Getronics Holdings Emea BV & Anor v Logistic & Transport Consulting Co & Ors

I shall for convenience refer to the parties as the "Claimant" and the "Defendant" unless the context requires otherwise.

This is the defendant's appeal against an order for summary judgment in favour of the claimant for 4,045,374.75 Euros. I do not propose to repeat the background facts, nor any more of the detail than is required for this judgment. Largely it would be unnecessary to do so having regard to the commendably full and careful judgment of Master Whittaker which performs the function so well. The claimant succeeded in obtaining judgment on the majority but not all of its claims, not upon the basis of the pleaded case in fraud, but in restitution for money had and received.

The claimant and the defendant did business for many years, the claimant being a major supplier of computer components and parts; and the defendant acted as a courier for the delivery of the components throughout most of Europe. This was a substantial and plainly highly remunerative business relationship. The claimant was the defendant's principal customer.

So far as deliveries and collections were concerned they were effected by the defendant outside of Belgium through sub-contractors. Once the service was performed a charge was levied upon the claimant by an invoice to which would be attached the relevant consignment notes in support of the contents of the invoice and the charge claimed by the invoice. Payment was effected by the claimant by bank transfer. There was no written contract between the claimant and the defendant but it appears from the evidence which is before the court that, in relation to collections and deliveries, the established course of business was that a claim for payment was made by the submission of the invoices supported by consignment notes and that such documents constituted a due request for payment under the contract.

Not all the claims in respect of which judgment was obtained fall into the category of claims against invoices which have been paid when they should not have been paid, when supported by consignment notes. It will be necessary to take each head of claim as it appears from the pleading to identify the issue which arises in connection with such claims on this appeal.

The claimant operated out of a logistics centre under the supervision and management of a Mr. de Witt. He was also assisted by, among others, a Mr. Ghisdal. The alter ego of the defendant was Mrs. Verdyke.

The common thread of the claim is to the invoicing by the defendant of the claimant, all of which was paid, but for which the claimant now maintains no payment was due. The full particulars of the claim appear from schedule A to the pleaded case. Since there is no appeal against the Master's refusal to give judgment for damages for fraudulent deception or for conspiracy to defraud, it is unnecessary for this court to dilate upon the detail of the alleged dishonest conspiracy which it is said was operated by Mr. de Witt acting as the inside operator within the claimant company, who deliberately approved invoices which he knew to be bogus, either because they were in respect of services which had not been performed, or represented duplicate requests for payment in respect of services for which payment had already been made, or comprised claims for payments which were without foundation.

Whilst it is not necessary to go into the detail of that alleged fraud it is pertinent to observe that the activities which resulted in payment to the defendant where no payment was due, putting aside the deliberate intention or deceit on the part of Mr. de Witt or Mrs. Verdyke, are precisely the same activities shorn of dishonesty and deliberate intention to deceive, which form the basis of the restitution claim. That, in my judgment, does not give rise to any issue, nor has it been argued that the recovery ordered by the Master is nevertheless, in effect, a recovery for fraud under a different name. In my judgment, it was perfectly legitimate to sever the activity of rendering invoices in respect of services which it could be demonstrated had not been performed, or had already been paid for or whatever, and to extract from that essential activity the dishonesty of any of the individuals involved. Thus, on analysis, the basis upon which payment was claimed in the alternative and upon which the claimant succeeded, was that payment had been made for services as a carrier or otherwise which had not, in fact, been performed and for which no payment was due.

The investigation which the claimant has undertaken for the purpose of mounting this claim in the court has been, so far as one can see, massive and has involved an immense amount of work and a number of people, including Mr. Ghisdal, who has provided evidence to the claimant - inside evidence one might say since he was party to it - of the activities which he says he was instructed to perform for the defendant.

So far as the Master was concerned, he approached the claim for summary judgment upon the basis that although there was a witness statement from Mr. Ghisdal which, by its terms, supported the claimant's case, nevertheless he being "poacher turned gamekeeper" was somebody upon whose evidence the Master considered it unsafe to rely. As has been said from the terms of his evidence, he would, in connection with the alleged criminal or dishonest activity, have to be regarded as an accomplice and someone who may have a grudge or some other motive for giving evidence for the claimant. I regard the approach of the Master in this regard as entirely proper and one which this court should also adopt.

The appeal relates to labelled heads of claim as follows: one, The French and German invoices; two, the Italian invoices; three, excess picking; four, inventory management; five, Netherlands shuttle charge; six, European stock markets; seven, Belgian stock movements; and eight, PUDO standardisation. As I have indicated, some considerations are common to each, some to one or more of those headings; other considerations are unique to the evidence on those issues.

There has been no dispute, nor was there cause for any dispute, about the relevant principle or law to be applied when considering whether summary judgment should be awarded. Attention has been drawn to Three Rivers District Council v. Bank of England (No.3) [2001] 2 All E.R. 513, Mulvenna v. The Royal Bank of Scotland [2003] EWCA, 112, and S v. Gloucester County Council [2000] 3 All E.R. 346. It is not necessary to recite the various statements appearing in such cases, save to emphasise, firstly, that the court must have regard to Article 6 of the European Convention on Human Rights, and in particular the requirement that there is a fair trial of the issues. Cases which are not fit for trial by way of summary trial must be rejected because, by definition, if they are not fit for trial there can be no fair trial. The real question at the heart of a summary judgment case is whether the evidence has reached a threshold of proof to a degree which enables the court to be satisfied that the defendant will not be able to make out any defence to the claims as formulated.

Where credibility is in issue, as it commonly is, the evidence of a claimant on an application for summary judgment needs to reach a threshold where the defendant's case can be seen to be not capable of belief. The conclusion must be one which can be reached without the minute examination of documents, correspondence, minutes, and without the necessity of conducting a mini trial on documents. It is a jurisdiction which is designed to deal with cases that are not fit for trial at all. If there are issues which should be investigated at trial they should be left over for trial.

The evidence which will be before the court on a summary judgment application will not amount to all the evidence which could be available at the trial. Thus the court must come to a conclusion, where, for example, it is considering the grounds of defence, first of all, whether the grounds of defence themselves give rise to a credible case; and secondly, it will consider whether there is any prospect that evidence not then available to support the defendant's case could become available to support it. Essentially, the first stage is to decide whether a sufficiently strong case for judgment has been made out, on the basis of the claimant's case, and then to consider the nature of the defence which the defendant is putting forward.

The evidence put in by the claimant to support each of its categories had, so far as the French and German invoices are concerned, a similarity. There was also, so far as categories to which I will come are concerned, at least to some of them, again a similar but not identical approach. The essence of that to which I refer is that the claimant sought to support its claim for summary judgment under those categories by selecting a single invoice as a sample and then, having investigated by reference so far as the French and German invoices are concerned the invoice and the underlying consignment notes which were said to support the invoice, the claimant demonstrated by the documents before the Master and now before this court a clear probability that the sum claimed in each invoice was wrong, either because it overcharged or double charged or both.

The claimant's case did not extend to exhibiting each of the invoices identified in schedule A in connection with the French and German invoices which it was said either contained both double charging and/or overcharging. The exercise, as the court has been informed, would have involved so far as the other invoices are concerned, an equivalent exercise, providing a lever arch file to demonstrate the basis for the falsity of the sum on each invoice.

As a result, the procedure adopted was as follows: witness statements were lodged which spoke to the claims not evidenced by documents. So far as schedule A was concerned in all its items, the witness statement of principal significance is that of Alan Charles Gurney Bryon. Where Mr. Bryon explains not just the background but how he came to be invited by the senior vice-president, or a senior vice-president, for the claimant to carry out an investigation and an analysis of the invoices received from the defendant and the payments made to the defendant. He states that he was in the course of the investigation which was still continuing and states at para.12, p.170:

Then, moving on to the verification of the claim so far as it has come from the witness statement, para.22, he says:

So it is that so far as schedule A in particular and the French and German more particularly are concerned, the complaint is made by Mr. Fealy that it is wrong in principle for the Master to have given judgment in respect of sums represented by invoices which were not exhibited and which were not therefore available for scrutiny by the court or by the defendant and in respect of which there could be no objective or independent view taken as to the reliability of the claimant's assertions in respect of those other invoices. I am bound to say that the claimant's approach to proving its case for the purpose of summary judgment did appear to me to have been a risky one. It no doubt would have been time consuming and bulky and inconvenient to have had to have provided the documentary evidence in support of its claims in respect of France and Germany. The real question is whether it was necessary for the claimant to do that in all the circumstances of this case.

I am satisfied, after consideration, that, having regard to the character of the response which the defendant has given to the claim as advanced, that this court does have sufficient evidence in relation to the French and German invoices to conclude that the figures there spoken to as being due for payment by reason of overcharging or duplicating are indeed due. I still remain of the view, as I believe Mr. Douthwaite now recognises, that it would have been preferable for at least some more specific reference to the documents to have been incorporated into the evidence. On reflection it seemed to me, having regard to the tenor of the evidence in Mr. Bryon's witness statement, the position would have been much stronger had he said, "I can say that I have carried out in relation to each and every consignment note in respect of each and every invoices a similar exercise to that which I have carried out here and I can verify that the sum outstanding in schedule A arises from identically the same exercise". It would have been better. At one stage it seemed to me that perhaps the way forward was to give the claimant an opportunity of clarifying the absence of specific reference in the evidence by making such specific reference. Ultimately, as I state, I have concluded that Mr. Douthwaite's submission is correct, that that would, in effect, be almost a semantic requirement for when one considers the import of what Mr. Bryan is saying, it is exactly that which I have endeavoured to summarise but which was not expressed with the clarity with which it could have been.

That is not simply the end of my reasoning on this part of the case. Mr. Fealy has, as he did before the Master, raised in this court a suggestion that his client was in difficulty in dealing with these claims, indeed all the claims, because of an inability to have access to documents which could support the defendant's position. I am satisfied that that is simply a spurious - which is not a comment on the argument but upon the factual suggestion - suggestion on the part of the defendant. I have had no evidence which could lead me to conclude that there would be any difficulty in the defendant, if it had chosen to do so, using the documents which came from Amicore which no doubt would have included - and if they did not obtain them there is no reason why they could not have done so - all the documents from the sub-contractors which would have gone to verify or establish what precisely had been done. As recorded by the Master in this part of the case and in other parts of the case, the defendant's position, as expressed by the witness statements of Mrs. Verdyke, is really nothing more than to suggest that what is desired is an opportunity to question the claims by whatever it might be that might turn up in the future, with apparently no effort being made to do anything with the material which, in my judgment, must have been available already. It is not an impressive response by a defendant to a very clear and detailed exposition of a basis of claim. Notably it has not been suggested that Mr. de Witt, by his statement, has shed any light or in any illuminated the evidential position. Thus, I am satisfied that there was sufficient verification of the claim in relation to France and Germany by the evidence to which I have referred.

A general point taken by Mr. Fealy in this connection was in connection with the burden of proof. He submitted that it was not enough to establish an overcharge and a right to restitution by producing a document, namely an invoice and supporting documents, and saying, "The documents are inconsistent and there is an obvious disparity and therefore there is an entitlement to restitution". More than once he submitted that to make out a documentary case is not enough. What has to be done in order to prove an entitlement to restitution, he submitted is, first of all, for the nature of the mistake to be identified; and next, for the claimant to prove that payment has been made in respect of a service which has not been rendered.

The submissions, so far as they go are, of course, in general correct, but, in my judgment, in this case it is a submission which is of little or no import because the contractual arrangement between the parties, and indeed the whole operation of the contract between the parties, depended upon the defendant lodging an invoice in respect of services performed, upon the basis that the services had been performed, with evidential proof that the services had been performed being supplied by the underlying consignment notes. That being the method of operation in accordance with the contract, in my judgment, it is open to the claimant, who has made payment in accordance with the documents as lodged in accordance with the contract, to demonstrate that in accordance with the contract it is manifest that the documents do not support the payment as claimed and paid. It is not to the point for it to be said, "Oh, well, it may be that the inconsistency between the documents is made out, but if we are given enough time we might actually be able to demonstrate that although those documents do not support the payment as made, nevertheless somehow or other the payment is due because the services were performed". That submission, in my judgment, does not amount to the claimant being required to prove its case, it is a submission which is tantamount to a defendant admitting irregularities in connection with the documents, but nevertheless asserting a case for retention of money on grounds other than those on which it is claimed back. In my judgment, it was for the defendants to make out that claim, the legal burden to prove its claim of course remaining upon the claimant, but the evidential burden, which the claimant's evidence had given rise to, required the defendant to make it out, and that the defendant has failed to do.

I have probably said sufficient to indicate my response to another general submission on the part of Mr. Fealy about the absence of documentation, but his general submission carried through to many of these points in the heads of claim was that there could be other documents and other evidence which could assist the defendant. In a summary judgment claim where grounds for judgment have been laid out with sufficient evidence by way of support, the defendant should, as I have indicated, at least state the nature of the defence to the claim as it is advanced. Bare assertions that something has been done when, according to the evidence presented by the claimants it is probable that it has not, are not enough unless it is said that the only way of proving the case that something has been done is by reference to documents which are not then available, and to evidence which would indicate the existence of such documents or other material to support it. Nowhere does the defendant, other than by way of a general almost five line assertion, go into any detail about how it is said this money which, on the face of the documents, the defendant was not entitled to receive is nevertheless entitled to retain it. Thus, so far as France and Germany are concerned, I can see no fault in the approach of the Master, and I would uphold his summary judgment under those categories.

I next turn to the Italian invoices and it is convenient to take the Italian invoices and the excess picking and inventory management items together. So far as the Italian position is concerned, there again only one invoice has been taken as a sample. What I have already said in relation to that process applies equally here. The common thread between these three items is the evidence of one Miss Stoots, who is a logistics administrator with the claimant. In her statement she explains her role, how she was involved and how she has been involved in an investigation of challenged invoices. She has used, with the expertise she has acquired working for the claimants, the computer system which was held upon a computer package called the "Wang Logistics Package" ("WLP"). She knew how to operate that system and she has operated that system with a view to verifying whether payment has been made under invoices in respect of which payment was not due. Thus this is not a case in which the claimants' evidence turns on the existence of consignment notes, it turns on the existence of records held on computer, to which Miss Stoots can speak showing the stock movement of product which examination, she says, demonstrates the invoices have been lodged in respect of stock movements which did not occur.

Mr. de Witt was somebody who, when he was with the claimants, would have known exactly what the WLP involved and what capability Miss Stoots had to operate the system. There is evidence in the statements which is expressly designed to demonstrate to the court the high reliability of the system of the order of 98 per cent from various checks which have been made. There is no evidence from Mr. de Witt contradicting either the day to day expertise and ability of Miss Stoots to run the system and to extract information from the system, nor is there anything to contradict the asserted reliability of the system.

Against that background Mr. Fealy attempted to undermine the reliability of this part of the case but he faced some difficulty. Manfully he took me to the print-outs which are in evidence, and the computer records which are in evidence, to the sample invoice to which Miss Stoots refers and in a submission, which the court well understood, he submitted that the documents were unintelligible. He went on to submit, being unintelligible to many, the evidence from Miss Stoots was to be regarded as opinion evidence and was therefore inadmissible. In my judgment, it was not opinion evidence. The operation of a particular package on a computer may give rise to any number of difficulties for those who are not equipped to operate that particular system. It may be that particular issues in relation to the operation of a computer and a package on a computer, just as indeed in relation to the operation of the internal combustion engine, can give rise to the need for an expert, but the first stage of that which a computer generates is a product which amounts to factual evidence obtained by the computer operator and, of course, as is well known, having some evidential value, as a record. Really the difficulty faced by Mr. Fealy was that what he was seeking to do was to suggest that the computer material was unreliable material upon which the claimants were not entitled to rely to obtain summary judgment.

In my judgment, the Master was perfectly entitled (a) to regard the evidence as factual evidence and not opinion or expert evidence; and (b), having regard to the available evidence and its reliability, to treat it as reliable; and (c) to pay regard to the fact that Mr. de Witt who could have come to the defendants' aid in this regard, if he had anything useful to say, did not do so. In my judgment, the Master was quite right to treat the computer evidence and Miss Stoots' evidence as reliable and sufficient.

I next turn to excess picking. This was a matter to which Miss Stoots spoke, again by reference to computer print-outs, but the discrete point made by Mr. Fealy so far as excess picking is concerned is that there was evidence from Mrs. Verdyke in her second witness statement and in the exhibit to her witness statement whereby she exhibited invoices from the sub-contractors which he submitted demonstrated that, contrary to the claimant's case, the movements were not done. There was evidence from Mrs. Verdyke supported by the sub-contractors' invoices that it was done and the Master appeared to have ignored that evidence. In his judgment the Master referred to Miss Stoots' support of the case and to the contention with which I have already dealt with and repeated by Mr. Fealy here that Miss Stoots was holding herself out as an expert. What he says appears in para.69:

I, therefore, turn to the question of whether, in so far as that head of claim is concerned, there should be unconditional leave to defend, conditional leave to defend, or whether the defendant should be required to make a payment in in this regard. The amount involved in the invoices is something just short of 90,000 Euros and the amount claimed by way of overcharge is some 51,000 Euros. The approach which seems to me to be correct, having regard to the need to ensure that the fraud case does not have a pervasive effect upon the claimants' case which is advanced in the absence of fraud, is to approach with caution the imposition of any terms so far as this particular head of claim is concerned. Balancing the position by excluding from my mind and approaching this claim as though it was simply a single claim with evidence standing as it is in the way I have identified, what scepticism might one have about the ultimate success of this defence on this item. It seems to me that the defendant has, one might say uniquely, having regard to all the other opportunities there were in respect of sub-contractors' documents, done that which it should have done in connection with the other claims and the failure has been held against the defendant. On balance, I conclude that there should be unconditional leave to defend under this head.

I next turn to inventory management. Again it is the evidence of Miss Stoots which is relevant. In this respect Mr. Fealy submits that in para.17 of her second witness statement Mrs. Verdyke has raised a triable issue. What she says in para.17 is as follows:

I now come to the collection of items, the Netherlands shuttle charge, the European stock movements and the Belgian stock movements. So far as the Netherlands shuttle charge is concerned, it depends upon, critically, the fact that a contract was determined which the claimants say, according to its terms, provided for no termination payment, whereas in effect the defendant's case is that there was an entitlement for it to claim in that regard. The answer of Mrs. Verdyke in this regard in para.48 of her first witness statement:

As I have already indicated, the position so far as the Master was concerned under this claim was that there was no provision in the agreement for the charges being made to May and, further, the contractual relations in relation to this element of the claim were between the claimants and May. As a result, paying the first defendants had deprived the claimants of the possibility of any set-off against these charges and quite clearly, as a result of the rendering of the invoice, the claimants paid a party not entitled to receive payment either as a matter of fact or law. He refers to the fact that Mr. Fealy attempted to argue that there was to be some implied assignment inferred, but he rejected that. Payment was made, he said, to the party to whom it was not due by the claimant and in the circumstances they should be entitled to judgment.

The submission advanced by Mr. Fealy in his skeleton argument, on a provisional view, appeared to me to be right. The payment by the claimant to LTC in respect of this sum, and indeed in respect of both a European stock move and a Belgian stock move were payments of sums which, as paid, were treated as payment to May Couriers. That being the position, the payments could not constitute a ground for restitution, but in the light of the detail to which I have been referred, my provisional view appears not to be right. The essence of the matter as now advanced, or made plain to me in this court, is that it was not simply a payment to somebody who was not a proper party to receive it, but on the evidence available to the Master and to me, amounted to payments in respect of matters which had themselves, whoever was to be the recipient for the money, not been made out as due.

So far as the European stock movements are concerned particular reliance was placed by Mr. Fealy on para.55 of the Master's judgment which contained the following:

As has been pointed out, on Miss Stoots' evidence it is the claimant's case that the payment was not due in any event.

I have, as a result, concluded that so far as the European stock movements are concerned, the Belgian stock movements are concerned and the PUDO standardisation claims are concerned, it is not appropriate that this court should attempt to resolve what may be the very thin evidential issues and contradictions which occur. I am bound to say, however, that I am not impressed by the weight of the case evidentially advanced for the defendant. It follows from that that, in my judgment, there should not be summary judgment in respect of those items, but there should be conditional leave to defend upon the defendant paying in the amounts claimed in respect of those items.

That, I think, concludes all the items which are before me for appeal. To the extent I have indicated, therefore, the appeal is allowed, but only in the limited respects I have indicated.