Car-Wizard Ltd v Vixen Surface Treatments Ltd - Contract Dispute

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  Car-Wizard Ltd  v Vixen Surface Treatments Ltd [2026] EWHC 685 (Ch) (26 March 2026)

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[2026] EWHC 685 (Ch) | | |
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| | | Neutral Citation Number: [2026] EWHC 685 (Ch) |
| | | Case No: BL-2023-BRS-000060 |
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
CIRCUIT COMMERCIAL COURT (KBD)

| | | Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR |
| | | 26 March 2026 |
B e f o r e :

HHJ PAUL MATTHEWS
(sitting as a Judge of the High Court)

Between:
| | CAR-WIZARD LIMITED | Claimant |
| | - and - | |
| | VIXEN SURFACE TREATMENTS LIMITED | Defendant |

**Jay Jagasia (instructed by Wards Solicitors LLP) for the Claimant
Simon Goldberg KC (instructed by Knights) for the Defendant

Hearing dates: 20-24 October, 13 November 2025**

HTML VERSION OF JUDGMENT ____________________

Crown Copyright ©

3. This judgment was handed down remotely at 10:15 am on 26 March 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
5. HHJ Paul Matthews :
7. Introduction
8. This is my judgment on the trial of a claim begun by claim form issued on 19 December 2023, for remedies in respect of what the claimant claims is the defective supply of a vertical diamond cutting lathe by the defendant for the purposes of the claimant's car wheel repair business. Although the parties negotiated for the supply of the lathe, there was no direct contract between them for that supply, because it was eventually supplied by way of hire purchase through a third-party finance company. Hence, the claim against the defendant is put in terms of misrepresentation and breach of a collateral contract.
10. The matter was tried by me between 20 and 24 October 2025, followed by written closing submissions and final hearing for oral submissions on 13 November 2025. Each side was well represented by counsel and solicitors, and I am grateful to them all for their efforts. I am sorry for this delay in producing this judgment, caused at first by the pressure of other work. In addition there was a further delay quite recently, as a result of a sudden domestic medical crisis.
12. The parties
13. The claimant
14. The claimant carries on the business of maintenance and repair of motor vehicles from rented premises in Bristol. It is solely owned and controlled by Oliver Birrell, who gave evidence before me. The claimant has a specific expertise in the repair of car wheels, which are often damaged by coming into contact with the raised kerb at the side of the road (so-called "kerbing"). In 2019 the claimant wished to expand its business so as to be able to carry out so-called "diamond cut" repairs, which previously it had outsourced to another business.
16. The defendant
17. The defendant is one of only a limited number of suppliers of lathes suitable for the claimant's business in the UK. Terry Myers was an industrial sales manager of the claimant until 2023, and is now its business development manager. He was the primary contact of Mr Birrell during the dealings between the parties. Andrew Raine was and is the aftersales manager, and Aidan Mallon was and is the managing director. All three gave evidence before me.
19. Procedure
20. General
21. As I have said the claim form was issued in December 2023. Particulars of claim were attached. The defence was filed on 13 February 2024, and a reply was filed on 26 February 2024. However, amended particulars were served on 12 March 2024, and an amended defence was served on 16 April 2024. So far as I am aware, no amendment was made to the reply. A request by the defendant for further information was made in March 2024 and responded to in March and April 2024. A CCMC was listed for 12 November 2024, when directions to trial were given (though the order itself was not in fact sealed until 24 December 2024). I held the pre-trial review on 12 September 2025. In passing, I note that the directions to trial of 12 November 2024 included the following:
23. "9. The parties shall have permission to adduce expert evidence from one expert in the fields of (1) Engineering and compliance and (2) forensic accounting."
24. Which court?
25. A bizarre element of the procedure however was this. The claim was issued by the claimant's solicitors in the Business and Property Courts (BPC) in Bristol. This involves the solicitors using the CE-File computer filing system selecting a court, and in some cases a list, within the BPC in which the case will be managed and tried. The claim form, prepared by the solicitors, has a space provided in the top right-hand corner, intended to state a court or list to which the case should be assigned. However, in that space the solicitors simply wrote "In the Business and Property Court Bristol". From the drop-down menu, the solicitors selected the Business List of the Chancery Division of the High Court. The case was therefore automatically allocated the number BL-2023-BRS-000060, the letters "BL" standing for the Business List within the Chancery Division. However, the particulars of claim (which were attached) bore, and every statement of case thereafter has borne, the name of the court as "Circuit Commercial Court", which is part of the King's Bench Division (formerly Queen's Bench Division) of the High Court.
27. Nevertheless, the case has since the beginning been managed as one in the Chancery Division of the High Court, and not in the Circuit Commercial Court of the King's Bench Division. So, for example, district judges have dealt with case management issues and made orders in relation to it. If it had been one in the Circuit Commercial Court, however, it would have been managed ordinarily by the Bristol circuit commercial judge (HHJ Russen KC), and not by the district judges. It was only when the case came before me for the PTR, in September 2025, that I raised the question in which court this case should be tried. The parties were agreed that it should be tried in the Circuit Commercial Court. I therefore formally transferred it from the Chancery Division to that Court. As it happened, the parties were agreed and no harm was done. But it points up the importance of solicitors' making the correct selection of court and list when issuing proceedings on CE-File in the Business and Property Courts. In another case it might matter.
29. The claim and the defence in outline
30. The claim
31. I can take this outline of the claimant's case directly from its skeleton argument at trial:
33. "1. ? The claim concerns a vertical diamond cutting lathe (the ' Lathe ') supplied by D for c. ?28k (plus VAT). It is advanced on the basis of alleged misrepresentations and/or breaches of a collateral contract. C's principal loss claim is directed at alleged loss of profits, alternatively (in the event that such a claim is determined to be limited) loss of profits together with other losses or alternatively (in the event that is determined that C is not entitled to recover loss of profits) other losses.
34. 2. Although there are factual disputes that the court will or may need to resolve, there has been a good measure of agreement between the accounting experts, and some measure of agreement between the engineering experts, with both engineering experts in agreement (but not full agreement) that the Lathe exhibits defects and that the Lathe (ignoring those defects) is unsafe and did not (and still does not) meet the applicable safety standards mandated in this jurisdiction and D should not have declared that it was safe; on safety grounds alone, the consequence is that the Lathe should not have been placed on the market and supplied to C, and any use of the Lathe by C would have placed it in breach of its own obligations under applicable health and safety legislation. In addition to those defects and safety concerns, it ought to be common ground that the Lathe has material limitations, none of which were communicated to C until after the Lathe was supplied, or in any literature supplied by D (prior to ordering the Lathe or in this litigation). Accordingly, the claim is also directed at what was not communicated to C in circumstances where it is its case that D well knew what it intended to achieve with the Lathe."
35. The claimant's case depends upon representations said to have been made by the defendant to the claimant. It is therefore desirable to set these out at this early stage. In the amended particulars of claim, the claimant pleads those representations as follows:
37. "5. Following the above meeting, by letters dated 6 November 2019 and 19 December 2019, Mr Myers provided to Mr Birrell a quotation for the Lathe (the Quotation) along with the additional information, which included the following statements or representations:
38. > 5.1. 'The [Vixen Wheel] Lathe uses state of the art technology to create a top-quality finish, removing kerb damage or imperfections and reproduces the original diamond cut finish'.
39. > 5.2. 'One of the unique features of the [Vixen wheel] Lathe is the laser probe system which maps the original wheel profile ... in under a minute'.
40. > 5.3. 'The tool is designed specifically to cut alloy wheels with high precision and accuracy'.
41. > 5.4. 'Your first point of contact will be me, I specialise in the lathe and other machines related to wheel refurbishment. After that we have an after-sales department and over 8 field engineers to support you": together the Written Representations'. [1]
42. 6. Further:
43. > 6.1. In November 2019 Mr Myers stated and represented that the Lathe offered by Vixen was a 'brand new' lathe (the Oral Representation).
44. > 6.2. ln offering the Lathe in the circumstances outlined above, Vixen impliedly warranted and represented that if Car Wizard placed an order for the Lathe:
45. > > 6.2.1. The Lathe supplied would be 'brand new'/'new'.
46. > > 6.2.2. The Lathe supplied would be the best on the market due to its ability to map a wheel with the laser quicker.
47. > > 6.2.3. The Lathe would be of merchantable quality i.e. satisfactory quality.
48. > > 6.2.4. The Lathe would be fit for purpose i.e. suitable for Car Wizard's needs, viz the repair of alloy wheels and capable of producing a top-quality finish, removing kerb damage or imperfections and reproducing the original diamond cut finish of the wheel undergoing repair.
49. > > 6.2.5. The Lathe would be capable of mapping the original wheel profile and cutting alloy wheels with high precision and accuracy: together the Collateral Warranties.
50. > 6.3. Yet further, the Quotation included a quotation for an 'Ex-demo Wheelblaster Cabinet' in addition to '1 x Vertical Wheel Lathe', thereby impliedly representing that the Lathe was a 'new lathe' and not 'used' or 'Ex-demo' (the Implied Representation)."
51. The claimant goes on to plead (at [8]) that the defendant made these representations intending that the claimant should rely on them, (at [12]) that the claimant did rely on them, but (at [13]) that the representations "were false and made by [the defendant] knowing the same to be untrue or being recklessly indifferent as to whether the same were true or false; alternatively, were made negligently". The claimant pleads further (at [19]) that, but for those representations, the claimant would not have agreed to buy the lathe and would not have entered into the hire purchase agreement with Paragon, but would have acquired a suitable lathe elsewhere. The prayer to the claimant's claim seeks damages for misrepresentation and deceit, damages for breach of collateral contract, and interest.
53. The defence
54. The defendant's case in summary appears from the opening paragraphs of its skeleton argument for trial (abbreviated simply for reasons of space):
56. "1. This is a claim for damages arising out of the hire purchase of a vertical wheel lathe, serial number 118 20 (the Lathe) by the Claimant (CW) from Paragon Business Finance PLC (Paragon) under a hire purchase agreement entered into in March 2020 (the HP Agreement).
57. 2. CW's essential complaint is that the Lathe does not work as it should do. However, CW has not sued its contractual privy, Paragon. Rather, CW paid the instalments due under the HP Agreement in full before launching this claim against the Defendant (VST), which was the company which sold the Lathe to Paragon.
58. 3. The result is a deeply flawed claim, in which the primary allegations are that certain statements made in the Defendant's sales literature as to the qualities and/or capabilities of its vertical wheel lathe were fraudulent misrepresentations, which induced CW to enter into the HP Agreement.
59. 4. There is not a shred of evidence to support a claim of fraud (or the alternative claim of negligent misrepresentation) which should never have been made. In truth, CW has prosecuted this claim as if it were a sale of goods case, with no or no proper focus upon what a claimant must prove in order to establish liability in tort for misrepresentations in the context of a damages claim.
60. 5. ? VST's case is that the Lathe was well capable of all the tasks outlined in the sales literature, and that any problems CW encountered when using it are attributable to the inexperience of the operator, CW's controlling mind Oliver Birrell, and not to any defect in the Lathe.
61. 6. ? there is no evidence to support CW's core allegation that the Lathe was delivered in a defective condition and/or was not capable of carrying out the functions advertised in the sales literature. ?
62. 7. In addition to the liability dispute, there are substantial issues between the parties on mitigation of loss and quantum. These points arise in the context of a claim for loss of profits which appears from CW's expert accountancy report (but not its pleading) to be valued at over ?1m ?
63. 8. As to mitigation, despite having made clear by the end of September 2020 that it would not be using the Lathe and then stating repeatedly that it would be obtaining a replacement lathe in order to mitigate its loss, CW did not obtain a replacement. ?
64. 9. As to quantum, there is an (as yet) unexplained disconnect between the pleaded case and the case advanced in CW's expert accountancy report in respect of loss of profits. The period over which lost profits are claimed is unclear.
65. 10. More fundamentally, the claim for loss of profits is founded exclusively upon Mr Birrell's predictions as to the revenue which would have been generated by what he acknowledges was an entirely new aspect of CW's business. The predictions far exceed any profit CW made before acquiring the Lathe, or since. ?
66. [ ? ]"
67. Comment
68. It is important to bear in mind that this is not a claim on a contract for the sale of the lathe. This is a claim on a collateral contract, but also one in tort. It nevertheless involves allegations of representations as to the quality, as well as to the suitability, of the lathe in question. This does not make it a case of sale of goods. It is also important to be aware of the proper role of statements of case. In Prudential Assurance Co Ltd v HMRC? [2017] 1 WLR 4031, CA, Lewison LJ, giving the judgment of the court (himself, Christopher Clarke and Sales LJJ) said:
70. "20. Our procedural system is and remains an adversarial one. It is for the parties (subject to the control of the court) to define the issues on which the court is invited to adjudicate. This function is the purpose of statements of case. The setting out of a party's case in a statement of case enables the other party to know what points are in issue, what documents to disclose, what evidence to call and how to prepare for trial. It is inimical to a fair hearing that a party should be exposed to issues and arguments of which he has had no fair warning. If a party wishes to raise a new point, he should do so by amending a statement of case."
71. On the other hand, one must not go too far. At the end of the day, it is a question of fairness. The White Book at [16.0.1], basing itself on Lombard North Central Plc v Automobile World (UK) Ltd? [2010] EWCA Civ 2, [79], says:
73. "Conversely, it does not follow that an unpleaded issue may never be the subject of investigation at a trial. There will be cases in which it will be obvious that it would be unjust for the court not to entertain and decide an unpleaded issue; eg when it is apparent that both sides have come to court ready to deal with it as an issue in the case despite its omission from the pleadings."
74. (See also Hawksworth v Chief Constable of Staffordshire? [2012] EWCA Civ 293, [43].)
75. How English judges decide civil cases
76. The lawyers involved in this case will know this already, but, for the benefit of the lay parties concerned in this case, I will say something about how English judges decide civil cases like this one. I borrow the following words largely from other judgments of mine in which I have made similar comments. First of all, judges do not possess supernatural powers that enable them to divine when someone is mistaken, or not telling the truth. Instead, they take note of the witnesses giving live evidence before them, look carefully at all the material presented (witness statements and all the other documents), listen to the arguments made to them, and then make up their minds. The point is that there are a number of important procedural rules which govern the decision-making of judges, and which are not as well-known as they might be. I shall briefly mention some of them here, because non-lawyer readers of this judgment may not be aware of them.
78. The burden of proof
79. The first is the question of the burden of proof. Where there is an issue in dispute between the parties in a civil case (like this one), one party or the other will bear the burden of proving it. In general, the person who asserts something bears the burden of proving it. Here the claimant bears the burden of proving his case, ie that the defendant induced the claimant to acquire the lathe by means of misrepresentations, and/or breached a collateral contract. The importance of the burden of proof is that, if the person who bears that burden satisfies the court, after considering the material that has been placed before the court, that something happened, then, for the purposes of deciding the case, it did happen. But if that person does not so satisfy the court, then for those purposes it did not happen. The decision is binary. Either something happened, or it did not, and there is no room for maybe. That may mean that, in some cases, the result depends on who has the burden of proof.
81. The standard of proof
82. Secondly, the standard of proof in a civil case is very different from that in a criminal case. In a civil case like this, it is merely the balance of probabilities, even where there are allegations of fraud. This means that, if the judge considers that something in issue in the case is more likely to have happened than not, then for the purposes of the decision it did happen. If on the other hand the judge does not consider that that thing is more likely than not to have happened, then for the purposes of the decision it did not happen. It is not necessary for the court to go further than this. There is certainly no need for any scientific certainty, such as (say) medical or scientific experts might be used to.
84. The role of judges
85. Thirdly, in our system, judges are not investigators. They do not go looking for evidence. Instead, they decide cases on the basis of the material and arguments put before them by the parties. They are umpires, or referees, and not detectives. So, it is the responsibility of each party to find and put before the court the evidence and other material which each wishes to adduce, and formulate their legal arguments, in order to convince the judge to find in that party's favour. There are a few limited exceptions to this, but I need not deal with those here. I have accordingly dealt with this case on the basis of what was put before me, in both documentary and oral form. I have not dealt with it (nor could have dealt with it) on the basis that there might be other relevant material available, except to the limited extent (described below) when the court is able to draw an inference from the absence of evidence.
87. The fallibility of memory
88. Fourthly, more is understood today than previously about the fallibility of memory. In commercial cases, at least, where there are many documents available, and witnesses give evidence as to what happened based on their memories, which may be faulty, civil judges nowadays often prefer to rely on the documents in the case, as being more objective: see Gestmin SGPS SPA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm), [22], restated more recently in Kinled Investments Ltd v Zopa Group Ltd [2022] EWHC 1194 (Comm), [131]-[134]. As the judge said in that case,
90. "a trial judge should test a witness's assertions against the contemporaneous documents and probabilities and, when weighing all the evidence, should give real weight to those documents and probabilities".
91. In the present case, there are a number of useful documents available, including print-outs of texts and WhatsApp messages. This is important in particular where, as here, the relevant facts have occurred over a period of time, and further time has elapsed since they took place. These messages enable dates and times of various events to be fixed with accuracy.
92. In deciding the facts of this case, I have therefore had regard to the more objective contents of the documents in the case. In addition to this, and as usual, in the present case I have heard witnesses (who made witness statements in advance) give oral evidence while they were subject to questioning. This process enables the court to reach a decision on questions such as who is telling the truth, who is trying to tell the truth but is mistaken, and (in an appropriate case) who is deliberately not telling the truth. I will therefore give appropriate weight to both the documentary evidence and the witness evidence, both oral and written, bearing in mind both the fallibility of memory and the relative objectivity of the documentary evidence available.
94. Reasons for decision
95. Fifthly, a court must give reasons for its decisions. That is the point of this judgment. But judges are not obliged to deal in their judgments with every single point that is argued, or every piece of evidence tendered. Judges deal with the points which matter most. Put shortly, judgments do not explain all aspects of a judge's reasoning, and are always capable of being better expressed. But they should at least set out the main points, and enable the parties to see how and why the judge reached the decision given.
97. Failure to call evidence or disclose documents
98. Lastly, there is the question (adverted to above) whether a party's failure to call a relevant witness or put in relevant evidence which is available has any effect on a party's case. The former question arose in Royal Mail Group Ltd v Efobi?[2021] 1 WLR 3893, SC. In his judgment, Lord Leggatt (with whom all the other members of the court agreed) said:
100. "41.?The question whether an adverse inference may be drawn from the absence of a witness is sometimes treated as a matter governed by legal criteria, for which the decision of the Court of Appeal in? Wisniewski v Central Manchester Health Authority? [1998] PIQR P324?is often cited as authority. Without intending to disparage the sensible statements made in that case, I think there is a risk of making overly legal and technical what really is or ought to be just a matter of ordinary rationality. So far as possible, tribunals should be free to draw, or to decline to draw, inferences from the facts of the case before them using their common sense without the need to consult law books when doing so. Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules."
101. But the principle goes further, in that there may be things or documents, for example, which are (or were) available to a party and would be or contain evidence relevant to an issue before the court, but are never produced to the court by that party. Thus, in Armory v Delamirie (1722) Str 505, the plaintiff was held entitled as against the defendant to a jewel that he had found, but the defendant refused to produce the jewel in order to be valued. The judge directed the jury
103. "that unless the defendant did produce the jewel, and shew it not to be of the finest water, they should presume the strongest against him, and make the value of the best jewels the measure of their damages: which they accordingly did."
104. Thus, if a party fails to disclose relevant documents in accordance with a disclosure obligation, the court may draw an appropriate inference against the party on the issue to which it was relevant.
105. In Active Media Services Inc v Burmester, Duncker & Joly GmbH [2021] EWHC 232 (Comm), Calver J went further still, when he said:
107. "311. ? the fact that in the present case both (i) documents have been deliberately destroyed and (ii) witnesses have not been called by the guilty party whose evidence would likely bear upon the (presumed) contents of the destroyed documents, takes this case a step further forward than in the case of drawing inferences from the mere absence of witnesses. Although it might rarely arise in practice ? I consider that the court is entitled in such a case, depending upon the particular facts, to draw adverse inferences as to (i) what the destroyed documents are likely to have shown on the issue on question, and (ii) the evidence that the witnesses are likely to have given on the issue in question but which was withheld,? without? the need for some other supporting evidence being adduced by the innocent party on that issue. The two factors combined make the case for the drawing of an adverse inference without other supporting evidence an extremely strong one, at least so far as establishing a defence to a claim is concerned."
108. The evidence
109. The evidence before me fell into a number of different categories. First, there was the evidence of witnesses of fact who were cross-examined on their witness statements. Secondly, there was one witness statement where the witness concerned did not attend for cross-examination. Thirdly, there was the expert evidence, both written and oral, of both mechanical engineers and forensic accountants. Fourthly there were the documents in the bundles before me. These last are admissible evidence by virtue of paragraph 27.2 of the Practice Direction to CPR Part 32, which provides that:
111. "All documents contained in bundles which have been agreed for use at a hearing shall be admissible at that hearing as evidence of their contents, unless ?
112. > (1) the court orders otherwise; or
113. > (2) a party gives written notice of objection to the admissibility of particular documents."
114. I made no order under paragraph 27.1(1). So far as I am aware, no notice was given under paragraph 27,2(2).
115. I make one general comment about the expert reports in this case. All of them to a greater or lesser extent (even Mr Hatcher, who at paragraph 1.3 of his report disclaimed any intention to do so) sought to give at least some factual evidence. Experts often do so, for example because they have examined equipment, premises or other things, and they give evidence of what they found on examination. There is nothing wrong with this in principle. However, as a matter of procedure, such evidence should have been given in a factual witness statement exchanged with other such statements, rather than being left to an expert report.
117. The Commercial Court Guide, 2022, paragraph H2-12, says this:
119. "Where the evidence of an expert is to be relied on for the purpose of establishing primary facts, as well as for the purpose of providing their opinion to the Court on a matter within their expertise, as for example where a surveyor, assessor, adjuster, or other investigator instructed as an expert witness will (also) give evidence about the condition of a ship or other property as found by the expert at a particular time, that part of the expert's evidence which is to be relied upon to establish the primary facts is to be treated as factual evidence and should be put into a factual witness statement from the expert, to be exchanged in accordance with the order for the exchange of factual witness statements. It is not proper practice to postpone disclosure of a party's factual evidence by including it in or serving it with expert reports."
120. Similar views are expressed in the Chancery Guide, 2022, paragraph 9.12.
121. Witnesses
122. The following witnesses gave evidence before me. For the claimant there were Oliver Birrell, the director and shareholder of the claimant, Danny Sacco, the managing director of Lansdown Mazda of Weston, Bath, Christopher Hatcher, forensic accountant, and Paul Wood, expert mechanical engineer. For the defendant there were Terry Myers, Business Development Manager of the defendant, Aidan Mallon, managing director of the defendant, Andrew Raine, aftersales manager of the defendant, Henry Pocock, forensic accountant, and Adam Oakley, expert mechanical engineer. I give here my impressions of them.
124. For the claimant, Oliver Birrell was the principal witness. In my judgment, he was transparently telling me the truth as he saw it. I say that, although he did tell a lie to Mr Myers in his email of 16 November 2020, in saying that he had placed a deposit on another lathe, and that the Vixen lathe was being removed. As it happens, he did in fact place such a deposit and consider removing the Vixen lathe some months later, but not at that time. I attribute this lie to his febrile state of mind at that time, and a desire to emphasise his rejection of the Vixen lathe. Before me, however, when he was on oath and observed carefully by me, I consider that he was a very fair witness, though undoubtedly rather bruised by the litigation experience. In giving evidence, he was good at details, and also accepted correction. I think I can rely on that evidence. Danny Sacco was a highly professional witness, transparently honest and truthful. Christopher Hatcher was an elderly and rather frail witness, but knowledgeable and spirited. He was trying to assist the court. Paul Wood was a very good and reliable witness, on top of the material, and knew his limitations.
126. For the defendant, Terry Myers was a friendly and knowledgeable witness, whom I judge to have been telling me the truth substantially as he saw it. I qualify that by saying that I think he was mistaken in some important details, but has undoubtedly convinced himself that his memory is right. Henry Pocock was a clear and straightforward witness, trying to help the court. He was knowledgeable, but aware of his own limitations. Adam Oakley was, I am afraid, a confused and hesitant witness, who took a long time to answer some questions. This made his evidence more difficult to place reliance on. I am afraid that, for the most part, I did not rely on it where it conflicted with that of Mr Wood and was not independently corroborated. Andrew Raine was a good witness on his subject (aftersales) but less good outside it. Nevertheless, he was telling the truth as he saw it. Aidan Mallon was a witness who knew his business, but was not on top of all the details. He is evidently used to being listened to. But he accepted correction.
128. Overall, I do not think that any of the witnesses was trying to mislead the court. But some of the witnesses were better than others, and I have placed more reliance on their evidence where the documents do not provide a clear answer. Also, I bear in mind that the defendant sells many lathes. That is its business. Mr Myers and the other employees of the defendant will have dealt with many sales and many customers. But Mr Birrell has bought only one lathe from the defendant. The events of that transaction will stand out in his mind for that reason.
130. Other evidence
131. Darren Swan, managing director of Swan Motor Company of Willsbridge, Bristol, made a witness statement in support of the claim, and attended for cross-examination. However, having waited all morning, his evidence was not reached before he had to leave to deal with work and family commitments. No hearsay notice was served in respect of his evidence. That means that the defendant is entitled to rely on anything in those statements as hearsay evidence (CPR rule 32.5(3)), but the claimant may rely on those statements only with the permission of the court (CPR rule 32.5(1)). The defendant has not formally objected to use being made of the witness statement. As it happens, I see no good reason not to permit the claimant to rely on it, and I will do so. But I remind myself that the witness statement of a witness who is not cross-examined and in respect of whom a hearsay notice is not served is not as good evidence as that of a witness in court, who takes an oath to tell the truth, who can be cross-examined on the statement, and whose demeanour can be observed. In addition, I bear in mind that, if?hearsay evidence is admitted without complying with the notice procedure, this?will affect its weight, because the opposing party is denied the benefits that that procedure was designed to afford.
133. The accountancy evidence
134. I have referred above to Christopher Hatcher and Henry Pocock, both forensic accountants, who were called to give expert rather than factual evidence (though their reports contained that too). In a recent decision of my own, Mashal v Javed [2025] EWHC 3195 (Ch), I attempted to set out some of the principles regarding expert (opinion) evidence:
136. "10. ? Opinion evidence has long been generally inadmissible in English law: Carter v Boehm (1766) 3 Burr 1905, 1918. But expert evidence is a form of opinion evidence that is admissible, under certain limited conditions. As it is put in s 3(1) of the Civil Evidence Act 1972,
137. > 'Subject to any rules of court made in pursuance of ? this Act, where a person is called as a witness in any civil proceedings, his opinion on any relevant matter on which he is qualified to give expert evidence shall be admissible in evidence.'
138. 11. The first point therefore is that expert evidence within section 3 can be tendered only by someone who is qualified as an expert. This is someone who, according to Evans-Lombe J in Barings plc v Coopers & Lybrand [2001] PNLR 22, [45],
139. > "satisfies the court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of"
140. the issues in the case. That does not mean that the expert must possess formal qualifications in that discipline. Practical experience may be sufficient in some cases: see eg R v Silverlock [1894] 1 QB 76, CA; R v Oakley (1979) 70 Cr App R 7, CA.
141. 12. But not all expertise counts for this purpose. The 'expertise in question' must be
142. > 'a recognised expertise governed by recognised standards and rules of conduct capable of influencing the court's decision on any of the issues which it has to decide' (Barings plc v Coopers & Lybrand [2001] PNLR 22, [45]; see also The RBS Rights Issue Litigation [2015] EWHC 3433 (Ch), [13]-[14]).
143. 13. It will be noted that someone who does possess a recognised expertise is an expert for this purpose only when giving an opinion within that expertise. A qualified and experienced lawyer has no basis for giving expert evidence of, say, property valuation, merely by reason of possessing that legal expertise. An accountant may be an expert within a particular field (for example in relation to the preparation of accounts and conformity with relevant standards), but is not without more an expert in relation to anything which lies outside that field (for example expertise in demergers): see eg De Sena v Notaro [2020] EWHC 1031 (Ch), [157]."
144. In addition to what I said in that case, there is a further point. This is that, by virtue of CPR rule 35.1,
146. "Expert evidence shall be restricted to that which is reasonably required to resolve the proceedings".
147. In other words, in addition to the need for a witness who is qualified as an expert, within a recognised expertise, giving an opinion within that expertise, the evidence in question must also be "reasonably required to resolve the proceedings".
148. As to this, in JP Morgan Chase v Spingwell? [2006] EWHC 2755, [2007] 1 All ER (Comm) 549, Aikens J said:
150. "23. I should mention one further practical matter, which I think is relevant to large commercial disputes. It is inevitable when there is a dispute between commercial entities that covers a long period of time (as this case does) and concerns a very large sum of money, that a huge amount of documents will have to be considered. There is a natural tendency of parties and their advisors to consider employing experts to assist in digesting this material, particularly if it relates to any area that might be recondite, such as trading in Russian debt in the 1990s. There is a tendency to think that a judge will be assisted by expert evidence in any area of fact that appears to be outside the 'normal' experience of a Commercial Court judge. The result is that, all too often, the judge is submerged in expert reports which are long, complicated and which stray far outside the particular issue that may be relevant to the case. Production of such expert reports is expensive, time-consuming and may ultimately be counter-productive. That is precisely why CPR Pt 35.1 exists. In my view it is the duty of parties, particularly those involved in large scale commercial litigation, to ensure that they adhere to both the letter and spirit of that Rule. And it is the duty of the court, even if only for its own protection, to reject firmly all expert evidence that is not reasonably required to resolve the proceedings."
151. And, in? British Airways plc v Spencer? [2015] EWHC 2477 (Ch), Warren J declined to accept
153. "63. ? the proposition that, because expert evidence may prove of assistance, it should be admitted. A judgment needs to be made in every case and, in making that judgment, it is relevant to consider whether, on the one hand, the evidence is necessary (in the sense that a decision cannot be made without it) or whether it is of very marginal relevance with the court being well able to decide the issue without it, in which case a balance has to be struck and the proportionality of its admission assessed. In striking that balance, the court should, in my judgment, be prepared to take into account disparate factors including the value of the claim, the effect of a judgment either way on the parties, who is to pay for the commissioning of the evidence on each side and the delay, if any, which the production of such evidence would entail (particularly delay which might result in the vacating of a trial date)."
154. As I have already said, the court in its directions to trial in the present case gave permission for expert evidence from experts "in the fields of (1) Engineering and compliance and (2) forensic accounting." But it still needs to be expert evidence, given by an appropriate expert, and bearing on issues in the case, which evidence is "reasonably required to resolve the proceedings". The permission of the court, whether given at the CCMC or elsewhere, does not do away with any of those requirements. A judge cannot by order make otherwise inadmissible opinion evidence admissible. Accordingly, the comments which I go on to make below in relation to the evidence actually adduced do not amount in any sense to a collateral attack on the order made at the CCMC, and should not be understood in that way.
156. Mr Hatcher's report says this (amongst other things):
158. "1.2. I have been requested by Wards Solicitors LLP acting for the claimant, to prepare a report dealing with the alleged losses suffered by Car-Wizard Limited, ? resulting from the supply and installation of a Vertical Wheel Lathe ? by the defendant Vixen Surface Treatments Limited ? which the claimant contends was faulty.
159. [ ? ]
160. 1.4. The matters pertaining to this case fall within my professional experience and are such that I am qualified to provide an expert opinion thereon ?
161. [ ? ]
162. 1.6. I have not been specifically requested to undertake any audit or similar verification work to substantiate the information or documentation provided to me for the purpose of this report.
163. [ ? ]
164. 2.6. As a result of the issues with the lathe supplied, the claimant has provided information regarding the loss of both trade and retail revenue, costs relating to the acquisition of the lathe including finance costs, storage costs and accountancy charges in relation to advice provided ? "
165. What Mr Hatcher has done is to take the information provided by the claimant, as well as that available from searching the internet, and to carry out a number of arithmetical calculations using that information, but also making a number of assumptions, for example as to the dates when such losses would start and stop, and as to discounts that might be applied. This is not merely "number crunching" (because Mr Hatcher has had to decide which arithmetical calculations and which assumptions to make), but it is not much more than that. Moreover, the decision as to which calculations and which assumptions to make is necessarily predicated on Mr Hatcher's understanding of how the law operates in calculating compensation for wrongs done. But, as Mr Hatcher has very properly pointed out, he claims no expertise in law.
167. I cannot see that Mr Hatcher has employed any of his undoubted accountancy expertise in what he has done. He has not produced any accounting records to statutory standards, nor audited any such records, nor even valued anything by reference to such records. All he has done is to apply arithmetical rules to data supplied to him. This is not expert opinion. It is arithmetic. In the past, this exercise would have been carried out by the lawyers, and then marked by the judge. That would not have been expert evidence either. Moreover, Mr Hatcher has no experience of working in the car wheel repair industry. He does not know what costs would be incurred or what prices could be charged. He has had to be supplied this information before he can make his calculations. In my judgment, Mr Hatcher is not an expert for the purposes of this case, and the evidence he has supplied is not expert evidence for the purposes of section 3(1) of the Civil Evidence Act 1972.
169. The position of Mr Pocock is no better. He too is an accountant, and not an expert in car wheel repair business. His report says (amongst other things):
171. "1.2.3. I have been instructed by Knights to prepare an expert report assessing Car-Wizard's alleged losses in the event they are successful with the claim against Vixen.
172. [ ? ]
173. 1.4.6. In preparing this report, I have relied on the accuracy and completeness of the information provided to me. I have reviewed these materials for consistency and reasonableness but have not independently verified their correctness, completeness or accuracy, nor does my work constitute an audit of this information in accordance with auditing standards.
174. [ ? ]
175. 2.2.1. While I generally agree with Mr Hatcher's approach to his calculation of the alleged loss of revenue, cost savings and incremental costs, I note the following points ? " [details set out]
176. Mr Pocock has essentially gone through the same arithmetical exercises as Mr Hatcher. He too claims no expertise in law. He too has not employed any of his accountancy expertise in what he has done. On the way, however, he has made comments on the material placed before Mr Hatcher. For example, at one point (paragraph 2.3.1) he says:
178. "In calculating the volume of wheels that Car-Wizard would have repaired Mr Hatcher has relied upon copy letters and emails from potential customers. I note that ? " [factual comments follow].
179. At another point (paragraph 2.3.7), he comments on the absence of material before Mr Hatcher. In my judgment, submissions on the evidence should be made by counsel at trial, not in an expert accountant's opinion.
180. All of this is not to say that the reports produced are not helpful to the court. They are of assistance, in exactly the same way as tables of calculation of loss, formerly prepared by the lawyers in complex cases, and used as part of counsel's submissions to the court, were formerly of assistance in times gone past (and in many cases still are). But, just as those tables were not expert opinion evidence, neither are the reports of Mr Hatcher and Mr Pocock. They are simply aids to the understanding of details in complex cases. They organise those details into more easily assimilable form for the busy judge. At their highest, they are a kind of hearsay evidence, presenting other evidence in a different form. Otherwise, they are simply a kind of written submission on the evidence. I will therefore take them into account in the same way in deciding this case.
182. Facts found
183. The claimant and its business
184. On the basis of the evidence before me, and in the light of the submissions made to me, I find the following facts. Oliver Birrell is the sole director of and shareholder in the claimant company. He started the company's business (the maintenance and repair of motor vehicles) in 2005, as a sole trader, and it was incorporated as the claimant company in 2018. It was originally a mobile business, without fixed premises, and using vans. Eventually, he decided that the claimant would rent physical premises and trade from them. He went into occupation of these premises in about November 2019. He had both trade and private customers.
186. An important part of his business consisted in repairing car wheels. As I have said, these are frequently damaged by coming into contact with the kerb at the side of the roadway. In the past, car wheels were usually finished as painted alloys. But, for about the last 10 years or so, the manufacture of most alloy car wheels has been finished by using a technique called diamond cutting. A diamond-tipped bit is used to machine a smooth mirrored finish. If such a wheel is damaged, the factory finish can be replicated only by using a lathe with a diamond-tipped bit. The claimant did not have such a lathe, and originally outsourced the diamond cutting work, but eventually stopped offering to do so, because of poor service. Part of the reason for renting and trading from fixed premises was to acquire such a lathe and resume the offer of diamond cutting work.
188. The search for a diamond-cut lathe
189. Mr Birrell did some research, and found that there were only a limited number of UK based suppliers of such lathes. The defendant was one. Its diamond cutting lathes were manufactured in, and imported from, China. They used laser technology (then a novel method) to map the surface of the wheel. Another was a company called Mint Alloys Ltd, which sold a diamond cutting lathe that was more expensive. It used a physical probe to map the surface of the wheel. First of all, Mr Birrell attended a demonstration of the Mint lathe, and spoke to a representative of the company. He then contacted the defendant and was put in touch with Terry Myers, who at that date was the defendant's industrial sales manager.
191. On 29 October 2019 Mr Birrell and Mr Myers met, and there was a demonstration of the defendant's lathe. They had a long discussion about the claimant's plans, and the kind of refurbishment work that the claimant intended to carry out, that is, full refurbishments including of the tapered edges, rather than simple "cut and clear" repairs to the surface. I am satisfied that Mr Myers understood that Mr Birrell wanted to be able to use the lathe to repair not only wheel surfaces (including black surfaces) but also tapered edges. Mr Myers assured Mr Birrell that the defendant's lathe would be capable of undertaking "full" restorations and would be suitable for the claimant's purposes. I find that Mr Myers, on behalf of the defendant, was assuming responsibility towards the claimant to avoid making negligently untrue representations about the lathe. However, I find that the demonstration given to Mr Birrell was of a "cut and clear" process to repair cosmetic damage on the face of the wheel, rather than to deal with damage on the tapered edges. Mr Myers did not tell Mr Birrell that the defendant's lathe could not deal with the tapered edges, which would have to be sanded by hand, rather than cut to a factory finish. Nor did Mr Myers tell Mr Birrell that the defendant's lathe could not deal with black surfaces, unless masking tape was used.
193. The defendant's first quotation
194. On 6 November 2019, the defendant sent an email to the claimant, with an original quotation for the lathe and other equipment sought by the claimant at the same time. The quotation document ran to some 18 pages. It described the lathe as using "state-of-the-art technology to create a top-quality finish, removing kerb damage or imperfections and reproduces the original diamond cut finish". It also said that the laser probe system enabled "a wheel profile to be mapped in under a minute". In addition, the lathe was "simple to operate and does not require machine operator skills". Indeed, "on average most people are happy to use the machine on their own within one day". In fact, the quotation said that the defendant would "provide to you two days of training and set up. Basically everything to get you up and running". All of these statements were factual and capable of objective verification. They were not predictions, nor mere "puffs", but were intended to influence the reader in deciding whether to acquire a Vixen lathe. The quotation required a deposit to be paid, and said that delivery would be eight weeks from the receipt of the order and the payment of the deposit.
196. The quotation also included terms and conditions of sale. Clauses 1, 6 and 7 read as follows:
198. "1. Unless otherwise specifically agreed in writing by Vixen Surface Treatments Limited (Vixen), these terms and conditions shall apply to all quotations and contracts for the supply of goods or services by Vixen and shall at all times override any conflicting terms and conditions which the purchaser may seek to impose.
199. [ ? ]
200. 6. Goods supplied shall substantially conform to the specification thereof current at the time of manufacture, varied if applicable by drawings or modifications agreed between Vixen and the purchase [sic] at the time of contract. Vixen warrants that goods of their own manufacture will be free from defects in materials workmanship or design for a period of 12 months from date of delivery (labour charges payable after a period of 3 months). Vixen makes no warranty as to fitness for any particular purpose. Any warranty claims that arise due to lack of maintenance would be deemed invalid and therefore chargeable.
201. 7. Vixen shall not be liable for any loss (including consequential loss) or damage sustained or incurred by the customer or any third party resulting from any breakdown of our [sic] fault in any product supplied, unless such breakdown or fault is caused by the negligence or wilful misconduct of Vixen, its employees, agents or sub-contractors, in which event (except in the case of death or personal injury) Vixen's liability shall be limited to the invoice value of the goods."
202. What the quotation did not mention were any limitations which would prevent the lathe from operating on the tapered edges of the wheel or to map black surfaces. As a result of the discussions between Mr Myers and Mr Birrell as to the latter's needs, the assurances of Mr Myers to Mr Birrell, the demonstration of the lathe by Mr Myers to Mr Birrell, and the terms of the quotation, I find that Mr Birrell was reasonably led to believe that the lathe would be of high quality, and capable of carrying out the full range of alloy wheel repairs, including repairing damaged tapered edges and black surfaces, without the need for hand sanding or the use of masking tape. I further find that these were necessary functions of the lathe required by the defendant. Mr Birrell gave evidence, which I accept, that "had the functionality of the [Vixen] Lathe not been misrepresented to me", he would have bought the Mint lathe.
204. Thereafter, there were telephone conversations between Mr Birrell and Mr Myers, in which Mr Birrell made clear what he wanted to use the lathe for, and Mr Myers repeated his previous assurances. I find that he did describe the lathe to be supplied as "new" but did not use the expression "brand-new". They also discussed how long it would take for the lathe to be delivered, and Mr Birrell raised the possibility (for the sake of speed) of buying a used lathe which at that time was being advertised on the defendant's website. Mr Myers said he "would not want to do that to" him, which Mr Birrell understood as meaning that the lathe to be supplied to the claimant would be "brand-new". For the avoidance of doubt, and despite the evidence of some of the defendant's witnesses, I find that the defendant did indeed sell used lathes at that time. I come back to this later. Looking at the position between the parties at this stage, I find as a fact that all of the representations pleaded by the claimant in paragraphs 5 and 6 of its particulars of claim were indeed made to the claimant by or on behalf of the defendant, with the exception of that in paragraph 6.1, where Mr Myers said "new" rather than "brand-new". I further find that Mr Myers intended that what he represented to Mr Birrell was to be taken seriously by him in deciding whether to acquire a Vixen lathe.
206. The second quotation and the order
207. The defendant provided a further quotation on 19 December 2019. This differs from the first in that (i) it concerned two machines, namely the lathe and another machine called an "Aqua Wheelblast" (which, in contrast to the lathe, was described as "Ex-demo"), and (ii) delivery, commissioning and training were included in the price. It contained the same written statements about the lathe as the first quotation. The requirement for a deposit and a lead time of eight weeks to delivery were the same as in the first quotation. The deposit of approximately ?9,000 was paid by the claimant on 19 December 2019, and the defendant's sales records show that the sale bears the date of 19 December 2019. On 10 January 2020, the defendant sent an order acknowledgement to the claimant. This included a further copy of the terms and conditions of sale which previously appeared in the quotations (including clauses 1, dealing with general matters, 6, dealing with warranty, and 7, dealing with liability, as set out above), as well as a reference to an estimated dispatch time of eight weeks from the payment of the deposit.
209. On 6 February 2020, Mr Myers sent Mr Birrell a document called Vixen Lathe Delivery Instructions. This document begins "Here are some notes for the process you need to follow after ordering your new lathe." The process to be followed fell into 2 parts. The first comprised "Tasks prior to delivery". They included booking a forklift truck and driver for the delivery date, and an electrician to install the power supply needed. The second comprised tasks "Directly after delivery". They included the need to remove the back panel and then the small side panels (so that the forklift truck would be able to pick up the cast-iron base) and to remove the transport bolts securing the lathe to the pallet. They then included the need to lift up the lathe slightly, so that the feet which were supplied could be put on the bottom of the cast-iron base, and the lathe then replaced where it was to be operated. An electrician would be needed to put power to the machine, and an airline available so as to operate the door of the lathe. Once the machine had power, the customer was to contact the defendant to book commissioning and training. One thing that these instructions did not include was any requirement for, or responsibility of, the customer to level the machine. Indeed, it is clear from the correspondence between Mr Birrell and Mr Myers that Mr Myers undertook that responsibility.
211. Hire-purchase
212. Although the claimant had ordered the lathe from the defendant and paid the necessary deposit, Mr Birrell subsequently decided to fund the acquisition by hire purchase through a finance house called Paragon Business Finance Plc. The defendant's invoice to Paragon is dated 2 March 2020, and on it both the lathe and the wheelblaster were described as "NEW AND UNUSED YEAR OF MANUFACTURE 2020". The defendant's dispatch note for the goods, addressed to Paragon at its business address, but showing the claimant's name and address at the bottom, is dated 18 March 2020. It says, "NEW VERTICAL WHEEL LATHE SERIAL NO: WHL 118 20" and "NEW AQUA WHEELBLASTER SERIAL NO: AB 1215 1717 20".
214. The hire purchase agreement between the claimant and Paragon is undated, but the claimant's direct debit instruction for the instalments is dated 10 March 2020. The agreement contains a set of detailed terms and conditions. The effect of these was that Paragon undertook no liability for the matters about which the claimant complains in this action, but that it was entitled to all rental payments come what may, and could charge interest on any that were not made, could terminate the agreement for non-payment and retake the goods, and yet still recover the outstanding rental payments as a debt. The total payable under the hire purchase agreement was ?48,452.20. When Mr Birrell first began to complain about the lathe, Paragon told him that his remedy lay against the defendant if anyone. Hence this claim.
216. Delivery
217. The defendant dispatched the lathe on 18 March 2020, and it was delivered by a third party courier to the claimant's premises on Thursday, 19 March 2020. Although Mr Myers had agreed with Mr Birrell to be present at the time of delivery, in fact he telephoned and cancelled the appointment about an hour before the delivery took place. He offered to attend the following Monday, 23 March 2020, but Mr Birrell said that this would not be necessary. (In his witness statement, Mr Myers said that his offer was turned down because of the Covid lockdown, but his memory cannot be right. The lockdown was announced only on Monday, 23 March 2020, and did not take effect until Thursday, 26 March 2020.) On the day of delivery, Mr Birrell noticed an oil leak from the machine. He spoke to Mr Myers about this on the telephone, who advised him that this was from testing undertaken before dispatch.
219. On 18 May 2025 there was an exchange of WhatsApp messages between Mr Birrell and Mr Myers after the lathe had been moved for the first time since it was delivered. Mr Birrell was asking for a technician to visit to level the lathe. Mr Myers' response was "Levelling and set up is done right at the beginning of training. Doesn't take long. What's your plans for opening?" Mr Birrell responded "Ah ok no problem. Will any lifting equipment be required? It has been leaking a fair amount of oil where it was originally sat. I didn't notice it until it was moved." Mr Myers' response to this (in part) was "All I need to level it is a standard carjack. Odd that it was leaking oil, unless that's from the testing. They flush the pipes to check for blockages. It's possibly the oil from that". Mr Birrell noted that "there was a fair amount of oil on the pallet also. We will be able to see if it's leaked in the new position."
221. There was then some difficulty in arranging dates during the summer for commissioning and training on the new lathe. A number of dates were fixed, but had to be changed subsequently, and it was not until 20 August that the commissioning and training took place. In a WhatsApp exchange on 17 August, and in answer to a specific question from Mr Myers, Mr Birrell told Mr Myers that the lathe had a power supply connected to it, but that he had not yet powered it up. He asked Mr Myers whether he should do so, but was told not to. I accept this evidence, and find that Mr Birrell did not power up the lathe after it was delivered, until Mr Myers arrived for the commissioning and training on 20 and 21 August.
223. Oil leaks
224. During commissioning, Mr Myers saw puddles of oil on the floor. I find that he told Mr Birrell, after examining the machine, that this was because a pipe connection had become loose during the pre-delivery testing, but that he had now solved the problem. However, the problem was not solved. On 7 September 2020, Mr Birrell sent Mr Myers a message about further oil leaking from the lathe: "It's definitely leaking fairly heavy. I wiped the floor on the outside yesterday". He chased for a reply on 10 September 2020, and Mr Myers told him that he was waiting on a call back to see if a technician could visit. On 17 September 2020 Mr Birrell sent another message to Mr Myers, that the machine had "been leaking oil heavily since the day it arrived which is concerning me".
226. The condition of the lathe
227. Mr Birrell gave evidence (which I accept) that, when the lathe was opened on 20 August, it looked grimy, with oil and quantities of swarf present, and scratches around the internal casing and metal partition. There was also folded tape jammed in the door, with swarf embedded in it. Mr Myers accepts that Mr Birrell noted the condition of the machine at the time. (The defendant's own training guide says that the cutting area of the machine should be cleaned after each wheel has been cut.) When the lathe was turned on it was noted that the software contained 47 existing map entries. (Two of these were called "SEND HELP", one was called "bubonic plague" and one "TAPEWORM".) That means that at least 47 wheels had been mapped on that machine, whereas Mr Myers' evidence was that the defendant would perform only "a couple of test cuts" before delivering a new machine.
229. Given this evidence, I find that this machine had been previously, and significantly, used for purposes other than pre-delivery testing. It was therefore not in any meaningful sense a "brand-new" or "new" machine, ie one that had been tested before despatch, but which was otherwise unused. This was confirmed by the three engineering reports obtained by the claimant after the dispute arose, although I have not relied on them in reaching my conclusion. The first was prepared by Andrew Dunster of the British Engineering Manufacturers' Association ("BEMA"). He concluded that it was a reconditioned rather than a new machine. The second report was prepared by CNC Repair (UK) Ltd in June 2021. The maker of the report stated, "I wouldn't say it is a new machine or if it is it's a very badly built machine and very badly commissioned". The third report was prepared by another firm, Phase 3 CNC, in February 2022. The maker of the report stated that "Internally there are areas which raise ? doubts as to whether it can actually be a 'new' machine. I would not expect to see damaged conduit or signs of wear and tear on a new machine".
231. Date of manufacture
232. Moreover, the defendant was unable satisfactorily to establish how old the machine in fact was. There were three metal plates on the machine giving different dates. That on the material lathe was from the original Chinese manufacturer. It showed 191011, which in the Chinese system refers to 11 October 2019. But the second plate, attached to the motor, showed a manufacture date of August 2019. The defendant's own plate merely showed the date to be 2020. The defendant's own invoice to Paragon, dated 2 March 2020, stated that the equipment had been manufactured in 2020.
234. The other documentation relevant to this enquiry and provided by the defendant in the trial bundle was either ambiguous, meaningless or irrelevant. The lathe the subject of this litigation bore a "Vixen" serial number of 118. The evidence (which I accept) is that these serial numbers were allocated only after a machine was sold. In a list of machines by serial number, provided by the defendant, this was shown as allocated to the claimant, and bearing a date of 19 December 2019. As already mentioned, this was the date of the second quotation by the defendant to the claimant and the date on which the claimant paid its deposit of ?9,000. Yet the same list shows that machine 120 (which I infer was a newer machine) bears the date 29 January 2019, about 11 months earlier, and machine 121 (newer still, I infer) bore the date 17 January 2019, also about 11 months earlier. Moreover, the first three pages of the list show 26 lathes without serial numbers at all, but bearing dates earlier than that for 118. And each of machines 008, 009, 038, 044, 061, 067, 068, 069 085, 151, 158, 159, and 180 is also shown in the list twice, either with two unspecified dates, one specified and one unspecified date, or two specified dates. Machine 008 is expressly marked "(2 ND HAND)".
236. The defendant provided some photographs of lathes, some date-stamped 2023 or 2024, and one (not date-stamped) of a wrapped lathe with the number 118 written in manuscript on it. It also provided some invoices from May to June 2019, and three bills of lading, but none of these identifies any particular lathe. One of the bills of lading shows an issue date of 2 November 2019. Each bill of lading describes the goods as "10 pieces CNC lathe", that is, 10 lathes. But there is no further identification. The defendant invites the court to find that the claimant's lathe was amongst those shipped on the 2 November 2019 bill of lading, on the basis that the Chinese plate affixed to the machine showed a date of 11 October 2019. This is not impossible, but that is not the test for fact-finding. In the present case, a combination of the woeful lack of disclosure, the deliberate destruction of documents, and the problems of the serial numbers, just discussed, means that I am not satisfied that it is more likely than not that the claimant's lathe was shipped in November 2019. I simply do not know.
238. The defendant was unable to supply a copy of the invoice for machine 118 from the then Chinese manufacturer. None of these photographs or documents is of any assistance to me in establishing how old the machine was. In fact, in May 2025 and September 2025, the claimant made a number of disclosure requests for documentation relevant to this issue. I was not shown any response by the defendant to these requests, and I infer that there was none. As I have already said, cross-examination elicited the fact that the relevant records were destroyed by the defendant after this dispute arose (though this fact was not mentioned in the disclosure reports). And, as the lawyers involved in this case will know, that should not happen: see eg Douglas v Hello! Ltd [2003] EWHC 55 (Ch), [35].
240. I bear in mind (i) the three date plates, each showing a different date, (ii) the condition of the machine on delivery to the claimant as I have found it to be, (iii) the evidence of the 47 existing map entries in the software, (iv) the peculiarities of the defendant's list of machines by serial numbers, (v) the profusion of machines in that list that appear to have been sold or otherwise supplied twice, and (vi) the failure by the defendant (a) to produce any satisfactory documentary evidence supporting the dating of manufacture, or even (b) to call any witness who could give first hand evidence which would support its case. I also bear in mind the fact that relevant documents had been destroyed by the defendant after the dispute arose, making it impossible for the court to be sure of that date. Despite the limited evidence from the witnesses that the defendants did call (none of whom was in a position to give a definitive answer), I find that this lathe was not built in 2020, and was not a new machine as at March 2020, when it was sold to Paragon and delivered to the claimant.
242. Using the lathe to cut wheels
243. For the purposes of being trained by Mr Myers on the lathe, Mr Birrell bought some BMW and Audi wheels with cosmetic damage. These wheels were the subject of test cuts during training. Those tests resulted in uneven and distorted cuts on all the wheels except one, which Mr Myers cut successfully. In fact, at one point Mr Myers was obliged to stop the machine as the chuck was wobbling excessively. In his written evidence, Mr Myers referred to these wheels, and said "I suspect the wheels were buckled". On the evidence before me, I find that he simply assumed this, and did not himself inspect or test the wheels to check whether they were indeed buckled.
245. The relevant evidence includes not only that of Mr Birrell, but also of the supplier of the wheels, and Mr Megginson, an engineer from Everard, who inspected the wheels on 9 September 2020. All of this was to the effect that they were not buckled. Indeed, the engineer said they were totally normal. In addition, the defendant's own training itinerary says that three wheels were cut during training, but there is no mention on the itinerary that any of them was buckled. I find that that was indeed the position: they were not buckled. Moreover, although Mr Myers visually inspected the jaws of the lathe in position, he did not remove them from the lathe in order to examine them closely. The defendant's own engineering expert accepted that it would not be possible to tell whether the jaws were bent without first removing them physically from the lathe.
247. Was the lathe level?
248. Mr Birrell gave evidence that the lathe was lopsided from the beginning. The experts on both sides, having examined it, agreed that the lathe was not in a level position. One foot did not touch the floor. Mr Myers had told Mr Birrell on 17 August 2020 that he would "try to remember to bring my [car] jack" to the commissioning visit, in order to level the machine. It appears however that he did not bring the jack with him, and that he did nothing himself to level it. In his first statement Mr Myers said that the lathe "may not have been exactly level". In his supplemental statement, however, he said he "placed a spirit level on the [lathe] and considered it was level". Looking at the evidence as a whole, and especially at the words deliberately chosen by Mr Myers in his witness statements, I find that it was not level at the time of commissioning and training.
250. Limitations of the lathe, and the "trick"
251. During the training, Mr Birrell was told for the first time that the lathe could not map black surfaces without using masking tape. This would obviously slow down the mapping process, and therefore reduce the machine's productivity. As I have already mentioned, the quotation of November 2019 had said that the laser probe system enabled "a wheel profile to be mapped in under a minute". And, when Mr Birrell asked how he could use the lathe to repair damage to tapered edges, he was shown what Mr Myers described to him as "a trick". This was to open the side safety door and with his hand inserted into the machine use sandpaper on the damaged area, while the lathe was still spinning. As the experts confirmed, this is self-evidently unsafe. It is only possible because opening the side door does not prevent the chuck from spinning, unlike opening the main door, when a safety feature stops the machine. Moreover, it cannot and does not produce a diamond-cut factory finish.
253. Mr Birrell evidently thought that this "trick" was just a temporary fix for novices, because on 10 September 2020 he sent a photograph of such a damaged tapered edge to Mr Myers, and asked him how he would approach cutting it with the lathe. (In his witness statement, he says that he "must have been thinking that the wheel could be cut, just using a technique I had not yet been taught.") Mr Myers' response was that it should be hand-sanded as shown during training. Mr Birrell's immediate reaction was,
255. "So can the machine not cut the outer tapered edge? I am not comfortable just sanding the edge of a rim like that for a diamond cut service. We'll just get pulled up on it. Plus it'll not be possible to get an Identical finish across all four rims. Definitely not if they've been painted/powder coated. I'll need a more professional approach with it."
256. He referred to this "trick" as such (and using inverted commas) in an email of complaint sent on 18 September 2020, set out later. The contrast with the words used in the defendant's quotation in November 2019 is striking: the machine uses "state-of-the-art technology to create a top-quality finish, removing kerb damage or imperfections and reproduces the original diamond cut finish". Sandpaper, though undoubtedly useful, is not "state of the art" technology. Nor does it reproduce "the original diamond cut finish". It is notable also that Mr Myers did not respond to Mr Birrell's question, even by saying that the lathe could repair damaged tapered edges, but that (for example) Mr Birrell was not yet experienced enough to be able to do this (if that was his opinion).
258. In this respect, I note that the defendant's training guide contemplates that a certificate of training would be completed and signed off by the trainer, scoring the trainee and identifying areas of concern. Mr Myers confirmed in oral evidence that he did not complete or sign such a certificate. What he did sign (on 21 August 2020) was a training itinerary, which shows that three wheels were cut, and a certificate of completion of training, which certifies nothing more than the name of the trainee, the date and the fact of two days' training having been completed. Neither document suggests that Mr Birrell was not competent to use the machine, and indeed Mr Myers accepted in cross-examination that he himself had no concerns about Mr Birrell's fitness to use it. In his witness statement he said that Mr Birrell "picked up the training fairly well", though he qualified this by adding that "much of it is practice".
260. Safety
261. The instruction manual for the lathe makes the point that "Every effort has been made to make the use and operation of the machine as safe as possible". However, as I have noted, My Myers told Mr Birrell that he should open the side door and insert his hand in order to sand a wheel manually while the lathe was running. The instruction manual also tells the user to remove the swarf collection tray and empty it. The training guide makes clear that this is part of "Daily Maintenance". But this action too can be carried out without stopping the machine, and removing the tray exposes moving parts. In cross-examination, Mr Oakley was asked whether the machine was safe, given that the drawer could be opened in operation, to reveal moving parts. After a long pause, he finally answered that it was safe to operate while the drawer was closed, but unsafe to operate when it was opened. One of the risk assessments states that "Brushes [are] fitted on [the] opening to mitigate swarf coming out [of the] machine in normal operation." In fact, the brushes fitted to this machine were too short to do this, so that swarf could indeed come out of the machine in operation.
263. Post-training experience
264. After the three wheels that were cut during training, Mr Birrell bought six diamond cut wheels at a cost of ?600 in order to be able to continue learning how to use the lathe. He attempted to cut six customer wheels on his own before he eventually rejected the lathe on 19 September 2020. All of them had distorted patterns, and were unsaleable to customers. When Mr Birrell approached Mr Myers about this, Mr Myers simply told him that buckled wheels were the downside to the wheel refurbishment industry. Mr Birrell's evidence was that they were not buckled. Mr Birrell saw the wheels in question. Mr Myers did not. Mr Wood later examined one of the wheels, and was of the view that it was not buckled (Mr Oakley however did not examine any of them). I find that the wheels were not buckled.
266. On cutting one of these six wheels, however, on 3 or 4 September, the diamond tip on the lathe broke while Mr Birrell was manually winding the tip very slowly up to the edge of a rim. I have already noted that Mr Myers did not during commissioning check the jaws of the lathe by removing them from the machine (although that was what he himself advised Mr Birrell to do), but simply saw them in position. I find that this breakage occurred at a time when the machine was not being operated. By this time, of course, other wheels had already been cut with distorted patterns.
268. Mr Birrell enquired of the defendant about buying new tips, but was told they were ?90 each plus ?74 postage and packing. He refused to pay this, discovering that they could be obtained over the internet for ?25. A further incident occurred on 10 September 2020, when the lathe made "a substantially deep cut [in a wheel surface] on a safety pass". (A safety pass is one where the diamond tip does not make contact with the wheel surface.) Once again, when asked, Mr Myers suggested that the wheel must have been buckled, as he could find no fault with any of the machine settings. But he thought that the wheel map subsequently produced by Mr Birrell "look[ed] good". I infer from this that Mr Birrell by that stage knew how to operate the lathe.
270. Chuck out of alignment?
271. On 17 September 2020 Mr Birrell asked a question of Mr Myers:
273. "How can I check that the chucks are running true Terry? I've just carried out a speed check and at a slower speed and you can see the distortion as it rotates. It's got a fluctuation as it rotates. I'm reluctant to want to cut anything else at the moment as every wheel has cut top heavy."
274. Mr Myers replied:
275. "I have a measuring gauge that does that job. It's not something that can be done by eye really. Can you send me a video?"
276. Mr Birrell responded as follows:
277. "The video doesn't capture it so well. It's definitely out though. Those wheels cut identical yesterday. It's too much of a coincidence. Not one wheel has cut straight. If I run a slow speed test with out a wheel it's got a clear distortion. I've just put a spirit level on the arms. They are all out."
278. Mr Myers said:
280. "Right, we need to find out if it's the jaws first. Take off each jaw and put it on a straight edge. If you can see daylight through it then its bent. That will make every wheel act as though its buckled."
281. But Mr Birrell was unhappy with that suggestion:
282. "Can you possibly dowel to your head office and organise for a technician to come out sooner if possible please? I've got no confidence in using it. Being new it 's difficult to determine if you're doing things wrong, more so when I don't feel the chucks are running true ? "
283. Mr Myers was non-committal:
284. "I'll do my best ollie. The jaws are held on by two bolts mind. Very quick easy job. I'll get back to you."
285. Mr Birrell restated his position:
287. "I don't want to mess with it Terry. It needs a technician to diagnose it. The arms are definitely not running true though. It's been every wheel, and I've been thinking it's me, or wheels or buckled. I can't work with it like this. It's a stressful skill to learn as it is, let alone when it's not functioning correctly."
288. The next day, Mr Myers sent the following message to Mr Birrell:
289. "Good news ollie, one of my training appointments has cancelled for next week. I'll be with you thursday/friday and get it all sorted."
290. Disillusionment and rejection
291. However, in the meantime, also on 17 September, Mr Birrell had received an email from Annie Thompson, described as an "Account Handler" with the defendant. She had said (among other things):
293. "Terry has advised that there was a buckled wheel on the commissioning but the jaws were not bent
294. My colleague has informed me that on the 4th of September you called the office and explained that you had broken some tips. However, due to the cost of the Saturday delivery you bought tips elsewhere.
295. If you have had an impact this can cause the jaws to bend
296. We sell the jaws for ?698.21, however as a goodwill gesture I will apply a 50% discount to this ? "
297. Mr Birrell was thoroughly upset by this. Perhaps it was the straw that broke the camel's back. His lengthy reply to Ms Thompson (copied to Terry and to the finance company) speaks eloquently, not only of his many complaints, but also of his frustration. Although it is long, I think I should set it out in extenso rather than attempt to summarise or edit it:
299. "I do not appreciate this email one bit. You've not even had the decency to send an engineer to thoroughly diagnose the machine before having the audacity to offer a 50% gesture at nothing more than a guess. How do you even know the arm is bent without viewing the machine? Yet you're happy to request money from me. I can not believe what I'm reading. It's an absolute disgrace. Can you tell me what tests were carried out to check that the arms were not bent when Terry was operating the machine please?
300. This aside, I'm convinced it's the hub area that's running distorted. I can put the spirit level on any one of the arms, and in a particular position, they all give the same reading. Today I've run it at slow speed without a wheel, and you can clearly see that it ovulates out of sync. The two wheels that Terry cut during the training have been checked on the straightener. They are not buckled. The third wheel we cut successfully. Although, I was taught to rotate the wheel 180 degrees which likely makes up for the fact the chuck is not rotating true. This was all before I'd even touched the lathe myself.
301. I've only cut six wheels since training, and every one of them I've been advised is buckled and challenges I have to face in the alloy refurbishment industry. This is despite the most recent two reading straight on the straightener. I've yet to see a wheel run true on the lathe. The most recent two were identical wheels. They both cut an uneven cut with exactly the same issue. It's too much of a coincidence to suggest nine wheels, including the three in training are buckled. I still have all three wheels to verify this.
302. Furthermore, Terry did comment on the movement of the wheel/chuck during training. He actually checked to see if the wheel was tightened securely after a speed check as he stated "the chuck is moving a lot more than it usually would". I have this recorded on my phone if you would like me to share this with you? The lathe was shaking so much during the training it was also making the aluminium partition shake erratically which he was concerned about it enough to check to see that it was tightened sufficiently.
303. Regarding breaking the tip, there was no 'impact' whatsoever. This tip was broke was when bringing the tool to the edge of the rim to detect set tool position at x10 speed. If you're not familiar with this, it's unbelievably, slow and delicate. It left the smallest indentation on the edge of the rim. This would definitely not bend a thick metal arm. This is nothing more then a disgraceful attempt to defraud me out of money without taking any responsibility for your equipment. We have CCTV all around the workshop area, I'm sure we can substrate this. It's completely out of order of you to suggest this without having the decency to speak with me personally or have an engineer inspect the lathe. You still don't even know that it is bent, but you're happy to demand money from me because you don't have an engineer that can get to me for three weeks, which is four weeks at the point of raising my concerns regarding an oil leak I've reported several times since the lathe was first delivered.
304. I will also clarify I was definitely not prepared to pay ?74 to post an item no bigger than a stamp. This only highlights the level of customer service at Vixen. The ?90 requested for the tip is also grossly overpriced when they can be found all over the internet for ?25. Even at ?25, they are marked up from the $7 they can be purchased at on Ali Express. They have exactly the same serial number the ones you're requesting ?90 for.
305. I'm not surprised you have gone down the route of suggesting I've damaged the machine. Naturally, I've become concerned about the lathe, and I've started to ring around in the industry. I've been told that Vixen will tell first me that you've bent the arms and request payment for a new set without even inspecting. This is exactly what you've done. I've also been advised if I buy the arms it will not resolve the problem. I've been assured Vixen will do absolutely everything and anything to not take responsibility for any issues you have with the lathe. People are taking in the industry, sharing the experiences. There are far too many unhappy customers of yours who have experienced the same issues. The fact your dedicated lathe engineer Ian can not get to me for over three weeks only highlights the scale of the issues you're having with the lathe, and how poor your after-sales service is. You have nowhere near the level of service you present yourselves to have on your website, which is a clear misrepresentation. My business is now suffering financially as a result of this.
306. Going back to the oil issue, this has been leaking heavily from the moment it was delivered, but was advised it was due to loose-fitting that had not been reconnected to which he resolved during training. The lathe has continued to lose oil since the training on August 20 2020. To the point, the oil alarm has been going off continuously. Terry has advised I loosen one screw from the oil tank, so the tank tilts and manipulates the tank into thinking the level is full. This is despite stressing my concerns about the fact that the machine is losing an awful lot of oil since May. I've attached some images below.
307. Most importantly, I'm convinced the lathe is not brand new. It arrived incredibly grimy. Terry even commented on arrival in training that it was a little messy inside. The internal partition was damaged on arrival. There is also damage to the back inner casing which that looks like damage from a loose wheel at some point. There is also masking tape and folded card in the internal left side door shut. It has been used to stop the partition door from vibrating. There are signs of tape residue inside the lathe, and a broken pipe, which I've also photographed below. Lastly, there were several maps already on the PC when Terry first logged on to the screen. He even chuckled at some of the maps/test files saved stating 'HELP', passing it off as an internal joke between colleagues. I'm certain the machine had been used previously, refurbished and sold to myself as brand new. I do not mean general testing; there are signs of wear and tear everywhere internally. The masking tape in areas is someone's else's personal preference and not something you would find on a brand 'new' machine.
308. The warning signs were there the moment I took delivery of the equipment. Nobody from Vixen was present on the day to help take delivery of two very large bits of machinery. The delivery driver could not believe it, as to remove the lathe from the pallet, it's actually quite a task. The lathes rear and side partitions need to be removed in order to fit the feet of the lathe. I was expected to do all of this without any pre-warning with a driver putting me under pressure. It was just fortunate I had an array of tools to hand even to be able to sort the incredibly difficult task with Terry's guidance over the phone. Terry only told me on the morning of the delivery he would not be present. This is the customer service I got in return for spending thousands of pounds with you.
309. All of this aside the lathe is not fit for purpose. It can not cut and roll the outer edge of alloys, or certain alloys. Virtually every diamond-cut alloy on the road have a tapered edge. I've been advised to sand the rounded part of the outer edge of an alloy with a hand DA sander, which is ridiculous. I have invested in machinery to offer a professional diamond-cut service, and I'm being told I have to hand sand edges to make up for the fact the lathe can not cut where the majority of alloys are damaged. To achieve an OEM finish I've been shown a 'trick' where the wheel is spun at speed, and the side safety door is opened while I hand sand the wheel with a DA. This is an utterly unprofessional approach to refurbish an alloy and is a safety hazard I would never expect my employees to implement. It's not what I expect from a ?30k investment.
310. During the training, I've also been advised the laser can not read gloss black wheels which is the majority of our work. Most diamond-cut rims have black inserts. To overcome this, I've been advised to apply masking tape to the wheel so the laser can read it. Again, this is not something I'm prepared to do when I've invested so heavily in equipment I was lead to believe is the best in the industry. If it can not accurately read all finishes on the market, especially one so common, it should not be on the market. You're selling a lathe in the market place that is far from fit for purpose. You're messing with people's lively hoods in the process, as you are fully aware of the issues this lathe has, but are happy to keep selling it.
311. The machine with heavily leaking oil, loose cables, and a chuck that ovulates is a safety hazard. I've completely lost confidence in it, and your ability as a company to even offer any respectable level of aftercare service to support the ongoing issues I'm likely to have based on your previous customer's feedback. I'm not prepared to put any more of my customer's wheels at risk, step around leaking oil, or hand sand the edges of alloys. I'm also not prepared to go down a rabbit hole of weeks/months of buying parts at my expense with no engineer turning up to diagnose the problem. This experience is what others have reported. Your actions right from the off have suggested I'll be treated no differently.
312. I'm also not prepared to watch my business suffer financially with loss of earnings while paying finance a machine because you have no engineers to send to diagnose a lathe that is clearly not fit for purpose. Or while you make ludicrous guesses over the internet at the probable causes at my expense. I'm also not prepared to turn a blind eye to the fact the machine has numerous signs of previous ownership. Whether this was done intentionally by yourselves, or by your supplier in China, I'll remind you again; this is fraudulent. I will definitely not be removing or fitting any parts to the faulty machine either. I believe you've asked me to do so to void the warranty.
313. As a result of the above, and supporting images attached, I would like the lathe collected immediately, and my finance company to be reimbursed in full. To make you aware I will not be paying any further finance payments against this machine for the reasons I've explained above. I have copied Paragon into this email, as I feel they should be aware the asset they have financed is not fit for purpose. I have videos, voice recordings, and the original three alloys used during training to substantiate my complaint.
314. I trust you will act accordingly, and get this resolved quickly as my business is suffering financially."
315. Mr Andrew Raine, the aftersales manager, replied to Mr Birrell's email on 21 September 2020:
317. "I understand your frustration with the machine if it is had some snags and you are not yet fully confident as you only completed training on August 21st. Let me assure you we will ensure all warranty obligations are met and we will continue to offer additional ongoing support to assist your gaining the knowledge and experience in operation of the machine like we have done to the 140+ lathes both overseas and the UK. I would like to confirm on email that Terry Myers has changed his schedule so he can be onsite Thursday and Friday of this week. I understand you have told him he is wasting his time as you do not want the machine, but I believe this visit is essential to assess the machine and give you additional support to resolve your concerns. Terry will be able to give you information whilst onsite as he was the sales engineer who successfully conducted the training (sign off & certs attached).
318. I can assure you the machine is a new and not second user lathe. For your information the lathes are thoroughly tested during production by the factory team with a final sign off by a senior member the factory team before they are shipped. During this process several wheels would have been mapped and cut successfully. Terry has then set up the machine onsite and trained for 2 days cutting the wheels available and no jaw issue was highlighted at any stage. If any issue was highlighted then of course we would of resolved during that period. Nothing was reported to aftersales until Friday 4th when you spoke with Terry and Nikki regards replacement tips you had broken yours. These were quoted for, including the additional Saturday delivery premium but you decided to purchase the tips elsewhere which is your choice. We have done extensive trials of various tips and the one sourced offered the best cut and durability and are not easily damaged. I cannot comment on cheaper alternatives as we do not recommend them.
319. As mentioned, I believe the best route would be for Terry Myers to visit site on Thursday to go through your concerns and give you more confidence in the machine whilst he's onsite. Please advise you will allow Terry to support on Thursday?"
320. In passing, I note that, despite the reference to the lathes being "thoroughly tested during production by the factory team with a final sign-off by a senior member of the factory team", in fact no disclosure of any documents relating to this sign-off process was given by the defendant. Indeed, the defendant's witnesses in cross-examination admitted destroying the relevant records, so that no such disclosure could have been given. Neither did it call any first-hand witness evidence at trial that the required sign-off had been carried out in this case. This is evidence which, if it existed, would be supremely within the control of the defendant. But there was none. In light of the failure by the defendant to lead evidence showing that the lathe had indeed been finally signed off "by a senior member of the factory team", and further in light of the destruction by the defendant of the relevant documents, I am entitled to and do infer that it never was in fact signed off by such a person.
322. Mr Birrell replied to Mr Raine the same day, politely thanking him for his "prompt response", and saying that he himself had spoken to Mr Myers that morning. But he remained of the view that "The lathe is not fit for purpose, there are numerous issues you have not touched on." He set some of these out, including that it leaked oil from the outset, could not cut tapered edges, and needed masking tape to map black surfaces, and concluded:
324. "The machine is not fit for purpose. It's not professional enough to meet my requirements, nor is your aftercare service.
325. Please can you arrange the collection of the lathe as soon as possible. It is already heavily effecting me financially."
326. Mr Raine sent a further reply later the same day, saying
328. "We will not accept the return [of] the Wheel Lathe as they are fit for purpose and successfully used in businesses in the UK and overseas to refurbish alloy wheels."
329. I note in passing that, in saying that "they are fit for purpose and successfully used" Mr Raine is referring to the lathes generically, and not to this particular lathe as delivered to the claimant. He went on to suggest that Mr Myers should attend the claimant's premises to assess the machine and offer additional support. What he did not say was that, contrary to Mr Birrell's allegations, the lathe did not leak oil, could indeed cut tapered edges, and did not need masking tape to map black surfaces. I infer that this was because he knew that these allegations at least were true.
330. On the following three days there were further emails back and forth between Mr Birrell and Mr Raine. Mr Raine was trying to persuade Mr Birrell to accept his offer of Mr Myers' attending the claimant's premises. Mr Birrell was not interested in this, saying that he was rejecting the machine as unfit for purpose, and threatening legal proceedings in respect of his losses. Mr Birrell's final email, on 24 September 2020, began in pithy fashion:
332. "No further site visits will allow the lathe to roll out alloy edges, or map a black alloy",
333. and concluded:
334. "Please do not email again, unless it's to arrange the collection of the machine."
335. To this I simply add that most of Mr Birrell's emails to Mr Raine were copied to others, including Mr Myers. But Mr Myers did not respond to any of them to say that what Mr Birrell was alleging was not true.
336. The finance company, Paragon Business Finance Plc, had also been copied into the correspondence, and was well aware of Mr Birrell's complaints. By letter of 14 October 2020, Paragon wrote to the defendant saying that it had inspected the machine. The letter repeated Mr Birrell's complaints about the inability of the lathe to cut tapered edges or read and map black surfaces, the chuck being out of alignment, there being an oil leak, and the evidence that the lathe was not in fact new at all. The letter concluded that
338. "Paragon requires that the Asset is collected within 10 working days and that the sum of ?27,995.00 + vat is remitted within that time."
339. The defendant instructed their present solicitors to respond to that letter. This was sent on 28 October 2020, and denied all liability. It is however notable that it did not deny the allegations that the lathe was unable to cut tapered edges or read and map black surfaces, that it suffered from oil leaks and that the chuck was out of alignment. On the other hand, it did in terms deny that the machine was not new, and it also referred to the breaking of the diamond tip in early September. Mr Birrell himself responded to that letter with a long letter of his own of 16 November 2020, suggesting that the solicitors had not had "full access to all of the documents relating to this complaint", and seeking to "correct and share critical events that have not been raised".
341. It is not necessary for me to deal in any detail with further correspondence between the parties. It is clear that the claimant had rejected the machine, but also that the defendant had refused to accept the rejection. The battle lines were drawn. I add only that I find that the lathe remained on the claimant's premises, undisturbed, except by experts retained by either side to examine it and report to their clients.
343. Mr Birrell did make enquiries with the alternative supplier, Mint, about acquiring a replacement lathe to undertake the repairs which the defendant's lathe could not. This replacement would have been the machine which the claimant would have acquired had it not decided to go for the defendant's lathe. Mr Birrell ordered the lathe at a cost of ?43,194, including VAT, for delivery in May or June 2021. He paid a deposit of ?4,319.40 (ie 10%) on 1 April 2021. However, subsequently he changed his mind, and the deposit was returned to him. I find that this was because he considered that he had no room to store the defendant's lathe as well as install a new lathe from Mint. The defendant says that Paragon in their email to Mr Birrell of 11 November 2020 offered to store it. What the email says is "If you intend to remove the lathe can you please advise Marcus so that we can arrange for it to be secured". In my judgment, this is ambiguous. It is certainly unclear that Paragon would pay any storage charges.
345. At this time the defendant was telling the claimant that the defendant wished to inspect the lathe, and wished it to remain connected to power and air for this purpose. Mr Birrell was also concerned that, if the machine was moved, the defendant would say that the move caused any damage. Accordingly, he considered that it was better to leave the lathe in position until the end of the dispute with the defendant, when he could purchase a new one. There were also other financial considerations which weighed with Mr Birrell at that time. These included the effect of Covid on the claimant's business, the need to renew the vans which carried out the mobile part of the business, and the need to save funds for litigation, should that become necessary.
347. The question was raised as to whether the claimant was able to finance the acquisition of a second lathe whilst still paying for the first one. The Mint lathe would have cost about ?36,000 to buy, but financed over three years would cost about ?15,000 per annum. According to its financial statements, as at the 31 March 2021 the claimant had cash in hand of about ?107,000. Its bank statements show that in September 2020 it had cash of about ?78,000, rising to about ?149,000 by August 2021. However, this does not take account of liabilities incurred and to be incurred, for example in relation to the payment of rent and other expenses of the premises, wages, and corporation tax and VAT payments. On the other hand, the claimant's own calculations suggested that a working lathe would generate receipts of about ?5,600 per calendar month.
349. Expert evidence
350. I turn now to consider the expert evidence in the case. I have already commented that the expert "accountancy" evidence submitted in this case is really no more than (nevertheless useful) written submissions, organising underlying factual evidence into a more assimilable, tabular form. Just because accountants organise it does not make it expert. None the worse for that, of course. Lawyers have prepared some alternative forms of factual presentation since time immemorial. That is not expert evidence either. But the accountants were not the only experts called, and there is a more important issue to deal with.
352. This arises in relation to the expert engineering evidence that was adduced. I make clear at once that I am casting no aspersions on the status of this evidence as expert evidence. But I do have comments to make in relation to one aspect of it. After Mr Wood had given his expert evidence for the claimant, Mr Oakley was called to give his expert evidence for the defendant. At the outset, Mr Goldberg KC for the defendant (apparently without warning to the claimant) sought permission to examine him in chief, which permission, after hearing Mr Jagasia, I gave. This new evidence in chief dealt with a revision (very late, and apparently overnight) to Mr Oakley's report in relation to the safety of the machine. In particular, this related to the absence of a lock to the swarf drawer, in that it could be opened at any time, even when the machine was in operation. It became apparent in cross-examination that this revision was entirely due to the fact that someone in the defendant's legal team had suggested to the expert that he reconsider his opinion. It was suggested on behalf of the defendant that Mr Oakley was not asked to reconsider his opinion, and did not change his opinion. He was simply clarifying his opinion. But my notes of the evidence show that, in answer to a question from the claimant's counsel, he said that he had changed his mind.
354. It does not matter for present purposes which member of that team it was. But I take the gravest view of any interference with the opinion of an expert who owes his loyalty to the court, above that to the client who instructs him (Commercial Court Guide, 2022, Appendix 8 paragraph 1). If Mr Oakley, of his own initiative, took the view that he had changed his mind on some material point in his expert opinion, then that is one thing. He should of course immediately tell his solicitors of this (Commercial Court Guide, 2022, Appendix 8 paragraph 8). And they would have the keenest interest in knowing. But if a member of the legal team suggests to the expert that, in light of something that has happened at trial, he might like to reconsider his opinion, that is another. I make clear that this is not about the preparation of any expert opinion or joint statement, unlike the comment by Rajah J in Marples v Secretary of State for Education [2025] EWHC 2794 (Ch), [27].
356. Mr Wood (for the claimant) prepared four expert reports. In the first, he was instructed (inter alia) to
358. "a) Inspect the lathe and produce a report commenting on its condition. Consider the issues identified with the lathe and comment whether those issues are typical to new lathes on the market or not. ?
359. b) Consider and comment on the alleged advice provided by Vixen to open a safety door whilst the lathe is in operation and hand sand the edges of alloys to remove curbing from the edges of the alloys.
360. c) Consider and comment on the lathe's software and the date when the software was installed to try to establish whether the lathe was new or reconditioned.
361. d) Review and comment on the expert reports prepared by CNC Repair (UK) Ltd, Phase 3 CNC Limited and the British Engineering Manufacturers Association Limited."
362. In the second report, he was instructed (inter alia) to
364. "1. Identify all health and safety issues concerning the lathe and its non-compliance to the applicable UK standards.
365. 2. Comment on whether the lathe complies with UK health and safety regulations. Identify whether or not the lathe could be made compliant and how easy it would be to make the lathe compliant ? "
366. In the third, he was instructed to
368. "revisit site, inspect the machine and make comment on the following areas:
369. 1. The limitations and accuracy of a 3-jaw chuck
370. 2. The distortion observed on wheels cut on the lathe during initial training and commissioning
371. 3. Inspection of the baseplate concentricity and condition
372. 4. Inspection of the jaws that hold the wheel in position
373. 5. The level of the lathe."
374. Those first three reports are all dated 15 August 2025. The fourth is dated 1 October 2025, and is called a "Supplementary Report". In it, Mr Wood was instructed to
376. "consider and provide [his] expert opinion on the following:
377. 1. Whether or not machining a wheel in the form of demonstration would be helpful given the fact that both experts agree that the lathe was not levelled properly and has some issues that might be attributable to the lathe being unable to cut wheels true?
378. 2. Even if the lathe was levelled properly would it be able to cut wheels true during the demonstration based on the defects identified in the expert reports?
379. 3. Would it be safe to use the lathe in operation given the major health and safety concerns which both experts agreed to?
380. 4. If the defects identified in joint expert reports have been rectified, what is the likelihood that the lathe would be able to cut wheels true, cut edges of alloys and provide a full uncompromised repair of an alloy?"
381. By contrast, Mr Oakley (for the defendant) prepared a single report, dated 10 September 2025, dealing with both engineering and safety and compliance issues. It summarises his instructions in this way:
383. "2.2. A report is required in response to the BEMA Report, the phase 3 CNC Report and the report of Mr Wood to assess whether the Lathe was;
384. •    New/Brand New/Second Hand/Refurbished;
385. •    Faulty;
386. •    Irrespective and inclusive of the above, of merchantable quality and was capable of enabling Car Wizard to provide services to its customers for the repairing of alloy wheels by removing kerb damage or imperfections and reproducing the original diamond cut finish of the wheel as per Car Wizard's requirements."
387. Mr Wood and Mr Oakley also produced a joint statement on "Engineering and Compliance" dated 26 September 2025. Although there was a considerable interval of time between the rejection by the claimant of the machine, and its examination by the experts, I am satisfied that nothing happened to it in the interim. I am in particular satisfied that Mr Birrell was concerned to preserve it in situ, untouched, until examined, so that the defendant should not be able to allege that any damage was caused by moving it.
389. As I have already said, on the whole I found Mr Wood's expert evidence more credible than that of Mr Oakley, and where they differed I have usually preferred that of Mr Wood. Nevertheless, there was some measure of agreement between the two engineering experts. They agreed that the lathe could not be described as "brand new", though they disagreed about whether it could be described as "new". Mr Oakley said that the machine would be "new" if it showed no signs of wear. They agreed that the machine was not level when they inspected it. They agreed that the chuck and base plate showed numerous signs of damage, and that there was damage to the inside of the machine, in particular to the internal conduit to the framework. They agreed that the chuck was out of level on the horizontal axis. They agreed that the guards to the front and side of the machine were poorly fitted. They agreed that the lathe could not map black surfaces without the use of masking tape.
391. As to safety and compliance, the experts agreed that opening the side panel in order to undertake a hand-sanding operation would pose a major safety hazard to the operator, and that the front drawer was not interlocked and was easily removable, exposing a rotating main spindle which presented a significant entanglement hazard. They agreed that the lathe was not supplied with an EC Declaration of Conformity on delivery, and the declaration provided in November 2023 was defective in the respects identified in a schedule to the particulars of claim. They further agreed that the lathe failed to comply with the requirements of BS EN ISO 23125:2015 such that it was not and remained unsafe to operate, as particularised in a further schedule to the particulars of claim. And they agreed that there was an absence of labelling to a number of wiring terminations contrary to BS EN 60204 :2018 'Safety of machinery - Electrical equipment of machines'. They also agreed that there was no CE mark on the motor of the Lathe (contrary to the Supply of Machinery Safety Regulations 2008).
393. However, they disagreed as to whether the lathe could cut the tapered edges of the wheel. Mr Wood said it could not. Mr Oakley's view was that
395. "With the correct programming and orientation of the cutting tip it should, in my opinion be possible to roll the edges of a wheel using this Lathe. The programming and setup to do so is more advanced than simply scanning the spoke profile of a wheel and would require the operator to have significant experience of CNC programming."
396. But, with all respect to Mr Oakley, this is a purely theoretical view, as demonstrated by his use of the phrase " should? be possible". Mr Oakley did not himself perform this manoeuvre, or see anyone do so (or even see a video recording of anyone doing so).
397. Mr Myers' evidence in court about how cutting the edges required the operator to "manipulate [the] map" was equally theoretical. Indeed, Mr Myers and the other witnesses called by the defendant did not respond to the claimant's allegations by saying that the lathe could do this. It would have been simple to say this. Mr Myers did not do it. Mr Birrell, despite training, could not do it. The defendant simply refers to the number of machines sold and says it is "highly improbable" that the users are not cutting edges. It would have been easy to ask them. Yet no-one on the defendant's side appears to have thought to do so. I prefer the opinion of Mr Wood to that of Mr Oakley. On the evidence before me, I find that the lathe could not cut the tapered edges.
399. The experts also disagreed as to whether the machine was leaking oil. Mr Wood said he "did observe oily surfaces in and around the machine indicative of excess oil application," although "the oil reservoir [was] too low to allow the pump to supply any oil to the system". Mr Oakley said that "At the time of my inspection there was no evidence of any oil leaks present", although he noted that "The oil reservoir was low and hence oil was not being pumped into the Lathe." So his observation is of no real value. Again, however, I prefer the evidence of Mr Wood and, taken with the evidence of Mr Birrell and indeed Mr Myers, I find that there were indeed oil leaks.
401. There were also some safety and compliance issues on which the experts differed. For example, Mr Wood said that shielded cables to the motor had not been correctly terminated, presenting a risk of electromagnetic compatibility interference on the motors. Mr Oakley disagreed. Mr Wood also said that, because the motor cables in the panel were left hanging in front of safety circuits, there was a risk of interference on the safety equipment, thereby causing electrical trips. Again, Mr Oakley disagreed. Mr Wood said that the amount of swarf which would be generated from use of the lathe would mean that the guards would need to be removed each day to allow for cleaning, but the guards were not designed for such frequent removal and the need for this was not identified in the Operations Manual. Once more, Mr Oakley disagreed. And Mr Wood said that the Operations Manual accompanying the lathe did not comply with the 2008 Regulations in that there was no mention of the electrical safety switch, there were no maintenance checks specified to check correct functionality and safety, and there were no electrical diagrams to aid with basic fault finding. However, in all these cases I preferred Mr Wood's evidence to that of Mr Oakley.
403. The main things that I take from the evidence of the engineering experts (both where they agreed and where I preferred the evidence of Mr Wood) is that the quality of the lathe was poor, it was badly commissioned, it exhibited damage inside and out, it suffered from important limitations which meant that it was not safe in operation, and it could not fulfil the claimant's purposes, as known to the defendant. It also did not meet various safety and compliance requirements of the applicable law. Mr Oakley himself makes clear that material records that he asked for from the defendant were not provided, that Mr Myers never demonstrated to him that the lathe could cut tapered edges, and that he accepted that sanded tapered edges would not be as good as diamond-cut tapered edges.
405. Overall, I am satisfied on the evidence that the lathe did not conform with the description given in the order invoice (that it was new and unused, and manufactured in 2020) nor with the description given in the defendant's quotation documents. I am satisfied that it did not comply with the relevant safety standards in a number of important respects. I am satisfied that the representations set out in paragraph 5.1 and 5.2 of the amended particulars of claim were untrue in material respects. The lathe could not reproduce the original diamond cut finish on tapered edges. And, whether or not it could map a wheel in under a minute, it would be slower in dealing with black wheels, because masking tape would have to be put on and taken off. I am satisfied that the representations set out in paragraph 6 of the amended particulars of claim were also untrue. The lathe was not new. The lathe was not the best on the market, because it could not do the things which the (more expensive) Mint lathe could do. The lathe was not of merchantable quality. The lathe was not fit for the claimant's purposes, which the claimant through Mr Birrell had made known to the defendant's representatives. The lathe was not capable of mapping and cutting alloy wheels with high precision and accuracy.
407. As to the condition of the lathe delivered, if it had been properly checked and signed off by a senior employee before it left the defendant's premises (as it should have been), it would have been discovered that it was not new, that it was leaking oil and that it was internally damaged. It was negligent of the defendant not to do so. If it had discovered this, I am sure it would not have delivered the lathe to the claimant. As to the capabilities of the lathe as a product brand, the defendant (through Mr Myers) knew that the claimant wished to use the lathe for repairing alloy wheels, including their tapered edges, and including those with black surfaces. Mr Myers assured Mr Birrell that the lathe could undertake "full" restrorations, implying that it could deal with all the things that Mr Birrell wanted to do. But neither Mr Myers nor anyone else on behalf of the defendant took any sufficient steps to advise the claimant of the limitations on the functionality of the lathe before it was acquired, including that it could not produce a diamond cut finish to repairs to tapered edges and it could not map black alloy wheels without the use of masking tape. Again, in my judgment it was negligent of the defendant not to do so.
409. The claimant's losses
410. The claimant's claimed losses include the following. First there are the direct losses incurred by the claimant in (1) paying the deposit on the lathe, (2) entering into the hire purchase agreement with Paragon (in relation to which the claimant discharged all its financial obligations by March 2023), (3) spending time (through Mr Birrell) in dealing with the dispute, (4) accountancy charges of ?1,650 in respect of services provided by accountants Milsted Langdon LLP in advising Car-Wizard in relation to its claim, and (5) storage charges for the unused lathe once it was rejected by the claimant (calculated as a pro-rata share of the rent of the premises).
412. In relation to any claim in contract, however, losses (1) and (2) are simply the price to be paid for the contractual rights that flow, and hence the contractual compensation that is payable in order to put the claimant in the position that it would have been in had the contract been performed.
414. Direct loss (3) is Mr Birrell's time spent in dealing with the dispute. As he said in his evidence, "This is based on my estimate of the time spent by me, at an hourly rate estimated by Car Wizard's expert". However, the forensic accountants in their joint statement agreed that no value should be attributed to the time spent on the claim by Mr Birrell. The reason for this was that, if the contract had been performed, the company would have made the profits for which a claim is made, and Mr Birrell would have been engaged in producing those profits. To award the claimant those profits as well as Mr Birrell's time would amount to double recovery. The accountants did not express a view about the recoverability of this loss in a claim based on tort rather than contract.
416. Direct loss (4) comprises accountancy charges of ?1,650, in respect of services provided by Milsted Langdon LLP in advising Car-Wizard in relation to its claim. The accountants agreed that, if this loss was made out on the evidence, it would be an "incremental cost" to the claimant. I assume this means that in their opinion it would be recoverable. Once again, however, the accountants do not seem to have distinguished between claims in contract and claims in tort.
418. Direct loss (5) comprises storage charges for the unused lathe, once it was rejected by the claimant. It was taking up space in the claimant's premises, for which the claimant was paying rent. But, apart from an abortive attempt to buy another lathe, there was no evidence that, if the Vixen lathe had not been there, it would have been used for any other revenue-generating purpose.
420. I referred above to the measure of the compensation that would be payable for breach of contract, in order to put the claimant in the position that it would have been in had the contract been performed As to this, I am also satisfied on the evidence before me that the claimant has suffered a loss of business that he had hoped to gain by acquiring the machine. This evidence was given by Mr Sacco orally and by Mr Swan in his witness statement, and was confirmed by a number of letters in the bundle from trade customers who said that they intended to use the claimant's services but could not do so because of the problems with the lathe. In addition to the loss of business from trade customers, Mr Birrell says (and I accept) that he has lost business from private (ie non-trade) customers, although he accepts that (i) this was less significant than the loss from trade customers, and (ii) it is more difficult to quantify.
422. I agree that the quantification of such loss of business (whether trade or private) is self-evidently problematic. It involves a counterfactual state of affairs which never happened, and which cannot be hypothesised with any certainty. Nevertheless, there are a few matters on which I can make findings without much difficulty. The first is that the period of loss should begin at the beginning of September 2020. As at that time, I find, a price of ?90 per wheel would have been a reasonable one. The end point for the period of loss is when the machine comes to the end of its useful life. There was no evidence before me about this, but I note from its accounts (as indeed did Mr Hatcher in his report) that the claimant company charges depreciation at 20% per annum on plant and machinery, so that a maximum of five years is being allowed for useful life. However, the reports of Mr Hatcher and Mr Pocock concentrate on the four years from September 2020. Mr Birrell himself accepts that, although there were few options available to customers for diamond-cut repairs in the Bristol area in 2020, there were more by 2025. That increase in availability would point to price competition (meaning lower profits) unless there were a corresponding increase in wheel repairs. As to this, there was no evidence either way.
424. Some eight trade customers supplied information about the work they would have given to the claimant, and I see no reason to disbelieve them. The claimant enjoyed a good reputation and had an established customer base. (I note that only five of these eight customers were actually pleaded in the amended particulars of claim. I consider the significance of this later.) On the basis of the data supplied by the claimant to the accountants who were engaged to consider the quantification of the losses, the estimated loss of gross trade revenue from September 2020 to August 2024 was ?158,000 in year one, ?340,000 in year two, ?346,000 in year three, and ?234,000 in year four. Given that the accountants from each side were agreed on these figures, that amounts to ?1,078,000 over four years. The accountants also agreed on a monthly loss of ?19,000 going forward from September 2024. I see no reason for me to try to repeat the same exercise. But those figures are for loss of gross trade revenue, not profits.
426. As to ascertaining what the lost trade profits were, it is necessary to calculate what would have been the costs incurred by the claimant in earning that revenue. This will cover any consumables needed (chemicals, paint and powder), running costs (power, oil etc), and operator costs. It will also include a sum for annual maintenance and repair costs associated with the lathe to keep it in good enough condition to earn the predicted revenue.
428. As to the first of these, Mr Birrell's written evidence was that "Achieving an 'as new' finish will require chemically stripping the damaged wheel and then powder coating it before machining it on a lathe with a diamond tip to achieve a 'factory finish'." However, it appears from Mr Hatcher's report (at 3.20) that he was advised by Mr Birrell that
430. "the alternative process offered to potential customers requires additional labour time in comparison with a diamond cut process which is machine based, however the latter incurs machine operating costs. Mr Birrell also advised that wheel repairs do not incur significant cost of sales in terms of materials, consumables etc., such that the majority of cost of sales purchases incurred by Car-Wizard relate to parts for body repairs."
431. This is evidence that should have been given by Mr Birrell himself in his own witness statement, particularly since it does not sit easily with the statement quoted above from Mr Birrell's own witness statement. It is most unsatisfactory for it to be given in the form of hearsay evidence by Mr Hatcher. And, even if it were to be given by Mr Hatcher rather than Mr Birrell, then, as I have already said, it should have been given in a factual witness statement exchanged with other such statements, rather than left to an expert report: see the Commercial Court Guide, paragraph H2-12.
433. The same applies to the report of Mr Pocock. He says (report, 3.3.6) "that Car-Wizard's website contains a general description of the 'Diamond-Cut Wheel Repair Process' which refers to chemical stripping, priming and lacquering the wheel". He gives information (at 5.2.10-5.2.11), obtained from a company called Spraybooth Technology Ltd, that consumables costing about ?12.80 would be required per wheel, though this appears to be an average of costs for both diamond cut and powder-coated repairs (the former, according to Mr Birrell, requiring fewer consumables, if any). Multiplying that by the number of wheels implied by Mr Hatcher's calculation of loss of trade and retail business, Mr Pocock put forward a figure of ?157,451 for consumables over the same period. Mr Hatcher agreed that arithmetical calculation, though not the base cost of ?12.80.
435. As to the second (power), Mr Hatcher refers to this briefly in his report (at 4.6) but gives no figures, saying that it was "impossible for me to put a value on any other costs which have not been incurred as a result of the lathe lying idle", so that the deduction from turnover to reach an estimated profit figure "could be understated to a small extent". Mr Pocock notes the absence of any figures for consumables and energy in his report (at 2.4.4) and agrees that the cost savings calculated by Mr Hatcher are potentially understated.
437. As to the third (operator costs), the cost of an employee was agreed at ?31,500 per annum. I do not think it is realistic to think that one employee could repair 15 wheels a day, even if, in the case of trade work, the tyres had already been removed and did not need to be replaced. In my view at least 1.5 employees would be required to achieve that output. That would cost ?47,250 per annum, and ?189,000 over four years.
439. As to the last matter (maintenance and repair), Mr Hatcher estimated the annual cost at ?4,200 (15% of the cost of the machine), while Mr Pocock noted that one particular company would charge ?3,170 for such annual maintenance. The sums are modest, and the difference between them even more so. I will split the difference at ?3,685.
441. In relation to lost revenue from retail customers, there is evidence from the claimant (which I accept) of significant enquiries from such customers which had to be turned away. This is not the same as actual work, because retail customers were not providing firm statements of intention to supply work. Not every enquiry would necessarily have been converted to an order. Nevertheless, using the same price of ?90 per wheel, the accountants are agreed that the undiscounted value of those enquiries amounted to about ?36,000 from September 2020 to 30 April 2024. This was based on two separate calculations by Mr Birrell of the enquiries he had received. One, for the period September 2020 to January 2023, showed a loss of revenue of ?19,660. The other, for the period February 2023 to April 2024, showed a loss of revenue of ?16,427.
443. Mr Hatcher discounted the figure ?36,000 by 20% to take account of the possibility that enquiries would not translate into orders. So in Mr Hatcher's view the ?36,000 lost revenue becomes about ?29,000. From 1 May 2024, the claimant outsourced repairs, and the loss to the claimant was simply the difference between the price charged to the claimant's customers and the price paid to the actual repairer. Up to the end of August 2024, the net loss was calculated by Mr Hatcher at about ?2,000. The total lost retail revenue according to Mr Hatcher is therefore about ?31,000.
445. In addition to that, the claimant had been offering a hand-sanding service at a lower price, but, once it decided to outsource repairs, that stopped. The calculation of the lost revenue thereby suffered, that is, the difference between the price that could have been charged for diamond cutting and the lower price charged for hand-sanding is about ?11,000. Again, this is based on two separate calculations by Mr Birrell. He had hand-sanded 262 wheels in the period September 2020 to January 2023, with revenue totalling ?14,973. And he had hand-sanded 143 wheels in the period January 2023 to December 2024, with revenue totalling ?10,790. Mr Hatcher rebased the second period to end in April 2024 and pro-rated the number of wheels to 94, with pro-rated revenue of ?6,110. So the potential income for diamond cut service would have been ?32,040, whereas the actual income was only ?21,083, a difference of ?10,957.
447. The relevant law
448. There are a number of areas of law which are relevant to the present case. These include (1) the tort of deceit (fraudulent misrepresentation), (2) the tort of negligent misrepresentation, (3) the law of collateral contracts, and (4) the rules relating to damages (including quantum and mitigation of loss) in respect of each of these causes of action. It is also necessary to consider aspects of (5) the law relating to exemption clauses and (6) health and safety law. I will deal with these in turn.
450. Deceit
451. In Derry v Peek (1889) 14 App Cas 337, at 374, Lord Herschell, with whom Lord Halsbury LC and Lord Watson agreed, [2] said:
453. "I think the authorities establish the following propositions: First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made."
454. Lord Herschell's summary of the law is still authoritative today: see eg Goyal v BGF Investment Managers Ltd [2023] 4 WLR 65, [39]. It is important to notice from the statement that the tort of deceit can be committed by a person who makes a representation but who does not positively know that what he or she is saying is untrue. To incur liability, it is sufficient if the statement is made without a belief that it is true. It is also sufficient if the statement is made by a person who does not care whether it is true or false. Popular morality might consider that, in the second and third cases, the maker of the statement is not dishonest. However, the civil law of fraudulent misrepresentation considers that he or she is indeed dishonest, and liability attaches accordingly. Some other aspects of fraudulent misrepresentation are common both to that subject and to negligent misrepresentation, and are dealt with later.
456. Negligent misrepresentation
457. As a general proposition, pure economic loss is irrecoverable in negligence, for want of a duty of care. But one exception to this rule relates to cases of misrepresentation. Early reactions to the decision in Derry v Peek suggested that no form of liability for misrepresentation was known to English law other than by virtue of the tort of deceit (as there defined). But the decision in Nocton v Lord Ashburton [1914] AC 932 (also a decision of the House of Lords) made clear that this was not so, and in Hedley Bryne & Co Ltd v Heller & Partners Ltd [1964] AC 465 the House of Lords accepted that in certain circumstances there could be liability for pure economic loss by way of negligent misrepresentation.
459. Subsequent developments in the caselaw have led to the position where such liability now rests on (1) the assumption of responsibility by the defendant towards the claimant, which (2) has given rise to a duty of care, together with (3) reliance by the claimant on the performance by the defendant of that duty, and (4) breach of the duty, causing loss: see Caparo Industries plc v Dickman [1990] AC 2 AC 605, Spring v Guardian Assurance plc [1995] 2 AC 296, Henderson v Merrett Syndicates Ltd (No 1) [1995] 2 AC 145, Playboy Club London Ltd v Banca Nazionale del Lavoro SpA [1991] 1 WLR 4041, N v Poole BC [2020] AC 780. This has indeed expanded liability beyond acts of mere misrepresentation to cover other cases of pure economic loss too. But the present case is put (in part) as one of negligent misrepresentation, and so I need not deal with wider issues. Nevertheless, I remind myself that the duty of care is just that, a duty to avoid negligence: it is not a duty of accuracy.
461. The first stage is the assumption of responsibility. This question was discussed recently by Lord Reed (with whom all the other members of the court agreed) in N v Poole BC [2020] AC 780, where he said:
463. "68. Since Hedley Byrne, the principle [of assumption of liability] has been applied in a variety of situations in which the defendant provided information or advice to the claimant with an undertaking that reasonable care would be taken as to its reliability (either express or implied, usually from the reasonable foreseeability of the claimant's reliance upon the exercise of such care), as for example in Smith v Eric S Bush, or undertook the performance of some other task or service for the claimant with an undertaking (express or implied) that reasonable care would be taken ? "
464. On the other hand, the existence of duty of care for the purposes of negligent misrepresentation may well be negatived by terms in a contract between the parties, or a disclaimer (such as may be contained a notice prominently displayed to the public in a place to which they have access). In Hedley Byrne itself, the information alleged to constitute a misrepresentation was supplied expressly "without responsibility". Nevertheless, in Smith v Eric S Bush [1990] 1 AC 831, 848-9, 856-7, and 872-3, the House of Lords unanimously held that, even where a duty of care was negatived by a contract term or a disclaimer, the relevant provisions of the Unfair Contract Terms Act 1977 still applied, because of section 13(1) of that Act:
466. "(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability ? sections 2 [, 6 and] 7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty."
467. The relevant provisions of the Act to which I am referring are as follows:
469. "2(1) A person cannot by reference to any contract term or to a notice given to persons generally or to particular persons exclude or restrict his liability for death or personal injury resulting from negligence.
470. (2) In the case of other loss or damage, a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness.
471. (3) Where a contract term or notice purports to exclude or restrict liability for negligence a person's agreement to or awareness of it is not of itself to be taken as indicating his voluntary acceptance of any risk.
472. [ ? ]
473. 11(3) In relation to a notice (not being a notice having contractual effect), the requirement of reasonableness under this Act is that it should be fair and reasonable to allow reliance on it, having regard to all the circumstances obtaining when the liability arose or (but for the notice) would have arisen.
474. (4) Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to?
475. > (a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and
476. > (b) how far it was open to him to cover himself by insurance.
477. (5) It is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.
478. [ ? ]."
479. Where the misrepresentation leads to the parties' entering into a contract, the Misrepresentation Act 1967, section 2, relevantly provides as follows:
481. "(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the misrepresentation would be liable to damages in respect thereof had the misrepresentation been made fraudulently, that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently, unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made the facts represented were true.
482. (2) Where a person has entered into a contract after a misrepresentation has been made to him otherwise than fraudulently, and he would be entitled, by reason of the misrepresentation, to rescind the contract, then, if it is claimed, in any proceedings arising out of the contract, that the contract ought to be or has been rescinded, the court or arbitrator may declare the contract subsisting and award damages in lieu of rescission, if of opinion that it would be equitable to do so, having regard to the nature of the misrepresentation and the loss that would be caused by it if the contract were upheld, as well as to the loss that rescission would cause to the other party.
483. (3) Damages may be awarded against a person under subsection (2) of this section whether or not he is liable to damages under subsection (1) thereof, but where he is so liable any award under the said subsection (2) shall be taken into account in assessing his liability under the said subsection (1).
484. [ ? ]"
485. The word "contract" as used in this section is perfectly general, and must apply just as much to the entry into a collateral contract as it does to the entry into a principal contract.
486. It is important to notice that the law of misrepresentation does not operate on the basis of what the representor subjectively intended to represent to the other party. Instead, it is ascertained objectively. In IFE Fund SA v Goldman Sachs International [2007] 1 Lloyd's Rep 264, Toulson J (as he then was) put the matter this way:
488. "50. In determining whether there has been an express representation, and to what effect, the court has to consider what a reasonable person would have understood from the words used in the context in which they were used. In determining what, if any, implied representation has been made, the court has to perform a similar task, except that it has to consider what a reasonable person would have inferred was being implicitly represented by the representor's words and conduct in their context."
489. The judge there also made the important point that a representation may be implied from conduct, rather than expressed in words. An appeal against the judge's decision in this case was dismissed by the Court of Appeal: [2007] 2 Lloyd's Rep 449. Nothing was said by the judges of that court touching the points made in the quotation above.
490. In order to found a claim for misrepresentation, the statement concerned must be one of fact rather than of opinion. In Cassa di Risparmio della Repubblica di San Marino SpA v Barclays Bank Ltd [2011] 1 CLC 701, Hamblen J (as he then was) said:
492. "215. A representation is a statement of fact made by the representor to the representee on which the representee is intended and entitled to rely as a positive assertion that the fact is true. In order to determine whether any and if so what representation was made by a statement requires (1) construing the statement in the context in which it was made, and (2) interpreting the statement objectively according to the impact it might be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee: see? Raiffeisen, supra, at [81];? Kyle Bay Ltd v Underwriters Subscribing under Policy No. 01957/08/01? [2007] Lloyd's Rep IR 460, 466, at [30]?[33], per Neuberger LJ.
493. 216. In order to be actionable a representation must be as to a matter of fact. A statement of opinion is therefore not in itself actionable. However, as stated in? Clerk & Lindsell?para 18-13:
494. > 'A statement of opinion is invariably regarded as incorporating an assertion that the maker does actually hold that opinion; hence the expression of an opinion not honestly entertained and intended to be acted upon amounts to fraud.'
495. 217. In addition, at least where the facts are not equally well known to both sides, a statement of opinion by one who knows the facts best may carry with it a further implication of fact, namely that the representor by expressing that opinion impliedly states that he believes that facts exist which reasonably justify it ? see? Clerk and Lindsell?para 18-14, citing among other cases? Smith v Land and House Property Corp? (1884) 28 Ch D 7, 15, per Bowen LJ, and? Brown v Raphael?[1958] Ch 636.
496. 218. A statement as to the future may well imply a statement as to present intention: 'that which is in form a promise may be in another aspect a representation' -? Clerk & Lindsell, para 18-12, quoting Lord Herschell in? Clydesdale Bank Ltd v Paton? [1896] AC 381, 394.
497. 219. Silence by itself cannot found a claim in misrepresentation. But an express statement may impliedly represent something. For example, a statement which is literally true may nevertheless involve a misrepresentation because of matters which the representor omits to mention. The old cases about statements made in a company prospectus contain illustrations of this principle ? for example,? Oakes v Turquand?(1867) LR 2 HL 325, where Lord Chelmsford said (at 342-3):
498. > ' ... it is said that everything that is stated in the prospectus is literally true, and so it is; but the objection to it is, not that it does not state the truth as far as it goes, but that it conceals most material facts with which the public ought to have been made acquainted, the very concealment of which gives to the truth which is told the character of falsehood'."
499. The present case is one of statements about a branded product in general. Where a branded product is represented as having certain qualities, the fact that the particular example of that product which the acquirer ultimately receives has not yet been shipped, or identified within stock, or even manufactured, does not make such statements predictions of what will happen in the future. They are statements about the branded product as a concept, and not predictions about the particular example of the product delivered to the customer. They are representations of fact, and thus potentially actionable.
501. Another aspect of this subject relates to so-called "puffs". In the law of misrepresentation, simply saying that your product is a good one in order to induce people to buy it is not an actionable representation at all. It is a mere "puff" of the product. Examples might be saying that "Nothing acts faster than" a particular brand of pain relief, or that a particular brand of detergent "washes whiter". As Chitty on Contracts (35 th edition) puts it, at [45 ? 055], "A puff is a statement extolling the virtues of goods which by virtue of its vagueness or extravagance would not be expected to and does not ground any form of liability". As a corollary, in Shaftesbury House (Developments) Ltd v Lee [2010] EWHC 1484 (Ch), [35], Proudman J pointed out that "the expression 'puffery' does not include communications which the recipient is expected to take seriously".
503. Collateral contracts
504. In general terms, a collateral contract is one where the contract concerned is collateral to some other (principal) transaction, whether the other transaction is a contract or anything else, and whether between the same or different parties. As Lord Moulton said in in Heilbut, Symons & Co v Buckleton [1913] AC 30, at 47,
506. "It is evident, both on principle and on authority, that there may be a contract the consideration for which is the making of some other contract. 'If you will make such and such a contract I will give you ?100,' is in every sense of the word a complete legal contract. It is collateral to the main contract, but each has an independent existence, and they do not differ in respect of their possessing to the full the character and status of a contract."
507. Whether such a contract actually arises in relation to any particular transaction will depend on the facts of the case. But illustrative examples can be given. Thus, in Charnock v Liverpool Corporation [1968] 1 WLR 1498, CA, the claimant's insurance company entered into a contract with a motor repair business (the second defendant) to repair the claimant's car, damaged by the negligence of the first defendant's employee. But it was not repaired within a reasonable time, and the claimant successfully sued for damages for breach of contract. On appeal, the second defendant submitted that the contract was with the insurance company alone, and not with the claimant. The Court of Appeal rejected that submission, on the basis that there were two contracts, the second (with the claimant) being inferred from the circumstances.
509. All three judges (Harman, Salmon, and Winn LJJ) gave judgments to that effect. Harman LJ said (at 1503):
511. "The practice has grown up that the insurance company shall agree the sum for which it will stand surety and a contract is very often made by the repairer with the insurance company. Let it be so in this case. That does not, in my view, at all rule out the existence of a contract between the person who owns the car and the repairer."
512. Salmon LJ said (at 1505):
514. "In my view, there was a clear contract to be inferred from the facts between the garage proprietor and the car owner that in consideration of the car owner leaving his car with the garage for repair the garage would carry out the repairs with reasonable expedition and care, and that they would be paid by the insurance company."
515. Winn LJ agreed with both judgments, but added this:
517. " ? the judge found, and was entitled to find, a contract on the basis of which he gave judgment in favour of the car owner against the garage ? by inference; it must not be overlooked that inference is one of the modes of formation of a contract. Often enough the courts are concerned to infer facts from conduct; but the law itself will infer a contract between parties without any express statement from either of those parties, let alone both of them, of an intention to contract."
518. Another example is found in the case of Wells (Merstham) Ltd v Buckland Sand and Silica Ltd [1965] 2 QB 170. The defendants were sand merchants, who warranted to the plaintiffs (horticulturalists) that particular sand supplied by them would conform to a certain chemical analysis. The plaintiffs wanted sand with this analysis in order to grow chrysanthemums. They ordered some of the sand directly from the defendants, but later ordered further quantities of the same sand through a third party, which bought the sand from the defendants and resold it to the plaintiffs. The sand did not conform to the analysis and the plaintiffs sued for damages for loss suffered in trying to grow chrysanthemums. The defendants argued that the plaintiffs could not claim in respect of the further quantities of sand bought through the third party, because the contract was between the third party and the defendants.
520. Edmund Davies J held that the claim for breach of warranty succeeded. He referred to the judgment of McNair J in Shanklin Pier Ltd v Detel Products Ltd [1951] 2 KB 854, at 856, where that judge said:
522. "If, as is elementary, the consideration for the warranty in the usual case is the entering into of the main contract in relation to which the warranty is given, I see no reason why there may not be an enforceable warranty between A and B supported by the consideration that B should cause C to enter into a contract with A or that B should do some other act for the benefit of A."
523. Edmund Davies J himself then said (at 180D-E):
525. "As between A (a potential seller of goods) and B (a potential buyer), two ingredients, and two only, are in my judgment required in order to bring about a collateral contract containing a warranty: (1) a promise or assertion by A as to the nature, quality or quantity of the goods which B may reasonably regard as being made animo contrahendi, and (2) acquisition by B of the goods in reliance on that promise or assertion."
526. Those two matters are both questions of fact, to be decided on the available evidence in the particular case.
527. On the other side, the defendant relies on two cases in particular, Drury v Victor Buckland Ltd [1941] 1 All ER 269, CA, and Fuji Seal Europe Ltd v Catalytic Combustion Corporation [2005] EWHC 1659 (TCC). The first of these was an entirely different case to the present, where the question before the court was whether the contract which had undoubtedly been made between the parties was a contract of sale (as the plaintiff said) or a contract of hire purchase (as the defendant said). It was not about collateral contracts at all. In the course of giving judgment, Scott LJ (with whom Clauson and Goddard LJJ agreed) said, at 272F-H,
529. "These cases are always pure questions of fact, in the light of the documents, as to what the transaction in fact was. Here, the evidence outside the documents supports the documents, and I do not think that there was any evidence before the County Court judge that the documents did not represent the reality. I think that the document called the hire purchase agreement was the reality, and that the use of an invoice formed by the defendant company was not any evidence in the circumstances, that there had been a sale by them".
530. Fuji Seal Europe Ltd v Catalytic Combustion Corporation was another case of fact-finding by the judge. The claimant entered into a contract with the UK subsidiary of the defendant, an American corporation. Subsequently, the claimant sought to bring proceedings against the defendant (the parent company) on an alleged collateral contract. The claimant sought to rely on the Shanklin Pier case. But the judge distinguished that case, saying this:
532. "157. An important feature of [Shanklin Pier ] was that the building contractors were at arm's length from the plaintiffs. It was the building contractors who needed to purchase the paint. All that the plaintiffs could do was to control the specification. The present case is different. CCC and CCE were not at arm's length. CCE was a subsidiary company. It would have been perfectly possible for Fuji and CCC to contract directly with one another if that was what they wanted to do, but neither company wished to adopt that course. Fuji wished to contract with an English company rather than an American company. CCC wished to run its European operations through a subsidiary company. CCC's contractual rights and remedies in respect of quality and fitness for purpose of the abatement plant would be regulated by the contract between Fuji and CCE. The extent of those rights and remedies would be a matter for commercial negotiation. If Fuji had any fears that CCC would not stand behind its subsidiary company, Fuji could quite easily have asked for a parent company guarantee. It is difficult to see any proper basis upon which CCC could or would have refused to give a parent company guarantee. However, Fuji did not request this. Fuji, for its own business reasons, was content to rely upon its contract with a subsidiary company.
533. 158. In my view, this situation is a far cry from that prevailing in? Shanklin Pier. It is not appropriate for this court to supplement the contractual arrangements which experienced and well-advised commercial parties choose to make. Fuji and CCC chose not to enter into any direct contract. In my judgment, no form of collateral warranty between those two companies can be read into or derived from the pre-contract documents."
534. So, the judge held that there was no collateral contract in that case. That was his finding of fact. It does not require me to find similarly in a case where the evidence and indeed the facts found are different. Here the defendant and Paragon were not associated companies, but operating at arm's length. The reason for the claimant's acquiring the lathe from Paragon was to obtain it on hire purchase, which it could not have done by acquiring it directly from the defendant. The defendant knew all about the lathe and what it could do. Paragon did not. I derive no assistance from the Fuji case.
536. In relation to warranties as to fitness for purpose, section 14 of the Sale of Goods Act 1979 provides:
538. "(1) Except as provided by this section and section 15 below and subject to any other enactment, there is no implied?[term]?about the quality or fitness for any particular purpose of goods supplied under a contract of sale.
539. [(2) Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
540. (2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
541. (2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods?
542. > (a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
543. > (b) appearance and finish,
544. > (c) freedom from minor defects,
545. > (d) safety, and
546. > (e) durability.
547. (2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory?
548. > (a) which is specifically drawn to the buyer's attention before the contract is made,
549. > (b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
550. > (c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample.]
551. [ ? ]
552. (3) Where the seller sells goods in the course of a business and the buyer, expressly or by implication, makes known?
553. > (a) to the seller, or
554. > (b) where the purchase price or part of it is payable by instalments and the goods were previously sold by a credit-broker to the seller, to that credit-broker,
555. any particular purpose for which the goods are being bought, there is an implied?[term]?that the goods supplied under the contract are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the buyer does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the seller or credit-broker.
556. (4) An implied?[term]?about quality or fitness for a particular purpose may be annexed to a contract of sale by usage.
557. (5) The preceding provisions of this section apply to a sale by a person who in the course of a business is acting as agent for another as they apply to a sale by a principal in the course of a business, except where that other is not selling in the course of a business and either the buyer knows that fact or reasonable steps are taken to bring it to the notice of the buyer before the contract is made.
558. [(6) As regards England and Wales and Northern Ireland, the terms implied by subsections (2) and (3) above are conditions.]
559. [ ? ]"
560. Section 10 of the Supply of Goods (Implied Terms) Act 1973 relevantly provides:
562. "(1) Except as provided by this section and section 11 below and subject to the provisions of any other enactment, including any enactment of the Parliament of Northern Ireland or the Northern Ireland Assembly, there is no implied?[term]?as to the quality or fitness for any particular purpose of goods bailed or (in Scotland) hired under a?[relevant hire-purchase agreement].
563. [(2) Where the creditor bails or hires goods under a?[relevant hire-purchase agreement]?in the course of a business, there is an implied term that the goods supplied under the agreement are of satisfactory quality.
564. (2A) For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
565. (2B) For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods?
566. > (a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
567. > (b) appearance and finish,
568. > (c) freedom from minor defects,
569. > (d) safety, and
570. > (e) durability.
571. (2C) The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory?
572. > (a) which is specifically drawn to the attention of the person to whom the goods are bailed or hired before the agreement is made,
573. > (b) where that person examines the goods before the agreement is made, which that examination ought to reveal, or
574. > (c) where the goods are bailed or hired by reference to a sample, which would have been apparent on a reasonable examination of the sample]
575. [ ? ]
576. (3) Where the creditor bails or hires goods under a?[relevant hire-purchase agreement]?in the course of a business and the person to whom the goods are bailed or hired, expressly or by implication, makes known?
577. > (a) to the creditor in the course of negotiations conducted by the creditor in relation to the making of the?[relevant hire-purchase agreement], or
578. > (b) to a credit-broker in the course of negotiations conducted by that broker in relation to goods sold by him to the creditor before forming the subject matter of the?[relevant hire-purchase agreement],
579. any particular purpose for which the goods are being bailed or hired, there is an implied?[term]?that the goods supplied under the agreement are reasonably fit for that purpose, whether or not that is a purpose for which such goods are commonly supplied, except where the circumstances show that the person to whom the goods are bailed or hired does not rely, or that it is unreasonable for him to rely, on the skill or judgment of the creditor or credit-broker.
580. (4) An implied condition or warranty as to quality or fitness for a particular purpose may be annexed to a?[relevant hire-purchase agreement]?by usage.
581. (5) The preceding provisions of this section apply to a?[relevant hire-purchase agreement]?made by a person who in the course of a business is acting as agent for the creditor as they apply to an agreement made by the creditor in the course of a business, except where the creditor is not bailing or hiring in the course of a business and either the person to whom the goods are bailed or hired knows that fact or reasonable steps are taken to bring it to the notice of that person before the agreement is made.
582. (6) In subsection (3) above and this subsection?
583. > (a) 'credit-broker' means a person acting in the course of a business of credit brokerage;
584. > (b) 'credit brokerage' means the effecting of introductions of individuals desiring to obtain credit?
585. > > (i) to persons carrying on any business so far as it relates to the provision of credit, or
586. > > (ii) to other persons engaged in credit brokerage.]
587. [(7) As regards England and Wales and Northern Ireland, the terms implied by subsections (2) and (3) above are conditions.]
588. [ ? ]."
589. In relation to exemption clauses in contracts, sections 3, 6, 11 and 13 of the Unfair Contract Terms Act 1977 relevantly provide:
591. "3. (1) This section applies as between contracting parties where one of them deals?... on the other's written standard terms of business.
592. (2) As against that party, the other cannot by reference to any contract term?
593. > (a) when himself in breach of contract, exclude or restrict any liability of his in respect of the breach; or
594. > (b) claim to be entitled?
595. > > (i) to render a contractual performance substantially different from that which was reasonably expected of him, or
596. > > (ii) in respect of the whole or any part of his contractual obligation, to render no performance at all,
597. except in so far as (in any of the cases mentioned above in this subsection) the contract term satisfies the requirement of reasonableness.
598. [ ? ]
599. 6. [ ? ]
600. [(1A) Liability for breach of the obligations arising from?
601. > (a) section 13, 14 or 15 of the 1979 Act (seller's implied undertakings as to conformity of goods with description or sample, or as to their quality or fitness for a particular purpose);
602. > (b) section 9, 10 or 11 of the 1973 Act (the corresponding things in relation to hire purchase),
603. cannot be excluded or restricted by reference to a contract term except in so far as the term satisfies the requirement of reasonableness.]
604. [ ? ]
605. 11. (1) In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act, section 3 of the?Misrepresentation Act 1967 and section 3 of the?Misrepresentation Act (Northern Ireland) 1967 is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made.
606. (2) ln determining for the purposes of section 6 or 7 above whether a contract term satisfies the requirement of reasonableness, regard shall be had in particular to the matters specified in Schedule 2 to this Act; but this subsection does not prevent the court or arbitrator from holding, in accordance with any rule of law, that a term which purports to exclude or restrict any relevant liability is not a term of the contract.
607. [ ? ]
608. (4) Where by reference to a contract term or notice a person seeks to restrict liability to a specified sum of money, and the question arises (under this or any other Act) whether the term or notice satisfies the requirement of reasonableness, regard shall be had in particular (but without prejudice to subsection (2) above in the case of contract terms) to?
609. > (a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and
610. > (b) how far it was open to him to cover himself by insurance.
611. (5) lt is for those claiming that a contract term or notice satisfies the requirement of reasonableness to show that it does.
612. [ ? ]
613. 13(1) To the extent that this Part of this Act prevents the exclusion or restriction of any liability ? sections 2? [, 6 and ]?7 also prevent excluding or restricting liability by reference to terms and notices which exclude or restrict the relevant obligation or duty.
614. [ ? ]."
615. > Schedule 2
616. The matters to which regard is to be had in particular for the purposes of sections?[6(1A), 7(1A) and (4),]?20 and 21 are any of the following which appear to be relevant?
617. > (a) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer's requirements could have been met;
618. > (b) whether the customer received an inducement to agree to the term, or in accepting it had an opportunity of entering into a similar contract with other persons, but without having a similar term;
619. > (c) whether the customer knew or ought reasonably to have known of the existence and the extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties);
620. > (d) where the term excludes or restricts any relevant liability if some condition was not complied with, whether it was reasonable at the time of the contract to expect that compliance with that condition would be practicable;
621. > (e) whether the goods were manufactured, processed or adapted to the special order of the customer.
622. [ ? ]".
623. Damages in tort and in contract
624. As is well known, there is an important difference between (i) the measure of damages awarded for loss suffered by a claimant by reason of a tort, and (ii) the measure of damages awarded to a claimant by reason of loss suffered by a breach of contract. In the former case, as Lord Blackburn said in Livingston v Rawyards Coal Company (1880) 5 App Cas 25, 39, the court should award
626. "that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation?"
627. The measure of the compensation is the difference between the claimant's position now, having suffered the injury of which it complains, compared with the position that the claimant was in before the injury was sustained. In a case where the claimant has relied on an actionable misrepresentation and the claim is in tort rather than contract, the loss will be that suffered by reason of the claimant's reliance on the truth of the representation. Such damages are therefore often referred to as "reliance" damages.
628. This is to be contrasted with the position of damages awarded to a claimant for loss suffered by a breach of contract. In the latter case, as Parke B said in Robinson v Harman (1848) 1 Ex 850, 855,
630. "The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed".
631. The measure of the compensation is the difference between the claimant's position now, having suffered the breach of contract of which he or she complains, compared with the position that the claimant would have been in if the contract had been performed. Such damages are often called "expectation" damages, because they compensate for the loss of the expectation which the claimant acquired by entering into the contract and supplying consideration.
632. Mitigation of loss
633. In relation to the applicability of the principles of mitigation of loss, I was referred to Chitty on Contracts, 35 th edition 2023, paragraph [30-100]. Since this case was argued, a new, 36th edition, 2026, has been published. But paragraph [30-100] of the new edition is still in the same terms, and relevantly states:
635. "It is not strictly a 'duty' to mitigate, but rather a restriction on the damages recoverable, which will be calculated as if the claimant had acted reasonably to minimise their loss. The onus of proof is on the defendant, who must show that the claimant ought, as a reasonable person, to have taken certain steps to mitigate their loss, and that the claimant could thereby have avoided some part of their loss. Any loss which is directly caused by a failure to meet this standard is not recoverable from the defendant."
636. Mitigation of loss applies also to successful claims in tort. Clerk & Lindsell on Torts, 24 th ed 2023, says at [26-09]:
638. "The claimant is under a duty?to mitigate the losses resulting from the defendant's tort.?(Damages are equally not recoverable for such losses as the claimant has actually avoided by taking action subsequent to the tort: the general principle of compensation implies that he can claim only for losses actually sustained.)"
639. As to the first sentence of the quotation, a footnote makes clear that "this is not, strictly speaking, a legal duty, since it cannot be enforced as such".
640. Health and safety
641. Section 6 of the Health and Safety at Work etc Act 1974 relevantly provides:
643. "[(1) It shall be the duty of any person who designs, manufactures, imports or supplies any article for use at work ? ?
644. > (a) to ensure, so far as is reasonably practicable, that the article is so designed and constructed that it will be safe and without risks to health at all times when it is being set, used, cleaned or maintained by a person at work;
645. > (b) to carry out or arrange for the carrying out of such testing and examination as may be necessary for the performance of the duty imposed on him by the preceding paragraph;
646. > (c) to take such steps as are necessary to secure that persons supplied by that person with the article are provided with adequate information about the use for which the article is designed or has been tested and about any conditions necessary to ensure that it will be safe and without risks to health at all such times as are mentioned in paragraph (a) above and when it is being dismantled or disposed of; and
647. > (d) to take such steps as are necessary to secure, so far as is reasonably practicable, that persons so supplied are provided with all such revisions of information provided to them by virtue of the preceding paragraph as are necessary by reason of its becoming known that anything gives rise to a serious risk to health or safety.
648. [ ? ]"
649. By regulation 7 of the Supply of Machinery (Safety) Regulations 2008, so far as relevant,
651. "(1) No responsible person shall place machinery on the market or put it into service unless it is safe.
652. (2) Before machinery is placed on the market or put into service, the responsible person must?
653. > (a) ensure that the applicable essential health and safety requirements are satisfied in respect of it;
654. > (b) ensure that the technical file is compiled and made available in accordance with the requirements of Annex VII (Part 7 of Schedule 2), part A;
655. > (c) provide, in particular, the information necessary to operate it safely, such as instructions;
656. > (d) follow, as appropriate?
657. > > (i) the conformity assessment procedure prescribed by regulation 10;
658. > > (ii) one of the conformity assessment procedures prescribed by regulation 11; or
659. > > (iii) one of the conformity assessment procedures prescribed by regulation 12;
660. > (e) draw up the EC declaration of conformity in accordance with the requirements of Annex II (Part 2 of Schedule 2), section A, part 1, and ensure that?
661. > > (i) a copy of it accompanies the machinery; and
662. > > (ii) the original is retained in accordance with the requirements of Annex II, part 2, first paragraph; and
663. > (f) affix the CE marking to the machinery?
664. > > (i) visibly, legibly and indelibly; and
665. > > (ii) as prescribed in Annex III (Part 3 of Schedule 2).
666. [ ? ]"
667. Application of the law to the facts
668. Collateral contract
669. For various reasons, it is sensible for me to begin my discussion with the claim in collateral contract. On the facts of the present case, I am in no doubt that, when the defendant sold the lathe to Paragon, a collateral contract came into existence between the claimant and the defendant. The parties had entered into discussions about the suitability of the defendant's lathe for the claimant's business, the lathe had been demonstrated to the claimant, and finally the claimant had placed an order with defendant for the lathe and paid the deposit directly. The claimant then took the finance business to Paragon, on the basis that Paragon would buy the lathe from the defendant, and the claimant would enter into a hire purchase agreement with Paragon.
671. The obvious inference from these facts is that the claimant was relying on the defendant's representations as to the quality and suitability of the lathe in placing the business with Paragon and entering into the hire purchase agreement (which was the consideration for the defendant's promises), and the defendant was promising that the lathe would be of sufficient quality and suitability for the claimant's business. As Mr Birrell said in his evidence (and I accepted) if the defendant had not so promised, the claimant would have gone elsewhere. The fact that it would be financed by hire-purchase was entirely secondary.
673. On the facts I have found, subject to the operation of any exclusion or exemption clauses incorporated into the contract, this collateral contract was breached in a number of important ways. First of all, this was a used machine rather than a new one, and was damaged in certain respects, already discussed. Second, it suffered from oil leaks. Thirdly it was not properly commissioned, and in particular it was not level. Fourthly, it was unable to perform the function, crucial to the claimant's business plan, of cutting the tapered edges of wheel rims so as to leave a diamond cut finish. Fifthly, it was unable to map black surfaces of alloy wheels without the use of masking tape, which significantly slowed down the process and made the machine less productive. Sixthly, numerous breaches of safety and compliance law meant that it should not have been supplied as it was. It was unlawful to put it on the market. Accordingly, it was not of merchantable quality. Further, it was not of the quality or suitability for the claimant's purposes, which were made known to the defendant.
675. The next questions are (i) whether the exemption clauses (or either of them) forming part of the quotations from the defendant to the claimant and (probably) subsequently into the actual contract of sale by the defendant to Paragon were incorporated into the collateral contract which I have found to exist between the claimant and the defendant, (ii) if so, what effect (if any) those clauses have on the liability of the defendant, and (iii) to the extent that they have such an effect, whether such clauses fall foul of the provisions of the Unfair Contract Terms Act 1977.
677. As to (i), I am in no doubt that, if the claimant had entered into the contract of sale and purchase itself, they would clearly have been so incorporated. The claimant knew of them and there was no push-back. The defendant would have supplied the goods on the basis that they were so incorporated. The sale to Paragon was done on the same basis. Everybody knew that that was the position. It would be unrealistic to contend otherwise.
679. But the position here is different. I set this out earlier, but, for ease of reference, clause 1 of the Terms and Conditions sent with the quotations reads:
681. "1. Unless otherwise specifically agreed in writing by Vixen Surface Treatments Limited (Vixen), these terms and conditions shall apply to all quotations and contracts for the supply of goods or services by Vixen and shall at all times override any conflicting terms and conditions which the purchaser may seek to impose."
682. This clause refers in terms to "contracts for the supply of goods or services". Yet the defendant in this case did not enter into any contract of supply of goods or services with the claimant. The contract between them was one collateral to the main contract between the defendant and Paragon. It was a contract by which the defendant, in consideration of the claimant's placing the order with Paragon to acquire the lathe on hire-purchase, and thus procuring Paragon to purchase the lathe from the defendant, gave several important warranties to the claimant. Clause 1 on its own terms does not apply, and therefore neither do the other terms and conditions. They are not incorporated into the collateral contract.
684. In case I am wrong, however, I will go on to consider the position if they were in fact incorporated. Questions (ii) and (iii) are more elaborate, and indeed expansive, questions. I set out the text of the relevant clauses out earlier, but it is convenient to do so again here for ease of reference:
686. "6. Goods supplied shall substantially conform to the specification thereof current at the time of manufacture, varied if applicable by drawings or modifications agreed between Vixen and the purchase [sic] at the time of contract. Vixen warrants that goods of their own manufacture will be free from defects in materials workmanship or design for a period of 12 months from date of delivery (labour charges payable after a period of 3 months). Vixen makes no warranty as to fitness for any particular purpose. Any warranty claims that arise due to lack of maintenance would be deemed invalid and therefore chargeable.
687. 7. Vixen shall not be liable for any loss (including consequential loss) or damage sustained or incurred by the customer or any third party resulting from any breakdown of our [sic] fault in any product supplied, unless such breakdown or fault is caused by the negligence or wilful misconduct of Vixen, its employees, agents or sub-contractors, in which event (except in the case of death or personal injury) Vixen's liability shall be limited to the invoice value of the goods."
688. In relation to clause 6, the important sentence is that in which the defendant "makes no warranty as to fitness for any particular purpose". This is not strictly an exemption clause from liability attaching for breach of warranty, but is instead an exclusion of duty arising at all. It purports to exclude the warranty implied by section 14 of the Sale of Goods Act 1979 or section 10 of the Supply of Goods (Implied Terms) Act 1973. However, the collateral contract between the claimant and the defendant is not a contract of sale within the 1979 Act, nor a hire purchase agreement within the 1973 Act. So, clause 6 has no application. In relation to clause 7, the word "our" in line 3 is an obvious mistake for "or", and I will so treat it. This clause excludes liability for loss resulting from breakdown or fault in the product supplied, subject to an exception where the breakdown or fault is caused by the negligence or wilful misconduct of the defendant. The clause contains no other exemption from, or limitation on, liability. Since the contract with the claimant is not a contract to supply goods to the claimant, this clause has no application either.
690. Again, in case I am wrong, I go on to consider the position on the contrary hypothesis. As to the exclusion of warranty in clause 6, I have found that there was an express warranty, or at least that Mr Birrell was reasonably led by Mr Myers to believe that there was a warranty (on which belief Mr Birrell relied), that the lathe could perform the functions and purposes which he had made known to Mr Myers. The question is, which represents the intentions of the parties in this particular negotiation, (i) the sentence in clause 6 saying there is no warranty, or (ii) the express warranty given by Mr Myers? In my judgment, the statement in the defendant's standard printed terms and conditions, formulated long before the claimant and the defendant negotiated for the supply of the lathe, indeed in ignorance of the defendant's very existence, is plainly overridden by the express warranty given by My Myers to Mr Birrell during their negotiations. It would be dishonest for the defendant to say that Mr Myers did not mean what he said.
692. Clause 7 excludes liability for loss "resulting from any breakdown of [or] fault in any product supplied." It has no application to a claim for breach of warranty as to fitness for purpose, or for breach of warranty that the goods are new and manufactured in 2020, or for a failure to commission the machine properly, or for supplying unsafe equipment which cannot be lawfully sold. To the extent that the claimant's losses stem from fault in the product (for example, damage to the chuck jaws, broken parts internally, oil leaks, etc) the exclusion of liability is subject to the test of reasonableness in section 11 of the 1977 Act. Taking into account the matters set out in section 11 of and schedule 2 to the 1977 Act, in my opinion this exclusion of liability for losses resulting from fault in the product is neither fair nor reasonable in the circumstances. This is a highly complex, and potentially dangerous, piece of machinery. As between the parties, the defendant is obviously in the better position to ensure that it works satisfactorily so far as possible. Moreover, the defendant will be able to insure against liability for supplying goods that do not work properly more easily than the claimant would be able to insure against acquiring such faulty goods. If I were wrong about that, then in my opinion the limitation of liability to the cost of the goods would not be fair or reasonable in the circumstances. It is self-evident that a piece of industrial machinery of this kind, costing tens of thousands of pounds, is acquired for the purpose of generating business revenue far exceeding the cost. To limit liability to the cost of the equipment would stunt the whole transaction from an economic point of view.
694. In my judgment, the defendant is liable to the claimant for breach of (collateral) contract in that the lathe (i) was not fit for the purposes for which it was reasonably required by the claimant and which had been made known to the defendant before the supply, (ii) was not new, nor manufactured in 2020, and was internally damaged, (iii) was not commissioned properly, and (iv) was unsafe as supplied, and therefore not of merchantable quality.
696. Negligent misrepresentation
697. As I said earlier, the elements of the tort of negligent misrepresentation are (1) the assumption of responsibility by the defendant towards the claimant, which (2) has given rise to a duty of care, together with (3) reliance by the claimant on the performance by the defendant of that duty, and (4) breach of the duty, causing loss which is not too remote. As stated above, I am satisfied that the defendant assumed that responsibility. For reasons already given, I am satisfied that no contractual term was agreed, and no disclaimer given, which would prevent a duty of care from arising, and I consider it is fair and reasonable that one should come into existence in this case. I have found that the claimant relied on the defendant's representations in ordering the lathe and procuring Paragon to purchase it from the defendant, so as to let it to the claimant on hire purchase terms. I have found that the representations pleaded in paragraph 6 of the particulars of claim were untrue, and that the defendant breached its duty of care in making those representations. I have further found that, as a result of reliance on the misrepresentations, the claimant has suffered loss.
699. The defendant submits that section 2(1) of the Misrepresentation Act 1967 does not apply. I do not accept this. All that section 2(1) requires is that the misrepresentation lead to a contract. There is no requirement that it lead to a contract for the sale of goods. I accept that the provision is not relevant to any claim relating to the contract of sale to Paragon. But this claim concerns the collateral contract with the claimant. As the defendant says in his closing submissions (at [146]) "A collateral contract is still a contract". Here, the misrepresentations led to that collateral contract. Accordingly, the Misrepresentation Act 1967, section 2(1), applies, and the defendant will be liable unless it proves that it was not negligent.
701. In fact, in the present case the incidence of the burden of proof does not matter, because I am satisfied on these facts that the defendant was negligent. The defendant did not take reasonable care in making the representations to Mr Birrell about the quality and capability of the lathe, leading him wrongly to believe that it would be suitable for his purposes. The defendant negligently represented the lathe as new when it was not, and of merchantable quality when it was not.
703. Deceit
704. In the light of what I have held in relation to breach of contract and negligent misstatement, it is not necessary for me to reach any conclusion in relation to allegations of deceit. But in fairness I should say this. I am not satisfied that anything that Mr Myers said to Mr Birrell before the acquisition of the lathe, and which formed part of the allegations in this case, was known by him at the time to be untrue, or was not believed by him to be true, or was represented not caring whether it was true or not.
706. Mitigation of loss
707. The defendant submits that the claimant should have taken two steps to mitigate loss. One was to permit the defendant to attend at the claimant's premises, to examine the lathe, and to provide further training to Mr Birrell. But Mr Birrell refused to permit this. The other was to purchase another lathe. Mr Birrell started down the latter path, but ultimately did not complete the acquisition. The question is whether it was unreasonable for the claimant to take neither of those two steps. It is for the defendant to satisfy me of this. As to the first point, Mr Birrell had lost all confidence in the defendant and their product. He thought that their product (even if it were supplied new) did not have the qualities the claimant needed, and that the defendant was simply after the claimant's money. In the circumstances, and given my findings of fact, it was not unreasonable for him to refuse to allow the defendant to take any further steps in relation to the lathe.
709. As to the second point, it was not unreasonable for Mr Birrell to take some time to decide what the claimant should do in the future, without a lathe capable of performing the diamond cut work that he wanted, and for which he had rented the premises. He had to take account of the claimant's financial circumstances, the availability of space in the premises, and so on. I do not think it is reasonable to measure this time in days or even weeks. Whatever the company did, it would be an important (and perhaps irrevocable) step. In the event, Mr Birrell on behalf of the claimant finally decided to order the Mint lathe, for delivery in May or June 2021. Up to that point, I consider that the claimant was not acting unreasonably.
711. However, Mr Birrell then changed his mind, cancelled the order, and recovered his deposit. Mr Birrell's reasons for doing so were that he had no space to place a new lathe unless the old lathe was removed. But he did not wish to move the old lathe in case he was accused of thereby damaging the equipment. I do not think it was reasonable to cancel the new lathe that he had ordered. Other arrangements could have been made for storage. And, to deal with the latter point, Mr Birrell could have secured independent evidence of the condition of the lathe before and after moving it. Accordingly, I consider that any claim made for loss of profit must be limited to the end of May 2021, that is a period of nine months from the beginning of September.
713. Damages
714. I deal first with the question of damages for breach of contract. This is not a case where the claimant is suing the seller of the goods, and rejecting them as against that seller. As already made clear, the claimant has not made any claim against Paragon, the hire-purchase supplier. Indeed, the claimant paid all that was owing to Paragon under the hire purchase agreement, and accordingly (I assume) it now owns the lathe. The claimant claims damages against the defendant for breach of the collateral contract. The measure of those damages is the difference between the position that it finds itself in now and the position that it would have been in if the collateral contract had been performed by the defendant. This, in broad terms, is the amount of the profits which the claimant would have made if the machine had lived up to the defendant's claims, and the warranted representations have been true.
716. Accordingly, none of the direct losses set out above is recoverable in the contract claim: that is, (1) the deposit on the lathe, (2) the hire purchase agreement payments, (3) the cost of Mr Birrell's time in dealing with the dispute, (4) the accountancy charges of ?1,650 for advice, and (5) the storage charge for the lathe, once it was rejected by the claimant.
718. Head (3) could be recoverable in principle as wasted management time: see eg Aerospace Publishing Ltd v Thames Water Utilities Ltd [2007] Bus LR 726, [86], CA. But although mentioned in the evidence, this was not in fact pleaded, and the forensic accountants considered that no value could be attributed to the time spent by Mr Birrell on the claim. In these circumstances, I do not need to consider whether they were right about that.
720. Head (4) would be recoverable, if at all, as part of the costs of the litigation if successful. Head (5) cannot be recovered in contract, because the contractual measure is the difference between the position of the claimant now and the position of the claimant if the contract had been performed. If the contract had been performed the lathe would have been generating profits, but the claimant would have had to find room for it (and pay for that room) in order to generate those profits.
722. As to the lost profits, however, the question arises how to discount the figures computed by the accountants for lost gross revenue. They calculated ?158,000 lost gross trade revenue in the first year. The defendant says that that calculation is impermissible, because it takes into account evidence of losses that were not pleaded by the claimant. I agree that the statements of case are the usual limits of any claim (and defence): see Prudential Assurance Co Ltd v HMRC? [2017] 1 WLR 4031, CA, [20], cited earlier (at [12]). But I also cited (at [13]) statements in Lombard North Central Plc v Automobile World (UK) Ltd? [2010] EWCA Civ 2, and Hawksworth v Chief Constable of Staffordshire? [2012] EWCA Civ 293, [43], for the proposition that there were exceptions to this.
724. There are two points to make in response to the point that the further letters were not pleaded. The first is that I doubt that it was necessary to plead them at all, since they were simply evidence of the loss claimed, and there is no requirement to plead evidence: see eg Barclays Bank Plc. v Boulter [1998] 1 WLR 1, 8, per Mummery LJ; Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405 (Comm), [1], per Leggatt J. The loss itself were pleaded, even though not completely quantified.
726. But in any event, in the present case, paragraph 24 of the Amended Particulars of Claim referred to the possibility of updating the Schedule of Loss to the date of trial, and paragraphs 86 and 87 of the claimant's first trial witness statement referred to the seeking of the further letters. Moreover, the further letters once received were disclosed to the defendant, and were considered by the forensic accountants and included as part of their calculation of the claimant's loss. In my judgment, the defendant came to this trial well aware of the claimant's case on loss, and also of the evidence being put forward to prove it. So, even if the claimant should have pleaded the further letters, the defendant has suffered no prejudice as a result.
728. There is however a different problem with the calculation. I have held that failure to mitigate by acquiring another machine should cap the loss at nine months. What I have is the figure agreed by the experts for lost trade revenue for the first year of assumed operation of the lathe, that is, ?158,000. The problem is that some of the letters relied on by the claimant say that wheel repair work would have been offered to the claimant only from a date after September 2020. So simply taking ? of ?158,000 (which is ?118,500) would probably overstate the lost revenue for the first nine months from September 2020.
730. There may be similar problems with the calculation of deductible costs, and perhaps even with lost retail revenue. On the other hand I do not wish to hold up the handing-down of this judgment just because a (proper) query has been raised at the last minute about the calculation of the damages due to the claimant. I am conscious in particular that it will be hard to preserve the confidentiality of the draft judgment for a significant period.
732. What I will therefore do is to adjourn the hearing of submissions on the calculation of the damages for breach of contract (lost profits for both trade and retail business) to a further occasion for consideration by me, assuming that the question of calculation is not agreed by the parties. It can be by written submissions or by (remote) hearing. This will not be a split trial, because findings of fact in this judgment will carry over to the assessment, and (importantly) there will be no new evidence. The matter will be dealt with solely on the material already before the court.
734. However, because the answer to the question of calculation may affect consequential matters, I will adjourn these also to await the further assessment, and the written directions previously given will not apply. The time for lodging an appellant's notice in respect of the matters in this judgment will be extended to 21 days after the decision on the calculation of damages (which will also be the time for lodging such a notice in relation to that decision).
736. A point arises in relation to taxation of profits. In his report (at 4.7), Mr Pocock says:
738. "Had the company earned the profits represented by the losses outlined above, then those profits would have been subject to corporation tax. During the period under review, the rate of corporation tax was 19% up to 31 March 2023, following which the rate has remained at 19% for the first ?50,000 of taxable profits, with the balance up to ?250,000 at a marginal rate of 26.5% and profits in excess of ?250,000 taxed at 25%. It is not possible to determine the actual corporation tax charge which would result as the 'losses' have been calculated on a September to August basis, assuming equal spread over a year, which does not coincide with the company's financial year which is April to March. However, if an overall rate of corporation tax of 20% is applied to the losses to 31 August 2024 outlined in paragraph 4.2, a tax charge of ?195,820 would arise."
739. These are clearly legal submissions, though with some interstitial arithmetical calculations (and some assumptions) made by Mr Pocock, who is not a lawyer. But there is no trace of them to be found in the defendant's written submissions, prepared by its legal team, either in opening or in closing. That would have been the proper place for such submissions. Nevertheless, I will deal with them.
741. In Watson, Farley & Williams v Ostovitzky [2014] EWHC 160 (QB), Silber J said:
743. "351. [British Transport Commission v Gourley? [1956] AC 185 ] establishes that deduction for tax from damages can only be made if (i) the sum for which compensation is ordered would have been subject to tax, while by way of contrast, (ii) the damages compensating for this loss would not have been subject to tax.
744. 352. The onus of proving that the damages have to be reduced because the ?Gourley?principle applies is on the paying party, who in this case would be the Claimant. It would have to show that "it is clear beyond peradventure" that the sum received would not be taxable in the hands of the receiving party (see? Stoke on Trent? City Council v Wood Mitchell?[1980] 1 WLR 254). A similar approach was adopted by Ouseley J in? Finley v Connell Associates?[2002] Lloyds Rep PN 62, who observed that that it is for Claimant, as the paying party, who has the burden of proof of what is an exception to the normal rule in relation to the incident of tax."
745. In the present case, the paying party is the defendant. Accordingly, it is the defendant that has "to show that 'it is clear beyond peradventure' that the sum received would not be taxable in the hands of the receiving party". But I have not been addressed on this at all. For all I know, this may be because the damages would be taxable as a receipt of the claimant's business, and hence the Gourley principle would not apply: cf Denny v Gooda Walker Ltd [1996] 1 WLR 426, HL. But I simply do not know. Accordingly, the defendant has not discharged the onus upon it, and I have no basis for taking the incidence of taxation into account in assessing damages otherwise payable to the claimant. Thus, the sum assessed as the measure of damages for breach of contract will not be reduced by any incidence of taxation.
747. I turn now to consider the measure of damages in tort, for negligent misrepresentation. As already stated, the measure of compensation for loss in tort is the difference between the claimant's position now, having suffered the injury of which it complains, compared with the position that the claimant was in before the injury was sustained. Here the claimant suffered loss by relying on the defendant's misrepresentations. That loss comprises a number of elements. These are: (1) the deposit on the lathe, (2) the hire purchase agreement payments, (3) the cost of Mr Birrell's time in dealing with the dispute, (4) the accountancy charges of ?1,650 for advice, and (5) the storage charge for the lathe, once it was rejected by the claimant.
749. As in relation to the claim in contract, head (3) could be recoverable in principle as wasted management time. But, as I have said, it was not pleaded, and the forensic accountants gave it no value. In these circumstances, I do not need to consider whether they were right about that. Head (4) could be recovered, if at all, only as part of the costs of the litigation if successfully pursued.
751. Head (5) is a proper head of loss in tort, because it is in reliance on the misrepresentations that the claimant gave the lathe house-room, and concluded that it could not simply abandon it until the defendant accepted liability, because the machine would have to be inspected and tested as part of the litigation which then appeared likely to, and indeed did, eventuate. In my judgment it was reasonably foreseeable that the machine would have to be stored at the claimant's cost if there was a dispute over the truth of the representations made.
753. I come back to heads (1) and (2). Here the arithmetic is straightforward. The claimant paid the deposit on the lathe to the defendant, and then the hire-purchase costs to Paragon. The total paid was ?48,452.20 (though I think that includes the acquablaster, and that the total paid in respect in respect of the lathe alone was about ?33,000).
755. The defendant says that because the Mint lathe is more expensive than the Vixen lathe, money has actually been saved, so that the claimant has lost nothing, I do not agree. On the claimant's case it was induced into buying the wrong lathe. It lost the money spent because on its case the lathe cannot do the job it was intended for. That is its loss. However, since it seems likely that the recovery in tort will be less than in contract, and the claimant cannot recover both ways, I dare say that the claimant will select the contractual measure. But that is something that can be dealt with once the contractual measure has been ascertained.
757. As to mitigation of loss in tort, the first complaint was that the claimant did not allow any work to be done on the lathe. But that, even if it solved some of the difficulties, would not have changed the lathe's capabilities. It would still not have done the job for which the claimant required it. The second complaint was that the claimant should have bought a new lathe. But that would not mitigate the reliance loss.
759. Conclusion
760. For the reasons given above, the claim succeeds, and I award the claimant damages which will be calculated following the further consideration contemplated above. I should be grateful to receive a minute of order, preferably agreed, to give effect to this judgment.

Note 1   In fact, this statement is contained in the covering letter from Mr Myers to Mr Birrell dated 6 November 2019, rather than in the quotation document itself. But nothing turns on that. [Back]

Note 2   The other two judges, Lord Bramwell and Lord Fitzgerald, delivered concurring speeches. [Back]

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