CL-2024-000457, 000458, 000459 - [2025] EWHC 1803 (Comm)

For the reasons set out below, I have concluded that:

In Readie Construction, the claimant buyer contracted to buy from the defendant seller a quantity of GSB Type 1 aggregate at £19.50 per tonne, for delivery to a construction site at Marston Vale, Wootton, Beds. There was a retention of title clause. 31,000 tonnes of GSB Type 1 were delivered, invoiced and paid for. 9,576 tonnes were delivered, invoiced and not paid for, because (so the defendant alleged) after heavy rainfall at the site over the weekend of 13-14 October 2018, “the aggregate” had liquified and turned into slurry and the defendant decided to suspend payments (per Martin Spencer J at [4]). By then, 34,000 tonnes of the GSB Type 1 delivered by the seller had been laid at the site, creating a sub-base that was 87% complete (ibid). The judgment does not say whether “the aggregate” that had become slurry was (said to be) all of it (40,576 tonnes), the quantity not paid for (9,576 tonnes), the quantity not yet laid (6,576 tonnes), or some other portion.

The payment clause required payment “in full without any deduction or withholding whatsoever on any account by the end of the calendar month following the month in which the relevant invoice was dated” (Clause 4.1, quoted by Martin Spencer J at [5]). The buyer conceded that that made the price payable on a ‘day certain’ within s.49(2) (per Martin Spencer J at [21]).

In the Central London County Court, HHJ Johns QC granted summary judgment to the seller for the unpaid price, and the buyer appealed, claiming an entitlement to abate the price that was not precluded (so it argued) by the terms of the payment clause, alternatively that s.49(2) was not satisfied by that clause. Martin Spencer J dismissed the appeal.

As regards s.49(2), the appeal was dismissed on the ground that s.49(2) did not concern the conditionality or unconditionality of the obligation to pay the price upon performance by the seller of its obligation to deliver, but concerned instead (per Martin Spencer J at [48]) “the time of delivery and the time of payment. Once these are divorced from each other under the terms of the contract, the contract becomes one whereby the price is payable on a day certain irrespective of delivery” (original emphasis). Hence Mr Debattista’s submission that the question, following Readie Construction, is whether the contract provides for payment to be made on a ‘day certain’ that is not the contractual delivery date.

In taking that view of s.49(2), Martin Spencer J, at [48], adopted “the judgment and reasoning of Judge Yang [sic., Asst. Registrar Tan] in Mitsubishi”, adding that in his view:

The seller’s argument in Readie Construction was that payment was linked to invoicing rather than delivery and even if invoices in fact followed deliveries, payment was not concurrent with delivery as envisaged by s.28 of the Act – delivery prior to payment had the effect of breaking the linkage between the two (per Martin Spencer J at [33]).

I find myself persuaded by Mr Nolan KC’s argument that Readie Construction is wrongly decided and should not be followed. If it was a considered decision after full argument not to follow the long-standing first instance decisions with which it is inconsistent, I may have needed to hesitate longer over whether I ought nonetheless to follow it despite my disagreement with it. However, and it is one of the reasons why I respectfully consider that Readie Construction is not a satisfactory decision, Martin Spencer J did not identify that he was not following long-standing prior authority and was “depart[ing] from conventional understandings of s.49(2) as being based on independent promises irrespective of delivery …” (Benjamin, at 16-027, n.197).

For the reasons given in my discussion of Mitsubishi, Caterpillar, and The Res Cogitans in Appendix B, in my respectful view:

As regards Lord Mance having referred without criticism to Longmore LJ’s dictum (per Martin Spencer J within [49], quoting HHJ Johns QC at [39]),that concerned ‘day certain’, which was not in issue in Readie Construction, and not ‘irrespective of delivery’, which was.

At [48], Martin Spencer J noted that on the interpretation advocated by counsel for the buyer, “the fact I have held that delivery, or purported delivery, is a pre-condition to the obligation to pay the price would mean that section 49(2) is not fulfilled”, and continued: “However, in my judgment that interpretation is not correct”, citing Mitsubishi. If by that Martin Spencer J was drawing a distinction between cases where delivery and payment are concurrent conditions (to which s.49(2) would not apply) and cases where delivery is a condition precedent to payment (to which s.49(2) would apply, subject to ‘day certain’), that would, I think, still be inconsistent with the ratio of the prior decisions. There is also an internal inconsistency there, I think, in that Martin Spencer J’s conclusion that delivery was a pre-condition for payment was in these terms, at [39]:

“The starting point is, as [counsel for the buyer] submitted, that this contract is one which provides that delivery of the goods is a “condition precedent” to payment of the price. … . Thus, this is not one of those contracts such as in Totsa [], where the obligation to pay arose on delivery of documents, irrespective of delivery of the goods” (my emphasis).

In Totsa, viz. Totsa Total Oil Trading SA v Bharat Petroleum Corp [2005] EWHC 1641 (Comm), s.49 of the Act was not raised or considered. The contract was an f.o.b. contract, payment against invoice and usual shipping documents not later than 30 days after the bill of lading date. Martin Spencer J does not identify a source for the view that the price in Totsa was payable irrespective of delivery. If it was simply the contrast he drew between a delivery of usual shipping documents and a delivery of goods, in my view that misunderstood the ordinary incidents of international sales. As it happens, therefore, I think it was incorrect to say that the contract in Totsa provided for the price to be payable ‘irrespective of delivery’; but that does not remove the internal inconsistency in Readie Construction between holding at [39] that the contract was not a contract providing for payment irrespective of delivery, and deciding the case at [46]-[49] on the basis that it was such a contract.

At [22]-[24], Martin Spencer J recorded that the buyer relied on Stein Forbes, Muller Maclean, the obiter dictum of Lord Keith of Avonholm in White & Carter (Councils) Ltd v McGregor, and Otis Vehicle Rentals, and submitted that they decided between them that “a contract cannot be “irrespective of delivery” if delivery and payment are interdependent …”. The judge did not say anything different as to what those cases decided, and in my view the buyer’s submission was correct, save that, strictly, the point was decided only in Stein Forbes and Muller Maclean, as I explain in Appendix B. From his summary of the seller’s argument at [35]-[36] and his adoption of HHJ Johns QC’s reasoning at [49], I respectfully wonder if Martin Spencer J may have been led astray by dicta that, properly understood, concern ‘day certain’, which had been conceded before him, and do not touch ‘irrespective of delivery’, which was in issue.

In CE Energy, Paul Stanley KC granted summary judgment on claims under a guarantee, one of which, he decided, required it to be shown that there had been a debt due from the primary obligor, which required in turn that the claimant could have maintained an action for the price against that party under a contract for the sale of goods, namely (in the event) 14,941.015 m.t. of industrial gasoil on the m.t. Kmarin Restraint, for delivery ex-ship offshore Lomé, Togo.

By the contract, payment was to be made “latest 45 calendar days from NOR Lagos (NOR=1) to seller’s nominated bank account …”, and there was a retention of title clause. At [27], the learned deputy judge said that initially it was common ground that the NOR triggering the payment obligation was “the first notice of readiness given by a daughter vessel that was to tranship the cargo after its arrival at Lome”, but that it became common ground finally that it was “the first notice of readiness given on the arrival of the daughter vessel at Lagos to unload”.

If I have understood the facts of CE Energy correctly, the daughter vessels to which the deputy judge was referring were those that would receive delivery ex-ship Lomé from Kmarin Restraint, and their envisaged subsequent voyage to Lagos for discharge would come after such receipt. The learned deputy judge said (ibid) that nothing turned on the change in counsel’s joint position on the meaning of the payment clause, and it is clear from [103] that he decided the case on the basis, therefore, that the case did not turn on the meaning of ‘irrespective of delivery’, only on whether payment a fixed number of days after a NOR anticipated by the contract amounted to payment on a ‘day certain’. There may be a subtlety about that:

That means CE Energy decided nothing of relevance to these appeals, which turn on payability ‘irrespective of delivery’. As regards ‘day certain’, Mr Stanley KC decided CE Energy on the ground, [102], that an obligation to pay latest 45 days after a defined NOR was an obligation to pay on a ‘day certain’ within s.49(2). I agree with Mr Nolan KC’s submission that the learned deputy judge erred in treating Readie Construction as a decision on ‘day certain’ (ibid and [99]), whereas the point was conceded in that case. But that is not the limit of Mr Stanley KC’s reasoning, and he did reach a considered view, after full argument, that Shell-Mex is not good law and should not be followed on the meaning of that term under s.49(2). Since the point does not arise here, though, I say no more about it.

As regards ‘irrespective of delivery’, Mr Stanley KC, at [100]-[101], and in part of [102], recognised that there were difficulties with the view adopted by Martin Spencer J, particularly its inconsistency with Stein Forbes, Muller Maclean and (the learned deputy judge thought) Otis Vehicle Rentals. Recognising that it did not affect the outcome in CE Energy, Mr Stanley KC indicated, at [101], that his doubts about the correctness of Readie Construction would not have led him to refuse to follow it. Having been persuaded by a clear margin that Readie Construction was wrongly decided, I do not consider that Mr Stanley KC’s obiter reluctance to say that he would not have followed it, despite concerns as to its correctness, is reason enough to decide these appeals on what I would consider to be an erroneous view of the meaning and effect of s.49(2) of the Act.