Court of Appeal dismisses $16m claim by Jordanian PPE supplier after finding buyer entitled to terminate contract

About this case:

• Citation:
  [2025] EWCA Civ 1212
• Judgment:
  External link
• Court:
  England and Wales Court of Appeal
• Judge:
  Males LJ

Uniserve Ltd, which was the defendant in an action raised by Advanced Multi-Technology for Medical Industry (t/a Hitex) and two other claimants, argued that the judge had decided the case based on an interpretation of the parties’ contractual position that was contrary to the position advanced by Hitex. The respondent accepted that the judgment could not be supported on the basis of a case it had not advanced but contended that the judge ought to have found that it was entitled to re-tender the same goods in mitigation of its loss.

The appeal was heard by Lord Justice Males, Lord Justice Phillips, and Lord Justice Snowden. Luke Parsons KC, David Walsh KC and Edward Mordaunt appeared for the appellant, and David Lewis KC and Edward Knight appeared for the respondents.

Contrary to own case

On 21 April 2020, two contracts were concluded between Hitex and Uniserve, one for the supply of 80 million face masks and another providing for commission to be paid on shipments made under the supply contract. A schedule was agreed under which between five and seven million masks would be delivered to Uniserve per week, with the buyer entitled to terminate the contract if any of the delivery dates, once weekly up to 28 July 2020, were not met. While time was of the essence in respect of delivery, it was not of the essence as regards Uniserve’s obligation to collect the masks on the stated dates.

A problem arose with the first delivery because the masks produced by Hitex did not have a nose bridge, as required by specifications. This necessitated a modification to the machines manufacturing the masks, and with that a reduction in the production rate. As a result, Hitex failed to meet the deliveries due on the first four set delivery dates. Even after a revised schedule was agreed for fewer masks, no deliveries were made past 7 June 2020, although the final two deliveries were not collected until 10 and 17 June respectively.

Uniserve defended the claim on the basis that it was entitled to terminate the contract or alternatively to rescind it for misrepresentation. However, the High Court judge found that Hitex had grounds to believe that it could supply 5 million face masks per week in April 2020. He also found that Hitex had accepted Uniserve’s repudiation of the contract when it did not arrange any collections of masks past 17 June, although this was not the case that Hitex had advanced, which was that Uniserve was not entitled to terminate the contract so long as it had enough masks to meet the next delivery date.

On behalf of the appellant it was argued that it was procedurally unfair for the judge to conclude that Hitex had accepted repudiation of the contract when that was contrary to its own pleaded case. That conclusion was also wrong because Hitex could not accept a renunciation without a clear communication to that effect. Further, the basis on which damages were awarded was wrong because Hitex had failed to continue to perform the contract and advanced no market price if there was an available market.

Fifteen per cent was reserved

In a judgment with which the other judges agreed, Males LJ began by observing: “It is a basic principle of our adversarial system of civil justice that the parties identify in their pleadings the case which they seek to advance so that the issues for decision are clear, that evidence and submissions are directed to those issues and need not be concerned with other matters, and that the judge decides the issues thus identified and gives judgment accordingly.”

He added: “It is apparent from the judgment as handed down (and as I understand it, also from the draft) that the judge realised that he was deciding the case on a basis which had not been argued, at least so far as acceptance of repudiation was concerned. That is one reason why I would not criticise counsel for not raising the point in advance of hand down. The judge said when refusing permission to appeal that he had taken the view that neither side’s pleading or argument met the facts as he found them to be and that it was necessary for him to interpret those facts for himself. However, that was a mistake.”

Considering whether Uniserve was entitled to rescind the contract, Males LJ said: “The primary focus of Uniserve’s case was that Hitex simply did not have enough masks available for collection to fulfil its obligations. That was Mr Parsons’ second, albeit principal, submission on this issue. The point here is that, according to Hitex’s own evidence, 15% of its stock was reserved for the Jordanian government, and that the judge failed to take account of this when calculating the quantity available for delivery to Uniserve.”

He concluded: “There was no rule of law which prevented Uniserve from relying on Hitex’s own evidence that 15% of its stock was reserved for the Jordanian government and this speculation was not open to the judge. There was no evidence that Hitex had dealt with the requirements of the Jordanian government in other ways. The evidence was clear that 15% of Hitex’s stock was reserved for the Jordanian government and, as a result, not available for supply to Uniserve. The fact that Uniserve did not seek to collect the goods does not prevent it from relying on Hitex’s own records.”

The court therefore allowed the appeal, found that Uniserve was entitled to terminate the contract, and dismissed Hitex’s claim.