CA-2024-001949 & CA-2024-001935 - [2025] EWCA Civ 1212

The first delivery, of 6 million masks, was due to take place on 28^th April 2020. However, a problem arose because the masks produced by Hitex did not have a nose bridge, as required by the specification. The judge found that Hitex had not appreciated that nose bridges would be required, and that when this was pointed out a modification to the machines manufacturing the masks was necessary. This took some time. Moreover, it was found that after the modification was made, the production rate needed to be reduced in order to avoid an unacceptable number of sub-standard masks.

In the event Hitex failed to meet the deliveries due on the first four delivery dates set out in the table above, although 1 million masks were delivered, in two batches which were collected on 16^th and 20^th May 2020.

On 13^th May 2020 Mr Stead, on behalf of Uniserve, produced a document setting out the expected production of each machine over the coming days and weeks. This led to further exchanges in which a revision of the contractual delivery dates was agreed.

On 22^nd May 2020 Mr Stead set out the following revised schedule of deliveries (totalling 79 million masks to take account of the 1 million already delivered) and asked for confirmation that it was agreed:

Hitex confirmed in an email dated 26^th May 2020 that this schedule was agreed.

There was an issue in the court below whether this exchange was effective to vary the contractual delivery schedule. Uniserve contended that it was not and pursued the point in this court. Ultimately, however, perhaps perceiving that his submissions were falling on stony ground, Mr Luke Parsons KC for Uniserve abandoned this ground of appeal.

Following the agreement of this revised schedule, the next deliveries, each of 1 million masks, were due on 31^st May and 7^th June 2020. These quantities were made available for delivery on the due dates but were only collected by Majlan on 10^th June and 17^th June. The judge found that by about this time Uniserve was keen to get out of the contract, partly because it was frustrated by Hitex’s previous failures to supply on time and partly because it had concluded a contract with an alternative supplier of masks at a cheaper price.

No further deliveries took place under the contract and the parties were in dispute as to whether and in what quantities masks were made available for collection from Hitex’s factory. The judge found that the most reliable evidence of the quantity of masks available for collection consisted of Hitex’s Production Reports. These were reports, compiled manually, recording masks transferred from elsewhere in Hitex’s premises into that part of the main warehouse from which deliveries were collected. On the basis of these reports, the judge found that on 14^th June 2020 Hitex had available the 2 million masks due for delivery on that day and that it had complied with its obligations as set out in the revised schedule. However, Hitex did not notify Uniserve (or Majlan) that these masks were available and ready for collection and Majlan did not turn up to collect them.

Instead, on or about 17^th June 2020, Mr Stead (on behalf of Uniserve) communicated to Mr Popeck (on behalf of Hitex) that the supply contract was over and Uniserve instructed Majlan to have no further dealings with Hitex. The judge found that Hitex would have concluded at this point that Uniserve had no intention of further performing the supply contract.

The judge found that because Hitex had at this stage complied with its delivery obligations under the revised schedule, Uniserve was not entitled to terminate the contract in this way and its purported termination was itself a repudiatory breach of the contract which would have entitled Hitex to bring the contract to an end and to claim damages for repudiation. However, Hitex did not do so. Instead, by an email dated 11^th July 2020 Hitex complained that Uniserve had failed to collect the deliveries due on 21^st and 28^th June and on 5^th July, and that it was running out of space to store masks on site and might need to hire space nearby. In response, Mr Stead made clear once again that the contract was finished.

The judge’s findings about what happened thereafter are not easy to follow. At paras 392 to 394 he said that Hitex continued to produce masks as normal for a period, without informing Majlan that further shipments were ready, but that the warehouse was full by the end of July, by which time Hitex had reduced the rate of production and was disposing of masks by sales in the local market. At para 398, however, he said that by 13^th July Hitex was not maintaining sufficient masks to meet the cumulative total due to be supplied under the revised schedule and that, from that time, the number of masks available declined, with no new masks being produced (or at least entering the warehouse) after 14^th July, save for 5,000 masks on 16^th August.

At all events, the position appears to be that from or soon after 11^th July 2020 Hitex did not have available sufficient masks to meet the cumulative total required by the revised schedule, but would have had enough on any given date to supply the number of masks required to fulfil the next shipment.