|[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]|
England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Redd Factors Ltd v Bombardier Transportation UK Ltd  EWHC 3138 (QB) (06 October 2014)
Cite as:  EWHC 3138 (QB)
[New search] [Context] [View without highlighting] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| REDD FACTORS LIMITED
|- and -
|BOMBARDIER TRANSPORTATION UK LIMITED
Justin Davis (instructed by Nelsons Solicitors Ltd) for the Defendant
Hearing dates: 24, 25, 26, 27 June 2014, 30 June 2014, 1, 3 and 4 July 2014
Crown Copyright ©
Mr Justice Dingemans :
17.1 Does clause 7.1 either: (a) Give Bombardier the right to set-off any FIM costs (plus 5%) against any Primarius invoices from any contract? (Bombardier) (b) Simply record an intention to make a further agreement allowing FIM costs (plus 5%) to be recovered from the parties payable to PUK for the seats? (Redd Factors)
17.2 Does the effect of clause 7.2 mean that tooling costs incurred by Bombardier in providing the FIM should not be counted as part of the recoverable FIM costs under the arrangement either made of contemplated in clause 7.1?
17.3 Does the fact that Bombardier has a duty to supply the FIM to Primarius within a reasonable time for it to make the seats when required by Bombardier (clause 4.5) mean that any costs incurred in expediting the delivery of materials should not be counted as the recoverable FIM costs?
The May Agreement
17.4 Did the May Agreement: (a) Fix the amount of FIM costs that Bombardier could recover from Primarius in relation to the Original Suppliers? (Redd Factors) (b) Or fix the amount of costs that Bombardier could recover from Primarius in relation to orders committed by Bombardier to the Original Suppliers as at 17 March 2011 but leave it open to Bombardier to recover any further costs relating to the Original Suppliers if further materials were ordered? (Bombardier)
17.5 Was it part of the May Agreement that Bombardier could not recover airfreight costs or painting costs or any other non-recurring costs?
Redd Factors' claim for payment of the invoices
17.6 How much of Redd Factors' claim is proved? (a) Which invoice claims are proved? (b) Is Redd Factors entitled to recover the VAT on those invoices from Bombardier?
BT's cross-claim for FIM costs
17.7 In relation to each supplier the following points arise: (a) How much can Bombardier prove that it spent on FIM materials? This includes: (i) Are any of the costs for materials that were not subject to the FIM agreement? (ii) Were any of the materials for which a claim is now made delivered later than the time when they could have been used by Primarius to make the seats? (b) What number of parts were needed? (c) How many parts did Bombardier order (and pay for)? [Redd Factors' case is that the parts required are as set out in Volume I; Bombardier's case is that those figures are inaccurate and that the sums actually ordered reflect the actual requirement, with some small allowance for rejected/lost/damaged parts]. (d) If Bombardier ordered and paid for more than were needed: (i) Should the cost of the excess parts be borne by Bombardier? (ii) Or should they be Primarius' liability? (iii) If any over-ordering was caused by Penmark, given Penmark's role in the events that have happened, should those over-ordered parts be Bombardier's liability or Primarius' liability? [Redd Factors contends that Penmark was acting on behalf of Bombardier when procuring parts and managing stock levels; Bombardier contends that it acted for Primarius at all times and for all purposes]. (e) If Bombardier has paid prices for parts that are greater than Primarius expected to pay, then were the price increases avoidable by Bombardier, e.g. as where they were bad management of the ordering process? (f) Are any of the costs claimed expedition costs that should be borne by Bombardier (see issue 3 above)? (g) Are there any of the costs for tooling that fall outside what is recoverable by Bombardier (see issue 2 above)? (h) How much was spent on each project? (i) Is Bombardier entitled to recover VAT on its claimed FIM costs?
What can be set-off against what
17.8 Does Bombardier have a right to set any cost off against any invoice under clause 7.1 of the Licence Agreement?
17.9 It being common ground that Bombardier cannot claim independent/statutory set-off of its FIM claims, and that Bombardier is entitled in principle to an equitable set-off of some kind, how far does that equitable set-off extend? (a) Is it, as Redd Factors contends, restricted only to invoices that would have been discounted under the May Agreement – i.e. invoices for the delivery of seats under the main project contracts – and then only within the same project as that in which the relevant FIM cost arose? (b) Or does it, as Bombardier contends, extend to any invoice from any project whether or not the invoice is one that would have been discounted under the May Agreement? (c) If Bombardier's contention is correct, does the set-off only operate against invoices for goods or services provided after the Licence Agreement was made or the FIM arrangement took effect? (d) Did Bombardier deliberately choose not to exercise its right of set-off against PUK and, if so, what effect does that have on the set-off available?
Calculating the result
17.10 If the set-off to be applied is unrestricted, does the FIM claim exceed the value of the invoices? Otherwise
17.11 Which invoices fall into which categories? [The agreed list of issues noted that the parties were working to agree a further schedule]
17.12 What is the value of Bombardier's FIM claim that falls into each category?
17.13 How much, if anything, is Redd Factors entitled to on its claim?
Relevant provisions of the licence agreement
1.1 The definitions and rules of interpretation in this clause apply in this agreement. Underlying contracts: all and any supply agreements between the parties, whether in writing or otherwise for the supply of driver and passenger seats and other deliverables.
2.1 Primarius shall deliver the driver and passenger seats and other deliverables at the prices and in the quantities agreed in the Underlying Contracts and as described at schedule 1.
4.5 The obligations on the part of the Primarius to deliver the seats referred to in schedule 1 will always be subject to BT complying with its obligation to provide and supply the free issue materials referred to in clause 7.1 in reasonable time for Primarius to complete its obligations under this Agreement.
4.6 Without prejudice to the warranty obligations of Primarius and BT under the Underlying Contracts, upon execution of this agreement all claims and counterclaims which have accrued up to and on the Effective Date are waived by the parties provided that for the avoidance of doubt the following Variation Orders which are yet to be agreed shall be expressly excluded: 4.6.1 LERL – part number 3EER400013-8035 tip up seat design changes. 4.6.2 LERL – first class seat assembly cover plate for kit 520023181. 4.6.3 Turbostar – drawing changes requested at final design review held on 25 October 2010.
7.1 Primarius and BT shall in good faith agree a variation order to the Underlying Contracts whereby BT shall agree the provision of free issue materials to Primarius at cost price plus 5% handling fee and which shall be set-off against the price payable for the deliverables under the Underlying Contracts.
7.2 Any tooling, procured by BT after the Effective Date for the use pursuant to its obligations under the Underlying Contacts will be offered to the Licensor upon termination or expiry of the licences granted in schedule 2 at cost plus and additional mark up of 5%.
7.3 The parties shall agree in good faith by no later than 28 February 2011 the identity and value of stock owned by Primarius where the identity of such stock is limited to such items which are of the same type as the free issue materials provided under clause 7.1 and which can be used in manufacture of the products under the Underlying Contracts and provided that the value of such stock cannot be greater than the amount paid for the free issue item. Provided that BY and Primarius have agreed the stock and the values BT shall pay for this stock subject to an agreed payment profile which shall be dependant upon the delivery of the products as per schedule 1 further assurance.
An enforceable right of set-off under clause 7.1
Tooling costs under clause 7.2
Costs of expediting delivery
The agreement about additional suppliers and the May agreement
The outstanding invoices
The FIM claims and set-off
Was there a deliberate delay in dealing with negotiations
Calculating the result