown at the Genoa Yacht Charter Show in May 2005, the pleaded commencement date being 4 May. In essence it is said that this show is vital to the prospect of a successful charter season because it is the largest annual gathering of charter brokers in Europe. They are the people who then promote the benefits of a particular craft to prospective charterers.
There is an unresolved issue about precisely when the Show started in 2005, but it is not in dispute that 'The Lady K II' was not on show at the Show. There is a major issue about whether time was 'of the essence' in the agreement between the Claimant and the Defendant and I will refer to that later. Suffice to say for present purposes, as I have already indicated, the Defendant's pleaded case in its Amended Defence and Counterclaim is that it was a fundamental term of the agreement that the work 'would be completed by no later than the beginning of May', the date 4 May being specified more than once in the pleadings.
It is common ground that the works were actually completed on or about 14 May 2005.
The consequences of the alleged sub-standard work and the alleged failure by the Claimant to complete the work by the specified date was (a) that a charterer (Mr Richard Johnson) decided, following an inspection of the yacht earlier in May, that he would not take up a charter due to commence for three weeks on 26 May and (b) that, with the exception of a three week charter in fact undertaken between 30 July and 20 August, no charters were obtained for the fifteen week period from 18 June to 30 September. Giving credit for the amount received for that three week charter, the total sum originally counterclaimed for the alleged breaches of contract was $3,000,000 (£1.932 million at the rates prevailing in May 2005).
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