Magnetic Shields Ltd v Vacuum and Atmosphere Services Ltd [2024] EWHC 2260 (TCC)

The Technology and Construction Court (TCC) reviewed and applied the principles of contract formation, assessed whether the defects claimed by the claimant (MSL) constituted breaches of contract, and determined how the losses should be calculated in relation to a dispute arising from an equipment repair contract.

Background

In 2017, MSL had acquired a previously used Abar furnace. This Abar was designed to operate at six bars of pressure maximum. The claimant hired the defendant (VAS) to refurbish an Abar HR50 furnace. While there were some challenges with the installation and commissioning process, the work was ultimately completed to the satisfaction of both parties, and the furnace was put into operation in October 2019. However, in June 2021, a serious incident occurred during the furnace's operation, causing it to be taken out of service. As a result, the claimant filed a claim for damages for breach of contract against the defendant.

MSL had not commissioned VAS to carry out the recommended repair works, and they instead purchased a new furnace in early 2022. VAS was contractually obliged to perform refurbishment, commissioning and testing of the new Abar to make sure it operated as a new Abar. This new Abar was only commissioned to operate at 0.8 bar pressure, when the contract required at 5 bar pressure.

A dispute had crystallised over whether VAS had breached the contract. VAS contended that MSL did not provide clear instructions for modifications to the contract, and MSL contended that VAS had failed to meet its contractual obligations.

Decision

The court decided that VAS had indeed breached the contract for a few reasons:

1.????? The Abar operated at a lower-than-agreed pressure.

2.????? VAS had accepted MSL’s T+Cs which stipulated that there must be a minimum of 5 bar pressure after refurbishment by VAS.

3.????? VAS had commissioned the Abar to operate at only 0.8 bar pressure.

MSL had claimed approximately ￡200,000 in damages, but the TCC awarded them only ￡16,600 net of VAT. The ￡200,000 figure was simply seen to be excessive; MSL had also failed to mitigate it’s losses - the need for the reasonable mitigation of losses was emphasised by the court.

GEORGE WILLIAM GIBBS LLB (HONS) LLM

[email protected]

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