HT-2022-000079 - [2024] EWHC 2260 (TCC)

There are two counterclaims. One of the counterclaims, for payment of an invoice (numbered 18751) of £2196.78 (£1830.65, plus £366.13 of VAT) in respect of three replacement heating elements for the Abar is conceded in principle, subject to a plea of set-off. The only issue is whether contractual interest is to be calculated as per VAS’s terms and conditions or as per MSL’s terms and conditions. As with the contract for refurbishment of the Abar, I find that MSL’s terms and conditions applied. This was stipulated in MSL’s purchase order. VAS then delivered the goods (on 17 February 2021) and only after having done so (on 22 February 2021) sent an invoice which referred to its own payment terms. As with the refurbishment contract, this contract was formed, and indeed performed, before VAS’s terms and conditions were mentioned. Contractual interest therefore falls to be calculated at MSL’s standard rate of 2% above base rate.

The other is for payment of an invoice (numbered 18908) for £902.40 (£752 plus £150.40 of VAT) for work done on 24 March 2021 on the CVE furnace. MSL’s terms and conditions again applied, as stated in its purchase order for this work. Again, VAS’s invoice, referring to its payment terms, was only sent (on 26 March 2021) after the contract had been performed. MSL refuted liability for this invoice firstly on grounds that it was for work which should have been performed by VAS without charge under the warranty which applied to the CVE furnace. MSL has provided no evidence or more detailed argument to establish that that is the case but in any event I cannot accept that it would be grounds to set aside or ignore the terms of the contract that MSL entered into,

I do, however, agree with MSL that it is entitled to set-off its liability under the two invoices against VAS’s liability for breach of the contract to refurbish the Abar. This is provided for by §8.8 of MSL’s terms and conditions which states: “The Company may at any time set off any liability of the Supplier to the Company against any liability of the Company to the Supplier, whether either liability is present or future, liquidated or unliquidated, and whether or not either liability arises under the Contract”. MSL is entitled by this clause to set-off its liability under the separate contracts for work done on the CVE furnace and for the supply of additional parts for the Abar against the larger amount of VAS’s liability to it under the contract to refurbish the Abar. MSL was accordingly not liable to pay the invoices, due to VAS already having committed breaches of contract causing damage in excess of the invoices (albeit that that damage was unliquidated and had not yet been quantified). Whilst MSL did not formally invoke its right of set-off in respect of the invoices when VAS pursued payment of them, it did in substance refute any liability to VAS after the overpressure incident having regard to its complaints about the work that VAS had done on the Abar.

Therefore, my conclusions on the counterclaims are that MSL is liable to pay VAS £1830.65 in respect of invoice 18751 and £752 in respect of invoice 18908, net of VAT, to be set off against MSL’s award of damages. Overall, VAS’s liability in damages to MSL of £16,600 net of VAT falls to be reduced by £2582.65.

The parties have agreed that MSL is, in addition, entitled to contractual interest in the amount of £2217.62 (taking account of a small amount of interest payable to VAS). The total liability of VAS to MSL for breach of the contract to refurbish the Abar is, therefore, £16,234.97. I give judgment accordingly.