In Tornado Wire Ltd v John Good Logistics Ltd [2024] EWHC 212 (KB), HHJ Worster sitting in Birmingham refused an application by the defendant, JGL, for summary judgment in a breach of contract and negligence claim brought by TWL. The judgment raises an interesting point about the meaning of ‘reasonableness’ in the context of the Unfair Contract Terms Act 1977 (“UCTA”), and is a salutary warning to any party seeking to slavishly rely on their standard terms and conditions, even if those terms are industry-approved.
TWL hired JGL as its customs agent to deal with the importation of steel wire products from the EU, with the aim of eliminating or minimising its tax liabilities arising from those imports. TWL alleged that JGL failed to deal with HMRC’s importation computer system properly, resulting in a large tax bill for TWL, and it issued proceedings in May 2023.
However, JGL contended that the parties dealt with one another on JGL’s standard terms, which also happen to be the principal set of terms used within the industry. Those terms include a provision barring any claims which are brought any more than 9 months from “the date of the event or occurrence [giving] rise to a cause of action”. Here, the competing positions were:
- JGL considered that, as the final import entry was entered into the computer system in June 2021, any claim brought after March 2022 was barred;
- TWL’s case was that it did not even know that it was subject to any tax liability until HMRC wrote to it in August 2022 to inform it of the same, and that it brought its claim within 9 months of that notification.
JGL applied for summary judgment, relying on two Court of Appeal authorities in which the reasonableness of those very same terms had been upheld (namely, Granville Oil and Chemicals Ltd v Davies Turner & Co Ltd, and Röhlig (UK) Ltd v Rock Unique Ltd). TWL opposed the application on the basis that the 9-month time limit was unreasonable for the purposes of UCTA, and unenforceable. It also argued that there was a good reason in revenue law why, in any event, the 9-month time limit did not begin until at least August 2022.
In his judgment, HHJ Worster dismissed the application for summary judgment, taking the view that:
- On its face, there was a real prospect of TWL establishing that the 9-month term, on these facts, was unreasonable, and distinguishing Granville and Röhlig;
- There would have to be evidence at trial which went to various factors influencing a trial Judge’s decision as to reasonableness, including the question of the parties’ respective bargaining power, whether the parties had willingly taken the risk of such a claim being barred, and what alternative remedies are open to TWL;
- It is not enough to import a decision on reasonableness from another case, even if it relates to the same terms. The Judge drew on the recent Court of Appeal decision in Last Bus v Dawsongroup Bus and Coach Limited to emphasise the need for each case to be determined on its own facts when it comes to the reasonableness of standard terms, and is particularly pertinent on an application for summary judgment.
The matter is now awaiting a directions hearing, with the expectation of a trial in 2025.
A copy of the judgment can be found at https://caselaw.nationalarchives.gov.uk/ewhc/kb/2024/212
Ali Tabari, instructed by Gavin Evans of The Wilkes Partnership, acted for the successful respondent to the application.
