Todaysure Matthews Ltd & Anor v Marketing Ways Services Ltd

A court may try a civil claim on its merits where an absent defendant has notice of the trial. Contractual scope is determined by the agreement properly construed, including subsequent clear agreements varying or clarifying the parties’ obligations. A counterclaim unsupported by evidence and inconsistent with the agreed scope of work will fail. Where a performance guarantee is subject to a final accounting, the beneficiary must return sums received if no underlying entitlement is established.

The claimants supplied incinerator systems to the defendant for a waste-treatment facility in Saudi Arabia. The claim concerned unpaid contractual sums, expedited fabrication costs, installation supervision fees and repayment of money received under a performance guarantee. The defendant initially defended the claim and advanced a counterclaim, but ceased participating in the proceedings after its solicitors came off the record.

The central issues were the scope of the subcontract, responsibility for delivery, packing, installation and delay, the evidential basis for the counterclaim, and whether the defendant was entitled to retain the guarantee proceeds.

1. Trial in the defendant’s absence. The defendant had notice of the trial but did not participate. The court therefore proceeded to determine the merits on the evidence available.
2. Contractual scope. The purchase order, read with the surrounding evidence and the parties’ subsequent communications, established that the claimants’ work was limited principally to fabrication. Installation, shipping and loading were not included in the subcontract. The parties later agreed that installation supervision would be supplied for a fee and that expedition costs would be paid by the defendant.
3. Counterclaim. The defendant adduced no evidence in support of its allegations. In any event, the counterclaim was misconceived. The defendant knew that equipment would be manufactured in Florida, was responsible for shipping and loading, and had not shown loss caused by the location of manufacture. Installation, associated systems and the alleged delay obligations were outside the claimants’ contractual scope. Withdrawal of staff from the site was not a breach, particularly as the defendant failed to obtain the permits needed for their return. The allegations concerning late installation and commissioning were unsupported and unsustainable.
4. Guarantee proceeds. The performance guarantee provided for a final accounting if there was a dispute. Once the counterclaim failed, the defendant had no entitlement to retain the proceeds. Its receipt and retention of £8,570,000 also breached the consent order governing the handling of any payment under the guarantee.
5. The claimants were entitled to judgment for the unpaid balance of the price, expedition costs, installation supervision fees and repayment of the guarantee proceeds, totalling £11,066,566. The counterclaim was dismissed.