Huktra (UK) Ltd. v Huktra NV

A court must decide the issues raised by the parties. It should not determine a case on an unpleaded alternative which is inconsistent with the pleaded case, particularly where the change would require different disclosure and evidence, unless the opposing party has a fair opportunity to meet it. A finding based on equivocal evidence and opposed by the other party may also be unsafe where it lacks support in the probabilities and documentary evidence. In contractual disputes, the court may distinguish between different categories of charge and accept part of a party’s case. Mutual dealings and accounting practice may establish that one category is charged at cost while another is charged on a profit basis.

Huktra (UK) Ltd and Huktra NV had conducted a long-standing cross-Channel chemical-transport business through oral arrangements. After their relationship ended, disputes arose over tank hire, alleged under-payment and over-charging, and the basis on which carriage and cleaning costs were to be charged.

The High Court found no pleaded December 1995 compromise agreement, but found that the parties had entered into successive six-monthly compromises up to June 1995. It also held that carriage costs were chargeable on a profit basis, while cleaning costs were chargeable at cost. NV appealed against the compromise finding, and UK cross-appealed on cleaning costs.

The central issues were whether the six-monthly compromise case was open on the proceedings and evidence, and whether the evidence entitled the judge to distinguish cleaning costs from carriage costs.

1. NV’s appeal allowed. The finding of successive six-monthly compromises was not open to the trial judge. The case had never been pleaded, was inconsistent with UK’s pleaded reliance on a December 1995 compromise, and was absent from the witness statement, opening submissions and closing submissions as an alternative case. It would also have required wider disclosure, clearer evidence from Mr Meyrick and a proper opportunity for Mr Van Poucke to meet it.
2. The material relied on at trial was, at most, equivocal evidence of discussions or occasional agreements. Mr Van Poucke had not been squarely confronted with a case that express compromises had been made at the relevant six-monthly intervals. The finding was procedurally unfair and, alternatively, unsupported by adequate evidence. The court applied the fairness principle illustrated by The 'Vimeira' [1984] 2 Lloyd's Reports 66: a tribunal must resolve the issues raised and give a party an opportunity to address an issue which it proposes to decide.
3. UK’s cross-appeal dismissed. The judge was entitled to distinguish carriage costs from cleaning costs, even though the parties had argued for a common basis. The evidence showed that cleaning was in practice charged at cost, including the issue of credit notes where invoiced amounts exceeded subcontracted cost, and that NV used a system specifically policing cleaning charges on that basis. Correspondence referred to cleaning by reference to real costs and carriage by reference to tariffs.
4. The judge had not impermissibly found a variation without precision. His reasoning was understood as finding distinct charging bases from the relevant beginning of the relationship. In any event, the parties’ mutual dealings provided sufficient evidence that by 1993 cleaning was charged at cost.
5. There was judgment for NV on its counterclaim in an amount to be assessed. Its under-payment claim was limited to over-payments relating to cleaning charges. UK was ordered to pay NV’s costs of the appeal and cross-appeal, subject to detailed assessment if not agreed.

• Court of Appeal (Civil Division) — The appeal from the High Court was allowed on the compromise issue, and the cross-appeal was dismissed on the cleaning-cost issue.
• High Court, Queen’s Bench Mercantile List, Liverpool — His Honour Judge Kershaw QC, judgment of 12 April 2000. The judge rejected the pleaded December 1995 compromise but found successive six-monthly compromises up to June 1995, and held that carriage costs were charged with profit while cleaning costs were charged at cost.