Wittmann (UK) Ltd v Willdav Engineering Sa
| Jurisdiction | England & Wales |
| Judge | Lord Justice Buxton,Lord Justice Ward,Lord Justice Moore-Bick |
| Judgment Date | 31 July 2007 |
| Neutral Citation | [2007] EWCA Civ 824 |
| Docket Number | Case No: A3/2006/2025 |
| Date | 2007 |
| Court | Court of Appeal (Civil Division) |
[2007] EWCA Civ 824
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BIRMINGHAM DISTRICT REGISTRY
(MERCANTILE LIST)
Her Honour Judge Alton
4BM40054
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Ward
Lord Justice Buxton and
Lord Justice Moore-Bick
Case No: A3/2006/2025
Mr. Andrew Charman (instructed by HBJ Gateley Wareing LLP) for the appellant
Mr. Richard Wilson Q.C. and Mr. Simon Sugar (instructed by Tollers) for the respondent
Hearing dates: 11 th June 2007
Judgement
Background
This an appeal by the defendant, Willdav Engineering S.A. (“Willdav”), against an order of Her Honour Judge Alton giving judgment in favour of the claimant, Wittmann (UK) Ltd (“Wittmann”), for the sum of £405,255 and interest under a guarantee entered into by Willdav in August 2002 in respect of the price of certain goods sold by Wittmann to a company called Automold Ltd.
Wittmann carries on business as a supplier of process equipment. For some years prior to the events with which this appeal is concerned it had supplied equipment for use in manufacturing parts for motor vehicles to Automold, a subsidiary of Latimer Automotive Group Ltd which was itself owned by Willdav, a Swiss company. As a result of their dealings in the past Wittmann had become aware that Automold generally obtained financing of one kind or another for individual purchases. On many occasions at its request Wittmann had invoiced a finance house for goods supplied to Automold, although on some occasions it had invoiced Automold itself and, as far as one can tell, received payment direct from that company.
In December 2001 Automold asked Wittmann to provide a quotation for the supply of certain equipment, the full technical description of which was set out in a document entitled 'Cell Specification and Request for Quotation'. Following discussions between the parties an agreement was reached for the purchase of equipment identified in five purchase orders numbered P013529, P013612, P013613, P013614 and P013615 for shipment to Automold's wholly-owned subsidiary, Automold of America Inc., at Auburn Hills, Michigan. There was some correspondence between the parties relating to the terms of the contract, but it is unnecessary to refer to it because it was accepted before us that the contract was made on Wittmann's standard terms and conditions. The only terms which it is necessary to mention at this stage are those relating to payment which provided that 90% of the purchase price should be paid 30 days after delivery in Auburn Hills and the balance at a specified time thereafter.
In the course of the discussions Automold had made it clear to Wittmann's managing director, Mr. Barry Hill, that it intended to obtain finance to enable it to pay for the goods, but as time passed it became apparent that satisfactory arrangements had not been put in place. By August 2002 Wittmann had goods ready for shipment, but it was unwilling to start making delivery until Automold had made the necessary arrangements to ensure that payment would be made in due course. In order to persuade Wittmann to begin shipment Automold arranged for Willdav as its ultimate parent company to guarantee payment of the price. At the same time Wittmann agreed to vary the terms of payment so that 75% of the price was to be paid by 27 th November 2002 and the remaining 25% on or before 1 st September 2003 with interest at 10% per annum until payment.
The Guarantee
On 21 st August 2002 Willdav executed a guarantee in favour of Wittmann in the following terms:
“ 1 Guarantee
In consideration of Wittmann agreeing to deliver goods at the order of Automold Ltd …. .(“the Company”) in advance of the date upon which full payment has been made for such goods by the Company, the Guarantor, as primary obligor, hereby unconditionally and irrevocably guarantees to Wittmann, the due payment and discharge by the Company of all the Company's indebtedness and other liabilities to Wittmann, as detailed in the pro forma invoices attached hereto (which for the avoidance of doubt show the total indebtedness in respect of the Order to be £1,518,584.00 …. .which shall be payable by the Company to Wittmann as to £1,138,938 on or before 27 th November 2002 and as to any balance outstanding thereon on or before 1 st September 2003 together with all interest (at the rate of 10% per annum), charges and expenses payable by the Company to Wittmann on any account whatsoever relating to the goods referred to in such invoices (the 'Indebtedness') and agrees to indemnify Wittmann on demand against any directly attributable losses (but not consequential loss) and any reasonable and proper costs and expenses that it may incur as a result of or in connection with any default relating to the Indebtedness by the Company PROVIDED THAT the total principal amount recoverable under this Guarantee shall not exceed the Indebtedness or if less the balance of the Indebtedness together with any interest thereon.
2 Demand
If the Company defaults in payment of any Indebtedness when due the Guarantor shall pay to Wittmann on demand, without set off or other deduction, an amount equal to the amount so unpaid. A certificate by a Director of Wittmann of the amount so payable shall be conclusive unless manifestly incorrect. Wittmann may make demand on the Guarantor without prior demand on the Company.
……….
Guarantor's liability
The Guarantor shall not be discharged by time or any other concessions given to the Company or any third party by Wittmann or by anything Wittmann may do or omit to do or by any other dealing or thing which, but for this provision, would or might discharge the Guarantor.
3.2 This Guarantee shall:
……….
3.2.2 be a continuing guarantee, shall not be discharged by any intermediate settlement of the Indebtedness and shall remain in effect until the Indebtedness is discharged in full.
3.2.3 remain in force notwithstanding (and the Guarantor's obligations under this Guarantee shall not be impaired, affected or discharged by) any failure, defect, illegality or unenforceability of or in any of the Company's obligations in respect of the Indebtedness;”
The document was executed as a deed by Mr. Beat Corpataux on behalf of Willdav. Attached to it were five pro forma invoices covering the various items of equipment making up the full order. Each one was addressed to Automold and stated that title to the goods remained in Wittmann until the goods had been paid for in full.
Following the execution of the guarantee Wittmann began shipping goods to the United States in accordance with the contract, but Automold continued to seek financing and in due course it managed to obtain the support of three separate finance companies, each of which was prepared to make part of the goods available to it on lease-purchase terms. As a result Wittmann entered into agreements with Automold and with each of the finance companies under which title in certain goods passed to each finance company in return for payment of part of the relevant purchase price. It was a term of the agreement between Wittmann and the finance company in each case that if Automold failed to pay the amounts due under its contract with the finance company Wittmann would repurchase the goods against payment of the outstanding balance.
The original value of the order was £1,518,584 exclusive of VAT as denoted in the guarantee, but the contract was subsequently varied to exclude certain items, thereby reducing the total price to £1,306,331 to which VAT had to be added bringing the total to £1,534,938.93. Automold itself paid £324,886.75 in respect of the goods and the finance companies between them paid Wittmann a further £886,383 leaving an outstanding balance of £323,669.18. As a result of subsequent adjustments and accrued interest the total amount outstanding as at 1 st September 2003 came to £338,531.14. In the event, however, Automold failed to pay any part of the balance and in due course the company went into liquidation. On 20 th May 2004 Wittmann made a formal demand under the guarantee and on 18 th June 2004 it commenced the present proceedings against Willdav to recover the amount still outstanding.
The issues
Willdav has not sought to deny the existence of the guarantee as such, but it has denied liability on the grounds that the contract under which Wittmann is entitled to recover the amounts outstanding from Automold is not that to which the guarantee relates. In summary, its case is that it guaranteed the obligations of Automold under its contract for the purchase of equipment from Wittmann and that the arrangements with the finance companies resulted in the discharge of that contract and the substitution of new contracts which do not fall within the terms of the guarantee. The judge rejected that argument. She accepted that the agreements between Wittmann and the finance companies were inconsistent with the original contract because they provided for a sale of the goods to the finance houses instead of to Automold and must therefore have involved making new contracts in substitution for the original contract. She also accepted that in the ordinary way the guarantee would not extend to obligations arising under a new contract entered into in substitution for the original contract, but she held that in this case the original contract provided for an alteration of the contractual relationships of the kind that had subsequently occurred and that the guarantee therefore extended...
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