[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Claymore Lubricants (Midlands) Ltd v P & P Sergeant (Belting and Automotive) Ltd [2006] EWHC 3635 (TCC) (12 December 2006) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2006/3635.html Cite as: [2006] EWHC 3635 (TCC)

[New search] [Printable RTF version] [Help]

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
TECHNOLOGY AND CONSTRUCTION COURT

		BIRMINGHAM CIVIL JUSTICE CENTRE 33 BULL STREET BIRMINGHAM B4 6DS
		Date : 12 December 2006

 

1. The claimant (Claymore) is a manufacturer and wholesale supplier of engine oil. The defendant (Sergeant) is (amongst other matters) an exporter of engine oil under the brand name "Nutexa".
2. Sergeant purchased engine oil from Claymore between 1997 and July 2002. From 1999 Sergeant sold some of that oil, purchased from Claymore, to purchasers in Greece, namely initially Zitol in Athens and subsequently Valourdos Vassileios & Co Limited ("Valourdos") in Thessaloniki. From late 1997 Valourdos acted as Sergeant's sole distributor of Nutexa products in Greece.
3. In November 2002 Claymore began proceedings to recover unpaid invoices totalling £22,565.64 in respect of oil supplied by Sergeant between February and August 2002. On 9 May 2003, Claymore obtained summary judgment in respect of that claim. Sergeant pursue a Part 20 claim against Claymore. Sergeant contend (1) that Claymore represented that the oils it sold to Sergeant were virgin oils, but were in breach of that representation and (2) that oils supplied by Claymore from April 2000 were not virgin oils, and were not of satisfactory quality nor reasonably fit for their purpose. Claymore admit that the oil to be supplied to Sergeant was to comply with its description (ie its performance specification) and was to be of satisfactory quality and reasonably fit for its purpose. Sergeant claim damages, including in respect of any claim which may be made by Valourdos and loss of profit on sales to the Greek market. On 18 December 2003, the court ordered that there be an initial trial on liability only. This is the judgment following that liability trial.
4. I heard evidence from Mr Paul Sergeant (a director of Sergeant), Mr David Duckett (managing director of Claymore) and Mr John Holmes (chairman and principal shareholder of Claymore). I also heard evidence from expert witnesses, namely Mr Robert Cutler and Mr Roger Davies (instructed by Sergeant) and Mr Alan Hodges and Mr Dale Green (instructed by Claymore). I have not heard evidence from any principal or employee of Valourdos.

Definitions

5. Virgin oil, also called base oil, is oil which comes straight from the ground via a refining process. To manufacture engine oils, various combinations of additives are mixed with the virgin or base oil. Reconstituted oil is oil which has been used before then laundered. Reconstituted oil is usable and can be capable of meeting performance specifications, depending upon the quality of the laundering process. If virgin oil or base oil is specified, reconstituted oil should not be supplied.
6. Claymore contend that Sergeant's claim is based on a mistaken understanding of the term "virgin oil". I deal with these issues in more detail below.

Background

7. Claymore have a blending plant at Redditch in which they mix oil which they have purchased with additives to produce their own blends. In December 2002 the plant was destroyed by fire. It appears that the plant has been rebuilt.
8. Sergeant began buying from Claymore in about 1997. In January 1999, at Sergeant's request, Mr Duckett of Claymore wrote to Sergeant as follows:

"...We provide a second to none delivery service throughout Britain delivering Lubricating Oils and Greases of the highest quality which are produced in Redditch using the finest quality Base Oils and Additives (Only Virgin Mineral Oils are used), the main source of base oil being BP, although we do buy from other refineries as prices fluctuate. We also use other additive manufacturers including LUBRIZOL AND PARAMINS..."

9. Sergeant supplied oils to the Greek market. Shipments to Greece were made directly from Claymore's factory in Redditch to the docks. Once filled in Redditch, containers were sealed. They did not pass physically through Sergeant's hands.
10. No significant problems were experienced in the early years, though, in February 2001, Zitol complained to Sergeant about the detachment of linings from barrels and also about black deposit and sediment in oils. That latter complaint is significant.
11. Sergeant persuaded Valourdos to change to Sergeant from a supplier of seven years standing, on Sergeant's assurances as to the quality of the Nutexa product. Initially Sergeant supplied oils to Valourdos without problem. Valourdos first complained to Sergeant in mid to late 2001 reporting complaints from various customers, including a customer in the mountains who had complained of water contamination of one drum of oil. Mr Sergeant visited Valourdos on 2 November 2001 to investigate. He prepared a detailed report of that visit. Valourdos provided some samples, which Sergeant sent to Claymore for testing. Mr Duckett wrote to Mr Sergeant on 12 April 2002, reporting the results of testing samples. The sample from the customer in the mountains indicated that there had probably been water contamination. In his letter Mr Duckett described the procedures he said operated at Claymore's plant, including the following:

"We check blends in our laboratory for specification compliance before filling containers and retain samples...."

(In fact, Claymore have difficulty in respect of the evidence in relation to any samples of their product or to any tests they may have taken of such samples, and I have no confidence in the evidence Mr Duckett gave in respect to these matters.)

12. Mr Duckett spoke to Ms Valourdos by telephone on 30 April 2002. He noted that Ms Valourdos referred to a shipment of oil which was dirty and a little cloudy. Mr Duckett wrote to Mr Sergeant on 3 May 2002, in which he said that one sample "on close examination is cloudy and not bright" and that he would send this sample to an outside laboratory for report. Mr Duckett noted that the second sample "did not appear out of specification". He goes on to say "we have checked through our ISO 9001 system for the blends and retained samples (of products shipped to Sergeant in November 2001) and confirm they are bright in colour and to specification. They do not match the sample... indeed all our retained samples for Greek shipments ... are correct and bright."
13. On 27 May 2002 Ms Valourdos sent Mr Sergeant three samples of oil. She complained about the inconsistency of colour of oil from the same drum. In her covering letter, Ms Valourdos said:

"We are sending you three samples with numbers on.

No. 1. It's a sample from a customers' container from the bottom of it. As you will see has contamination.

No. 2 It's a sample from a sealed container in our warehouse from the bottom of the container. You will also see the contamination.

No. 3 Sample from a sealed container. Liquid comes from the upper side of the container which as you will see it's clear.

When you take the samples see them in the light No.1 and No. 2 are dirty and filthy, No. 3 is clear and transparent. The same sealed container, which is clear in the beginning after the middle of the container, starts getting filthy.

The container is in our warehouse to see it when you will come here. And we will also have another sealed for you to see in your next visit."

14. Sergeant sent these three samples to Claymore who, in turn, sent them to Robertsons Wearcheck for testing. On 17 June 2002 Robertson reported the results of tests on these three samples. Both Claymore and Sergeant respect Robertsons' test methods and have confidence in their results. The experts all had confidence in the validity of the tests which Robertson carried out on the various samples supplied to them. The differences between the experts (as far as the Robertson tests are concerned) lie in the interpretation of those results.
15. In his fax to Mr Sergeant dated 3 May 2002, Mr Duckett had suggested that stock from the shipment in question at that stage be returned to Claymore, and Mr Duckett had offered that Claymore pay 50% of the shipping costs; if, after inspection at Claymore's factory, Sergeant's complaint was found to be justified, Claymore would credit Sergeant in full including the shipping cost. By fax dated 28 June 2002 Mr Duckett repeated that suggestion.
16. Mr Sergeant decided to travel to Greece. He invited Mr Duckett to accompany him, but Mr Duckett refused, and repeated that refusal even though Sergeant offered to pay the cost of flights and Valourdos offered to pay the hotel bill. The trip would have taken only two days. Mr Duckett faxed Mr Sergeant on 28 June 2002 saying:

"I thank you for the invitation to visit Greece but as I have stated I do not think it will help. I believe with our help and details you will do better alone. I will give you assistance at this end."

17. Ms Valourdos faxed Mr Sergeant on 11 July 2002. She referred to their decision to change to Sergeant as supplier. She referred to the first complaints (including that concerning the water contaminated container from the mountain) and said "as the time passes by, customers are coming on very strongly to us. They are very displeased and they want answers." She describes some of the problems her company had encountered with oil supplied by Sergeant, and loss of sales, and said:

"We ask you to come urgently, to take samples yourself from sealed products. So you won't have a doubt. All thought is quite obvious, that there is a problem with the lubs, black mad (sic) and sediment visible to the eye. I've also told you that randomly we opened sealed products even 1lt bottles and they all appear the same problem."

18. Mr Sergeant replied the next day, explaining that he would be visiting Valourdos the following week. At that stage, he still had confidence in Claymore. He told Ms Valourdos that Claymore's operation was "of a very high standing" and that they had not experienced problems with other markets: "We have no reason to believe that Claymore make other than top quality lubricants."
19. Claymore supplied Mr Sergeant with 13 sample bottles and an extraction vacuum pump (which Mr Davies described as an oil thief.) Mr Sergeant travelled to Thessaloniki, visiting Valourdos on 25 July 2002. Samples of oil were taken from containers at Valourdos. Mr Sergeant took a number of photographs of the taking of the samples. Immediately after his return to the UK, Mr Sergeant wrote a detailed report. The manner in which the samples were taken is in issue and I return to that episode in more detail later. I note here, however, that Mr Sergeant's note of his visit to Valourdos that day began "without doubt this was my most difficult, embarrassing meeting that I have ever had with a customer...."
20. Mr Sergeant sent to Robertson five of the samples which he had brought back from Greece and two samples from his stock of oil (one of hydraulic oil and the other of engine oil). He did not give Robertsons any information about the samples. Robertson's test results showed that they had passed the samples as "normal". Sergeant subsequently learned that Robertson had assumed that the samples were of used engine oil. They informed Robertson that the samples were supposedly of unused oil. Mr Cutler is a manager at Robertson. He explained in his evidence that, when they learned that the samples were supposedly of unused virgin, oil, Robertson retested the samples then checked the data recorded from the first test. The retest confirmed the original data. They informed Sergeant that they stood by the data. Robertson did not produce fresh reports. In brief, the test results showed the presence of wear metals and contaminants, except in one sample, which was of oil from stock, and not from a batch sent to Greece, and which Sergeant had provided as a control.
21. The evidence of Mr Cutler and Mr Davies was that wear metals are not found in unused oil. Mr Davies expressed the opinion that, in all the samples, wear metals and contamination levels were high for new oils and that, with the exception of the control sample, the test results showed that samples were not typical of new oil. I deal in more detail later with that issue.
22. Robertson returned to Sergeant the residues of the samples. Sergeant sent Claymore all the samples taken in Greece including the residue of samples sent to Robertson. Claymore suggest that they had their own analyses made of Sergeant's samples. Even if they did so (and I have no confidence that they did) they have never made the results available.
23. A meeting between Mr Duckett and Mr Sergeant was arranged. Mr Sergeant wanted Claymore to explain how it could come about that wear metals were found in oil which Mr Sergeant had believed was virgin oil. The two men met on 13 August 2002. Again, Mr Sergeant prepared a detailed note recording what had been discussed. Amongst other matters, Mr Sergeant said he could not understand why there should be wear metals in virgin oil. He said it suggested that reconstituted oil had been supplied "despite the reassurance on numerous occasions that no such action occurs at Claymore." Mr Sergeant noted:

"The question was there posed of Dave Duckett did Claymore blend and produce all the grades which we purchased. Dave confirmed that some were purchased in and consequently there would be no control for traceability record on light or dark additives and presumably no control over the base oils."

24. Mr Duckett confirmed that he had indeed said that to Mr Sergeant.
25. Mr Duckett again suggested that the oil be returned to the UK. He wrote to Mr Sergeant by fax dated 19 August 2002, commenting on the samples which Sergeant had provided. He noted that "there was no visible evidence of poor specification". Claymore had not had any other complaints of this nature, from a world wide customer base. He suggested that the presence of wear metals did not establish that oil had been refined. He referred to Robertson having described the samples as acceptable and suggested that wear metals could have been introduced from steel storage tanks, road tankers, pipework, pumps and valves within any blending plant. He said

"I confirm that we do not use refined products in our formulations.

"We maintain that the samples taken randomly from the sealed stock in Greece meet the typical acceptable industrial standards on additives and specifications, although there is some colour variation it is not detrimental to the oils performance. I reiterate our previous offer first made in January 2002 and subsequently repeated that stock of engine oil be returned to the UK for joint inspection by all parties.

If products are found to be unacceptable then we will pay for shipping costs and effect a settlement by replacement or credit note to suit all parties."

It is strange that Mr Duckett should have written as he did given the admission he had made at his meeting with Mr Sergeant that Claymore did buy in product.

26. Claymore provided Sergeant with a detailed commentary on the samples which Sergeant had provided. They concluded as follows:

We maintain all the oils are of serviceable quality. All the viscosity tests show the oils to be in standard for 20/50 or 15W/40. All the Wearcheck results show that the additive levels are consistent with the products specification. We have also examined our retained samples and find that these are acceptable."

27. Mr Sergeant wrote to Mr Duckett at length on 21 August 2002, with a draft letter to Ms Valourdos, on which Mr Duckett made some comments. Mr Duckett's response reveals his anxiety at the exposure of Claymore in this matter.
28. In a fax dated 3 September 2002 Mr Duckett again suggested that goods considered to be unacceptable be returned and "if, after joint inspection in the UK are found to be unacceptable, we will replace or credit subject to agreement, we also offered and again repeat the offer to pay for the shipping cost if product proven to be unacceptable." In fact, that was not a repeat of the previous offer or offers: by September, Claymore were offering to meet the shipping cost only if the product proved to be unacceptable. Valourdos, however, refused to return the oil to the UK.

Claymore's processes

29. In his statement Mr Holmes gave detailed information about Claymore's processes and procedures, but in reality he has had little to do with the company for a long time as he has been semi-retired for many years. He explained, in general terms, that Claymore purchase base oils with "specifications" (not performance specifications) set out in their suppliers' "product specification and typical value sheets". These deal with matters such as viscosity, density, colour and flash point. The base oils reach Claymore's premises with a certificate of conformity. Claymore then blend those base oils with other base oils of a different specification and/or with additives eg viscosity improver or detergent pack.
30. The manufacturers of additives produce "blend studies" which show how their additives are to be added to any particular specification of base oil or any particular blend of base oils and at what temperature in order to produce a blend that meets a particular performance specification. The blend studies are produced by the additive manufacturers after extensive research with those bodies that set the performance specifications. If any particular specification of base oil or blend of base oils is treated in accordance with the additive manufacturer's blend studies for a particular performance specification for that base oil or blend of base oils, the blend will meet that performance specification.
31. Claymore blend oil to order, in varying volumes. If a batch is not immediately required for an order, it is placed in a storage tank with other batches of the same performance specification, with the consequence that two or more batches may be mixed.
32. Claymore have disclosed no product specification sheets or certificates of conformity. I find it surprising that neither Mr Hodges nor Mr Green called for these. Even though Claymore's copies may have been destroyed in the fire in December 2002, enquiries could have been made of the suppliers. None was made.
33. In his statement, Mr Holmes said that Claymore used only base oil in blending engine oils and had never used oil or refined used oil in blending oils. He suggested that, during the relevant period of supply to Sergeant, refined used oil was in limited supply and the cost difference between it and base oil only marginal. However, Mr Holmes' evidence at trial was that Claymore did sometimes buy in blended oils. This is in accord with what Mr Duckett had said to Mr Sergeant on 13 August 2002.
34. Mr Holmes explained that Claymore held only very limited stocks of base oil and bought virtually on a daily basis. Sergeant placed orders only at intervals of several months for oil that was to be delivered to Valourdos. On that basis, he suggested, any order for a particular type of oil would not have been made up from the same base oil or batch as had been used to supply a previous order for that type of oil. Furthermore, Sergeant ordered a number of different types of engine oil, so each different type of engine oil in that order would have come from a different batch and from a different order of base oil.
35. Claymore did not batch number the containers they supplied to customers. Mr Holmes explained that batch numbering could be undertaken but they would then charge the customer a higher price. None of the oil supplied by Claymore to Sergeant was batch numbered. There was no traceability. I deal with that in more detail below.
36. As I have indicated earlier, Claymore's evidence as to the retaining of samples of oil they shipped out to Sergeant, or any test results on such samples, was unsatisfactory. If Claymore did retain samples, these were said to have been destroyed in the December 2002 fire at the plant.

Sergeant's case

37. Sergeant's case is that they purchased oil from Claymore in reliance on the representation made in January 1999 that only virgin oil would be supplied. Claymore did not supply virgin oil: analysis of the samples shows the presence within it of wear elements (metals which come from engines or other machinery) like copper, iron, lead, molybdenum and tin. The oil supplied was either heavily contaminated or possibly reconstituted oil. It had been laundered prior to supply to Sergeant.
38. The three issues are interrelated: virgin oil was not supplied; the oil supplied was not up to the performance specifications set out on the drums (i.e. did not accord with its descriptions) because additive levels were incorrect (probably due to inadequate mixing resulting in lack of homogeneity); oils supplied were not of satisfactory quality nor reasonably fit for its purpose due to the discoloration and the sediment (caused by lack of homogeneity) and due to their inadequate additive levels (also due to lack of homogeneity).
39. Sergeant contends that none of the engine oil sold by Claymore to Sergeant since April 2002 for the Greek market was manufactured from virgin oils. None accorded with the specification given them nor were they of satisfactory quality or reasonably fit for their purpose.

Claymore's case

40. Claymore denies all Sergeant's allegations. They say that Robertson's test results do not support Sergeant's case. They contend that the samples are limited and insufficient to prove Sergeant's allegations. Sergeant has not shown that the oils tested had not been altered or interfered with between the time of their supply and their testing. The possibility of contamination is demonstrated by the presence of water in the drum from the mountains. Even if Sergeant is able to prove that some oil supplied by Claymore was of unsatisfactory quality or otherwise supplied in breach of contract, Sergeant cannot prove the extent of that breach.
41. Claymore also contends that Sergeant contractually accepted the oil and is thus prevented from bringing the present claim. At trial, Mr Glassbrook for Claymore said that this was "not the central point" but in closing submissions Mr Glassbrook confirms that Claymore does rely on this point.
42. In his written closing submissions, Mr Glassbrook submits that Sergeant accuse Claymore of dishonest activity, namely that Claymore laundered oil in order to present it as unused oil. He submits that Sergeant's allegations of deliberate dishonesty and fraud are central to its case. It seems to me that that is a misreading of Sergeant's case. Sergeant does not plead its case this way. Mr Pugh's opening skeleton argument does not put the case this way, nor does his written closing submission. Sergeant's case is that the use of laundered oil instead of virgin oil is the most likely cause of the presence of wear elements in the oil, but it is no part of Sergeant's case whether Claymore did so knowingly or not. No fraud is alleged. The issue is whether, on balance of probabilities, Claymore supplied oil which conformed to its description of virgin oil which had been blended, was of satisfactory quality and reasonably fit for its purpose.

Samples

43. Mr Pugh prepared a helpful table summarising the various samples taken from stock at Valourdos and test reports prepared by Robertson on these. In May 2002, three samples were taken. Three samples were taken in June 2002. In July 2002, Mr Sergeant returned from Greece with 13 samples; of these, two had been taken from one container (one from the top and one from the bottom) and these two were from the same container as had been sampled in June 2002.
44. Sergeant supplied two samples to Claymore in April 2002 and three in June 2002. Mr Duckett says that he arranged for these to be tested and that the samples met "the performance specification". Claymore suggest that they retained samples of product supplied to Sergeant (see, for example, Mr Duckett's letter and commentary dated 19 August 2002.) However, Claymore have not produced the retained samples or any tests carried out on these. Claymore's premises were completely destroyed by fire in December 2002 and Mr Duckett says that the test results were lost as a result.
45. Sergeant also supplied to Claymore eight unused samples taken in July 2002 and the residue of the five samples tested by Robertson from the July 2002 exercise.

The expert evidence

46. The experts had each prepared a report before trial and had met twice before trial, on 15 July 2005 and again on 13 September 2006. Joint notes were prepared. Mr Hodges and Mr Green concentrated on criticisms of the sampling undertaken at Valourdos' premises in July 2002. All gave evidence after having heard the evidence of Mr Sergeant, Mr Duckett and Mr Holmes. The evidence of Mr Sergeant was of particular assistance to them with respect to that sampling exercise.
47. Mr Cutler and Mr Davies both approached their task diligently and independently. They considered carefully matters such as the composition of oils in the Robertson test results and specification for unused oils. They carried out useful analysis of the Robertson test results and helpful, relevant research. They took a measured approach. I found the evidence of Mr Hodges and Mr Green less helpful. They concentrated heavily on the approach to sampling but did not deal in depth with other aspects of the technical evidence. They made no enquires of suppliers of additives for technical data. They made no investigation of Claymore's manufacturing process. At the joint meeting of experts, Mr Hodges and Mr Green felt unable to comment on questions whether the oil met a particular specification or how recorded additive levels impacted on requirements of any particular grade or specification of oil. Mr Davies and Mr Cutler, on the other hand, had considered these questions in detail. I deal with these matters below.

Mr Sergeant's sampling at Valourdos in July 2002

48. in regard to the samples which Mr Sergeant collected at Valourdos in July 2002, Claymore complain of lack of cleanliness and thus potential cross contamination from:

(a) the contents of the plastic bottle used as a decanter;

(b) whatever was used to cut the bottle;

(c) the residue of sampled oil which Claymore submits must have collected in the neck and cap of the plastic bottle and on the irregularly cut upper rim;

(d) use of what Claymore describe as a plainly dirty rag;

(e) failure to use gloves;

(f) contamination from Valourdos' premises.

49. In their reports, Mr Hodges and Mr Green concentrated on what, at that stage, they considered to be poor practice in relation to the sampling, to the extent that they considered that one could not rely on the test results. However, as more detail emerged at trial of the way in which the exercise had been conducted and after having heard the lay evidence, they both tempered their opinions and their criticisms largely fell away.
50. Mr Sergeant arranged for 13 samples to be taken at Valourdos' premises (a warehouse) in July 2002. He took that number because Claymore had given him that number of sample pots. Claymore gave him no guidance at all as to how samples should be taken. Mr Sergeant was unable to use the extraction vacuum pump which Claymore had supplied because it was unsuitable. Mr Sergeant was assisted by Ms Valourdos and her brother. Mr Sergeant explained that containers from which samples were to be taken were chosen at random. He took a number of photographs during the session. These are most helpful.
51. I found Mr Sergeant to be open and straightforward, and honest in his evidence. He was careful with his evidence. The detailed notes he prepared at various stages during the sampling exercise in July 2002 and at other times are most helpful, and support the impression I gained of someone who took care.
52. The note of matters discussed by the experts at meetings on 15 July 2005 and 13 September 2006 records that, while it would have been preferable for there to be a third party to witness the sampling, "under the circumstances the sampling was done fairly and honestly and the date from these samples can be used to assess the quality of the contents of the drums sampled. Mr Green and Mr Hodges however remain concerned that the sampling was not independent." At trial, Mr Hodges and Mr Green accepted that there was no impropriety on Mr Sergeant's part. The containers to sample were chosen at random. Mr Sergeant plainly took great care during the exercise. I see no reason to doubt the validity of samples on the ground that Mr Sergeant was not independent. Of course, Claymore had refused the invitation to visit Valourdos and be present at the sampling.
53. Mr Green and Mr Hodges referred to the standard procedure for sampling in European Standard EN ISO 3170 of February 2004. This appears to be the only available official guidance. The standard emphasises the need for cleanliness to avoid the risk of contamination and recommends a method of sampling. The standard is of particular assistance in an environment where cargoes are to be sampled. It seems to me to be less helpful in the circumstances which faced Mr Sergeant. As Mr Davies, who has many years experience of sampling oil in various environments explained, if no oil thief were available, he would have approached the task exactly as Mr Sergeant had done.
54. Mr Green criticised Mr Sergeant for not having taken duplicate samples - one for Claymore and one for Sergeant. However, once it became clear to him that Mr Sergeant had passed on to Claymore all 13 samples (8 sealed and the remaining 5 less only what Robertson had taken for testing) Mr Green did not maintain that criticism.
55. Mr Green and Mr Hodges criticised what they considered to be deficient labelling of samples. However, after they had considered carefully at trial the detailed notes which Mr Sergeant had made and photographs he had taken during the sampling exercise, neither persisted with that criticism.
56. I heard much evidence about the possibility that samples could have been contaminated as a result of Mr Sergeant's approach to sampling. Some of the propositions advanced were fanciful and unsupported by calculation or other evidence. This gave the impression that Claymore were clutching at straws.
57. It was not possible to use the vacuum extraction pump which Claymore had provided. The drums are large, and heavy when full. It would be difficult to pour oil straight from the drum into a sample pot, which has a capacity of only 60ml. Mr Sergeant, Ms Valourdos and her brother therefore had to devise a way to transfer oil from a drum into a sample pot. They used a plastic bottle (probably a water bottle) as a decanter: the bottom was cut off and the lid left screwed on. As Mr Davies observed, without an oil thief, decanting is the only option. Mr Sergeant himself cleaned the decanter. Oil was poured from the container into the decanter, and from there into the sample pots. I accept Mr Sergeant's evidence that he took care to wipe out the decanter with a rag each time it was used. Clean rag was used for each step of the operation. No more than a smear of oil would have been left in the decanter after each use.
58. The 60 ml capacity of the sample pots is less than the likely volume of the decanter, which was suggested to be about 300ml. It is highly unlikely that only precisely the correct volume needed to fill the sample pot was poured from the drum into the decanter. It is more likely that a greater volume of oil was poured into the decanter than was needed to fill the sample pot.
59. Claymore's case was that there was a likelihood of cross contamination from one sample to another, and that this came about because traces of oil from one sample were carried forward into the next sample. I reject that suggestion. In this regard, Mr Green or Mr Hodges were, in effect advancing hypothetical possibilities without any supporting evidence. Mr Davies and Mr Cutler gave the matter careful consideration. During the trial, Mr Davies took the trouble to prepare, overnight, a calculation to illustrate how any contamination of the sort alleged by Claymore was either unlikely or, if it happened, would be de minimis. Indeed, as he explained, in preparing his calculations, he had assumed a much greater volume of supposedly contaminated oil than was ever likely to have been present. I found his arithmetical illustration most helpful and accept the conclusion he reaches. I also considered a detailed comparison of the composition of the oil in two samples (one taken following the other) which demonstrates conclusively that, as a matter of logic, cross contamination between samples is most unlikely to have occurred.
60. As Mr Davies explained, even if an inadequately cleaned "pop" bottle had been used, any drink residue in the decanter would not have explained the contamination identified in the Robertson test results.
61. The fanciful notion that fluid (and thus contaminated fluid, on Claymore's case) from the bottom of the decanter would flow out first when the decanter was emptied was quickly knocked on the head.
62. At trial, Mr Hodges suggested that samples may have been contaminated by the presence of metal particles in the, albeit clean, rag used to clean the sampling equipment. He accepted, however, that such particles would be far too big to be picked up by the spectrometer used to analyse the oil. I was concerned by Mr Hodges' having advanced that proposition on the basis, as he described it, of "gut instinct". His having done so gave the impression of a lack of impartiality by casting about to find support for a theory which Sergeant's experts had demonstrated objectively could not be sustained.
63. I accept the evidence of Mr Cutler and Mr Davies that the environment (an industrial warehouse) was a reasonable one in which to take samples. There is no evidence to support the proposition that samples could have become contaminated as a result of accretion of dirt from the surroundings.
64. Claymore criticise the fact that those involved in the sampling exercise were not wearing gloves. First, the wearing of gloves would appear to be a matter of health and safety and irrelevant to the issues here. Secondly, there is no objective evidence from Claymore's experts to explain how the absence of gloves could impugn the integrity of the samples.
65. Claymore suggested that the drums or containers of oil may have been contaminated before Mr Sergeant took samples. I reject that suggestion. While it is clear that contamination by water is possible (as was found in the drum from the mountains) and there is the hypothetical possibility that oil in drums could have been contaminated, there is no evidence to suggest that this had occurred in relation to the drums from which the Valourdos samples were taken. It is another example of Claymore casting around to find answers to Sergeant's case.
66. In my judgment it is unlikely that there was cross contamination from one sample to another or indeed any contamination from external sources of the samples taken in July 2002. Further, I believe Mr Sergeant when he says that the 13 samples were not interfered with after he had taken them, including when bringing them back to the UK and delivering them to Robertson and Claymore.
67. I reject each of Claymore's criticisms of the sampling.
68. Mr Green and Mr Hodges both expressed concern that the sampling had not been correctly undertaken because the contents of drums had not been homogenised before sampling; instead, oil was taken from the top and bottom of drums. This is a very odd criticism to make: a complaint at the heart of this dispute is that oil was not homogeneous, but had separated, with the consequence that oil was lighter in colour at the top of a drum and darker at the bottom and there was sediment at the bottom. To have homogenised such containers before sampling would have meant that no analysis could have been made of any differences between oil at the top and at the bottom of the same container. At trial Mr Hodges and Mr Green recognised that point and accepted (as Mr Cutler and Mr Davies considered) that, in the circumstances, the container should not have been homogenised before sampling. That approach must be right.
69. I am satisfied that Mr Sergeant did the best job he could with the equipment with which he had been supplied and in the environment in which he had to work. In all the circumstances I conclude that the 13 samples which Mr Sergeant brought back from Thessaloniki had been taken as well as was possible in the circumstances, and that the parties and the court can have confidence in their integrity.

Was the oil sampled unsatisfactory?

70. It is common ground that new oil should be clear, bright and homogeneous (as Mr Davies describes it.) At trial Claymore sought to make points on what they considered to be Valourdos' criticisms of the colour of the oil. They were missing the point. Valourdos complained about the difference in colour within the same container, that oil was cloudy and that there was sludge at the bottom of containers. Mr Sergeant's photographs clearly show that, as oil is being poured from a container, the oil is streaked dark and light, indicating visually – as is clear from the photographs - that there were variations in colour within the same container of oil. It is not surprising that Valourdos complained to Sergeant. Their criticism that oil was cloudy was valid: oil should, as all acknowledge, be clear and bright. The experts agree that oil should be homogeneous. Oil at Valourdos was not homogeneous. That is clear from the differences in colour within a drum, and the presence of sludge at the bottom of a drum. As Mr Duckett accepted, if additives are not properly mixed during the blending process, they will tend to sink to the bottom of a container. The sludge seen at the bottom of a drum probably indicates that additives had not been properly mixed in. Mr Cutler described the difference in colour within one container identified by Mr Sergeant as "most unusual" and said that this pointed to a non-homogenous product.
71. Claymore plead, in their amended defence, that the presence of "background elements" does not of itself indicate that oil is not "virgin oil" or of unsatisfactory quality. They plead that oil is said to be "virgin" if is unused oil direct from a refinery (base oil) or unused base oil after it has been blended. Here, they contend, virgin oil means virgin oil with a level of background elements that is within the range generally found within blended oil. Sergeant's experts have grappled with the question what is the appropriate composition of oil to fulfil that description. Mr Davies noted that the expectation was that new oil would be within specification and there would be no wear or contamination elements and Mr Cutler noted that unused oils should not contain wear-metal elements. Mr Hodges and Mr Green have not considered in any detail what the composition of virgin oil should be.
72. In their joint report the experts agreed that the contents of the containers sampled in Greece "are suspect". Mr Cutler and Mr Davies said that wear-metals contamination in the samples was unlikely to come from normal processing at the blending plant. Mr Green and Mr Hodges agreed that in general that was true but "they could not agree that this had to be the case at the Claymore plant" and maintaining that wear metals do occasionally appear in unused oil.
73. Mr Davies' evidence is of great assistance with the question whether the oil supplied by Claymore complied with specification. Compliance with specification requires engine testing with specific base oils. Additive suppliers do this with blenders "reading across" to produce oils to specification. This "read across", he says, is "not possible with base oils of variable properties ie non-virgin base oils, laundered/ cleaned/ refined." Mr Davies referred to typical data sheets for engine oil additives from Lubrizol and Infinium (which he describes as the leading additive package suppliers.) In Mr Davies' extensive experience, engine oils meeting typically API SH/CF-4 and API SF/CF-4 SHPD (appropriate specifications for petrol and diesel engines) contain about 1,000 ppm of phosphorous. Lubrizol told Mr Davies that the minimum value for phosphorous to meet API SH in a cost-effective way would be 800ppm. Mr Davies would expect a similar minimum value for API SF. Robertson's test results on Sergeant's samples show levels of phosphorous at significantly below 800ppm. Mr Davies concludes that the additive treat rate for the oils sampled at Valourdos appear to be inadequate to meet the performance specifications API SH or SF for engine oils. This evidence is significant. Mr Davies' clear evidence is that the fact that phosphorous levels were so low indicates lack of homogeneity, lack of correspondence to performance specification, lack of satisfactory quality and lack of reasonable fitness for purpose. Claymore have not engaged with this evidence.
74. In his report, Mr Hodges says of Robertson's test results that the presence of wear metals does not automatically mean that the oil containing them has been previously used in an engine. In cross examination, however, Mr Hodges agreed that the wear metals found are typical of oil which has been used in an engine and acknowledged that the normal expectation was that one would not generally expect to see wear metals in unused oil. Mr Hodges explained in his report that there are potential sources of wear metals in various parts of manufacturing equipment such as pumps, filters and pipework. While contamination from such sources is not likely to happen often, it is nevertheless possible. Mr Hodges identifies at least a theoretical possibility that background metals be introduced in blending and supply chain. His position essentially was that the available evidence did not point to where the contamination originates, and without further evidence he felt unable to commit himself. Mr Hodges has undertaken no study of Claymore's manufacturing process to support his point. He had no knowledge of which additives Claymore had been using
75. Mr Hodges expresses the view that what he describes as the low level and apparently random spread of metals in the samples indicates no systematic cause of contamination. If refined oils had been used and the assumption that they contain wear metals is correct, then Mr Hodges says a more uniform pattern of contamination would have been evident. Mr Hodges regards as significant that Robertson described the oil as fit for continued use after the initial testing, in the belief that the samples were of unused oil. In his report Mr Hodges said that the range and level of contamination did not convince him that the samples were not unused oils and he concluded that the oils sampled were fit for purpose. Mr Hodges noted that, at the joint experts' meeting, he and Mr Green took the view that the oils were fit for purpose, thus disagreeing with the views of Mr Cutler and Mr Davies, but bases that view largely on his dissatisfaction with the manner in which the samples were taken. He has not, however, engaged with Mr Davies' evidence as to specifications and what constitutes compliance with specification.
76. Mr Green works for a company called Scientifics Ltd, a company which provides an oil analytical service. Mr Green comments in detail on the Robertson test results. In general, he considered their interpretation of test results to be acceptable and in line with his experience. He concurred with Robertson's approach when reconsidering their report of the initial results once they had been told that the samples were in fact supposedly of new oil. Mr Green expresses the opinion that the level of contamination found in the Robertson results is very low (with the exception of one sample). In his experience, new oils tend to have very little contamination but he says that this is by no means always the case. He agrees that it is not ideal to introduce metals but the levels identified would be acceptable in service samples.
77. At trial Mr Green accepted that, in an ideal world, there should not be streaks of different colours in oil. He agreed with Mr Pugh that he would not advise anyone to use oil in an engine if it were dark in parts and light in others. He accepted that if additives had settled out, there would be a concentration of these at the bottom of a drum.
78. Mr Green did not deal directly with the interpretation of "virgin oil". He said in his report that, with the exception of one sample, the levels of contamination in samples were "generally very low". He confirmed that new oils tend to have "very little contamination but this is by no means always the case." He did not deal at all with the appropriate specification for the oils supplied by Claymore. He said that he was unable to comment on whether the samples indicated that the oil was fit for its purpose or to comment on the question of the appropriate specifications for engine oils or additives. He adduced no evidence to contradict Mr Davies' evidence whether generally in relation to the appropriate performance specification or in particular regarding the levels of phosphorous found in the samples.
79. Indeed, Mr Hodges and Mr Green both indicated in the joint experts' note that they felt unable to comment on the question whether the oils met a specification to API SH/CF4 OR API SF/CH4 SHPD, in circumstances where the oils were not homogeneous. They also felt unable to say how the recorded additive levels impacted on the requirements of any particular grade or specification of oil.
80. The joint experts' statement recorded that Mr Cutler and Mr Davies considered that the wear-metal contamination in the samples was unlikely to have come from normal processing at the blending plant. Mr Green and Mr Hodges are recorded as agreeing "in general that this was true but could not agree that this had to be the case at the Claymore plant". This supports the impression given by both Mr Hodges and Mr Green that each was looking for certainty, and to a standard higher than the balance of probabilities. It is in my judgment significant that neither researched the conditions at Claymore's plant and neither provided any material to support the theory that wear-metal contamination might have come from the plant itself. In the circumstances here, it seems to me that such mere supposition is not sufficient.
81. Mr Hodges was influenced by Robertson's conclusion, on first testing samples in the mistaken belief that these were of used oil, that they were "normal". It seems to me that Claymore place undue reliance on Robertson's statement in their initial tests reports that the oils tested were reported to be "normal", ie the conclusion which Robertson had reached when they had thought they were testing used oil. As Mr Cutler explained, Robertson take at face value the information they are given by a customer. Their task is not to decide whether oil is used or unused. Their task is to identify the chemical composition and viscosity of samples. The great majority of samples sent to them for testing are of used oil. The initial identification of samples as "normal" is of no relevance here.
82. I was assisted by Mr Davies' evidence, based as it was on objective research and analysis. I am persuaded by his opinion that wear metals were found in all but one of the samples whose test results he considered, and that with the exception of the control sample, none of the oils sampled was suitable to be sold as new oil. I accept his evidence that the samples showed lack of homogeneity.
83. Similarly, I found Mr Cutler's evidence helpful. He had also considered the questions objectively and undertaken research and analysed the results. He had arranged for an analysis to be made of typical wear metal values in a large number of samples of oil from new, ie unused, oils sent to Robertson by various customers. He also analysed the results of samples of oils which Robertson had purchased from a retailer, ie oils with true traceability. His approach was objective and, in considering samples from a known and traceable source, prudent. These analyses demonstrated that the levels of wear metals in the Valourdos samples were not typical of unused oil. I accept Mr Cutler's conclusion that all but the control sample contained contamination, namely wear metals typical of used oil.
84. I have no hesitation in concluding that that the samples of oil obtained at Valourdos showed that the oil in the containers from which the samples had been drawn was not virgin oil and it did not comply with its description as to performance or specification. I also conclude that, as the oils sampled were not homogeneous and additives had separated out, those oils were not of satisfactory quality nor were they fit for their purpose. As Mr Green conceded, he would not use such non-homogenous oil in a car engine.
85. That conclusion is sufficient, and it is not important given the issues in the case to conclude how it came about that non-virgin oil was supplied. However, it does seem to me probable that Claymore, on occasions, used reconstituted oil as a base oil, and that this had been supplied to Sergeant and by them to Valourdos. After all, Mr Holmes and Mr Duckett both accepted that Claymore had occasionally used oil which it bought in and that it mixed its batches. There is no other credible explanation for the presence of wear metals usually found in used oils in the Valourdos samples.

What conclusions can be drawn from the samples?

86. Given my conclusion as to the quality of the oil samples, the question then arises as to how much of the oil which Claymore supplied is likely to have been affected.
87. Sergeant's case is that all the oils in Valourdos warehouse were the subject of complaint by them. Valourdos refused to pay for any oil once it became clear that the oils were separating out and black sediment was found in containers.
88. Claymore's case is that Sergeant's claim depends upon establishing which oils were the subject of complaint by Valourdos. Claymore say that Sergeant's case as to which oils are complained of has altered on a number of occasions. Now, Sergeant say that none of the oil supplied since April 2000 is to the required specification and so on. Sergeant's case has indeed developed. Initially, Sergeant cross claimed only in relation to oil the subject of Claymore's claim. At that stage, it was not appreciated that lack of homogeneity played an important part of the case. Once the experts had considered matters, Sergeant amended its claim. I do not find anything sinister or unconvincing in this development of their case.
89. It is, of course, for Sergeant to prove its case, on balance of probabilities.
90. Mr Glassbrook submits that, in order to prove that Claymore are liable to them, Sergeant must identify the delivery and type of oil complained of by Valourdos, the alleged defects in such oil, and "that such defects were attributable to [Claymore's] deliberate provision of laundered, used oil." I have already dealt with the last point: it is not Sergeant's case that Claymore deliberately supplied laundered used oil. Sergeant simply say that Claymore may or may not have known that they were supplying used oil; it matters not - it is the fact of supply which is complained of.
91. Claymore suggest that the available evidence indicates that Valourdos' complaint is more limited than Sergeant's claim for damages would suggest. Mr Duckett has never acknowledged that Valourdos had valid complaints. He has sought to down play these at every opportunity. Neither party has called evidence from Valourdos. I bear in mind that Sergeant had let Valourdos down, and that Claymore had not shown interest when Valourdos complained, notwithstanding Valourdos' offer to provide accommodation for Mr Duckett if he would come to see the problem for himself.
92. Valourdos stored all containers in their warehouse, which was clean, dry and tidy. There is no suggestion that they sold old stock first, or indeed had any system of stock rotation. They simply had no wish to deal with any of the Sergeant oil in their warehouse after the problems were identified. I have little confidence in the evidence Mr Duckett gave with regard to his discussion with Ms Valourdos. I doubt that Valourdos would have been at all reassured had they seen the results of the tests carried out on samples. It seems to me that the question whether Valourdos complained about particular batches or deliveries is of little relevance. In any event, the principal question is whether, objectively, and on balance of probabilities, Sergeant proves its case in relation to the quality of the oil which Claymore supplied.
93. I heard evidence relating to traceability of oil to Claymore's various batches. This is not a central issue but has some relevance. As I have indicated earlier, there is no batch traceability in relation to the oil supplied to Sergeant. Claymore rely on their express terms of business, saying these should have alerted Sergeant from the outset to the fact that traceability and consequent record keeping would not be provided by Claymore. The wording of clauses 4 and 5 of the terms and conditions (on which Claymore rely) is not such as to make it clear that batch traceability will be given only if requested and paid for. In any event, as I set out below, Claymore are unable to demonstrate that their terms and conditions applied until January 2002 at the earliest. Claymore criticise Valourdos for its lack of a system which would link particular containers to particular deliveries. It is curious that Claymore make such criticism when they themselves chose not to adopt a system which would have enabled containers to be traced to any particular batch of oil.
94. Sergeant had assumed that Claymore had some system of batch traceability. However, they learned during the course of these proceedings (and to their surprise) that Claymore adopted no such system. Claymore say they have ISO 9002 accreditation, under which batch traceability is optional. ISO 9002 recommends procedures for identifying a product by suitable means from receipt and during all stages of production and delivery "where appropriate". It would appear that the standard does not identify the circumstances in which this would be "appropriate". Claymore chose not to operate any such system unless a customer specifically requested this and was prepared to pay extra. Mr Sergeant accepts that ISO 9002 appears not to impose such a requirement on Claymore, though he said that he "was staggered" to learn that traceability was optional under ISO 9002.
95. It follows that there is no means by which one can trace any particular sample or any container of oil at Valourdos to any particular batch of oil from Claymore's plant. Mr Davies commented that, even though there was apparently no requirement to trace, if he were a supplier, he would want to know what happened to the oil after delivery. He said that he could not envisage a situation where a supplier delivered oil but did not know where it had come from, who had made it and to whom it had been supplied. As he said, if one is running a good business, one does better than the minimum required by any relevant standard – one adds to it. I found Mr Davies' comments compelling. He said that, if one could not associate samples to batches, then the consequence was that all containers would have to be quarantined. His evidence was that, given the problems found with the oil at Valourdos, if he had been in their position he would have wanted to inspect every container of oil, but that of course would have rendered all unsaleable. Nevertheless, to be sure, one would have to test every container.
96. Claymore deduce that Valourdos were complaining about oil which formed part of a delivery of 100 x 25 litre containers of 20w/50 premium oil under an invoice dated 22 November 2001. It seems to me that the scope of supply of defective oil is not so limited – it could have been supplied in the September 2000 or April 2001 shipments, or indeed under the November 2001 invoice.
97. Claymore submit that the evidence available from such a limited number of samples is insufficient to condemn large batches of oil -some 100 containers - as Sergeant seek to do. They say that this would not be in accordance with the guidance in ISO 3170.
98. The experts agreed that the evidential scope of the sample was "a fair representative of the remaining drums of the same batch." In my judgment, there is sufficient evidence to prove on balance that the samples which Mr Sergeant collected in July 2002 were representative of all the oil sold by Claymore to Sergeant since April 2000.
99. Almost all of the samples had been taken from sealed containers. There is no evidence as to stock rotation by Valourdos. It cannot be said (indeed is not suggested) that either Sergeant or Valourdos was responsible for the lack of homogeneity. Claymore point out that the oil was shipped from Claymore's factory in Redditch to Greece by a contractor over whom Claymore had no control, but there is no credible evidence to suggest that the containers were contaminated after despatch from Redditch.
100. Not one of the July 2002 samples showed that virgin oil had been supplied. Claymore were in breach of their obligations in relation to each of the July 2002 Valourdos samples tested by Robertson. In relation to those samples, the base oil was not virgin oil and it is clear that Claymore had been unable properly to homogenise their oil.
101. I reject Claymore's submission that the sample taken in July 2002 was too small from which to draw the conclusions which Sergeant seek to draw. There is no suggestion that oil was supplied by any other supplier. Ms Valourdos' letters indicate concern generally about the lack of homogeneity in the oils in their warehouse. It seems to me that, in the circumstances here, the sampling did provide sufficient evidence from which to draw conclusions about the quality of all the oil in Valourdos' warehouse, which Sergeant had supplied to them from at least April 2000. In my judgment, it is not necessary to make any link between samples and a particular delivery. It is not necessary to link samples to deliveries to reach the conclusion that none of the oil from Claymore was made from virgin oil.
102. Mr Hodges said that it would not be possible to extrapolate from so few samples that a complete batch was unacceptable: if at any point in the sampling process there was a failure which resulted in a non-representative sample being offered, then the whole basis for meaningful quality control was negated. He could not see the trend he would have expected to see. He concluded that the samples could not be considered to be fair representations of the product supplied by Claymore. It became apparent, however, that Mr Hodges' real concern was that he found himself at the preliminary stage of the investigation. Understandably, he wanted to go on and examine matters in more detail: the Robertson results indicated that more investigation was merited, but this had not been undertaken. Mr Hodges had been unable to progress beyond the preliminary investigation stage. Likewise, Mr Green wanted more evidence. He was looking for greater certainty. Again, that is understandable given his background, which includes extensive forensic work in criminal cases, where the standard of proof is higher than in most civil cases. It is understandable that Mr Hodges and Mr Green should have taken a cautious approach and wanted more samples. However, Claymore chose not to obtain further samples. The question is whether there is sufficient evidence to sustain Sergeant's case. None of the experts is expert in statistics. The questions are for the court, not the experts. It seemed to me that Mr Hodges and Mr Green were striving to reach conclusions that were for the court, not for them, to make.
103. Reference was made to the tables in ISO 3170 which give guidance as to the number of samples which would justify rejection of a batch of the same petroleum product from which the sample was taken. There are some difficulties with this standard in relation to this case. The guidance assumes that all samples have been taken from the same batch, and that is not the case here. Mr Davies pointed out that the sampling guidelines contained in EN ISO 3170 are intended, he suggests, to prove that oil is good. Here, oil was found to be bad. Mr Davies was emphatically of the opinion that failure of just one sample was ground for rejection of the whole batch. I find Mr Davies' argument compelling and derive little assistance from EN ISO 3170.
104. Mr Pugh has referred me to the Court of Appeal decision in Datec v UPS [2005] EWCA Civ 1414, which is of assistance in considering a case where evidence is incomplete. I find that helpful in approaching the available evidence in this case. I do not find myself having to speculate to any significant extent. I am satisfied on balance that the oils sampled were not of appropriate quality. I am also satisfied that there is a sufficient degree of probability that all oils supplied by Claymore to Sergeant for the Greek market were deficient. In my judgment, the evidence here is sufficient to persuade me that it is probable, balancing all the evidence, that none of the oil sold to Sergeant for sale to the Greek market after April 2000 was virgin oil, that all such oil was non-homogeneous, and was not of satisfactory quality nor fit for its purpose.

Misrepresentation.

105. The letter of 22 January 1999 is in clear terms. It is a plain commercial representation that Claymore supplied only virgin mineral oils. I accept Mr Sergeant's evidence that he believed Mr Duckett's statement that Claymore used only virgin mineral oils. Clearly, Sergeant relied on Claymore's representation. Mr Scholes of Sergeant wrote to a potential customer (Chapter Oils) on 25 January 1999 enclosing a copy of Claymore's letter of 22 January 1999 in support of Sergeant's representations to Chapter Oils about the quality of products Sergeant could provide.
106. Mr Holmes could not recall having seen the letter but acknowledged that Sergeant had relied on Claymore's representation. He knew that Sergeant wanted top quality oil for its Nutexa brand. Mr Holmes said that the representation was true "so far as Sergeant were concerned." However, as I have set out earlier, Mr Holmes confirmed that, from time to time, Claymore did buy in blended oils. He could not be certain that Sergeant had not been sold oils which Claymore had bought in.
107. Claymore relies on the proposition that there is no evidence that it was a term of the contract between Sergeant and Valourdos that unused oil be supplied. Valourdos did not complain that Sergeant had supplied used oil. The 22 January letter had not been written in order to be seen by Valourdos. I have no hesitation in rejecting Claymore's arguments on this point. Claymore knew (as Mr Holmes confirmed) that Sergeant expected to be supplied with top quality oil. There was a plain representation that Claymore would supply only virgin oil and Claymore knew that. I accept Mr Sergeant's evidence that, if Claymore had not given him the assurance contained in the January 1999 letter that only unused oil would be supplied, he would have closed his account with Claymore. He had no reason to doubt the veracity of the statement. He relied on it in relation to all purchases he made, not just purchases for onward supply to the Greek market. As Claymore indeed accept, Nutexa is premium quality oil.
108. Mr Holmes did not inform Sergeant that Claymore had begun to use reconstituted oil after the January 1999 letter.
109. In my judgment, following the letter of 22 January 1999, Sergeant was entitled to expect to be supplied only with virgin oil. Sergeant plainly relied on the representation, in relation not only to Chapter Oils but also to Valourdos. I accept Mr Sergeant's evidence that he persuaded Valourdos to change to Sergeant as a supplier on the basis of the quality of the oil which Sergeant would supply.
110. The representation was made by Claymore to Sergeant and Sergeant relied on it. As between the parties to the action, the representation and reliance are proved.
111. Given my conclusions as to the quality of the oil which Claymore actually supplied to Sergeant, the claim for misrepresentation is proved: Claymore did not supply only virgin oil to Sergeant.

Acceptance

112. Although there is no pleaded case to this effect, Claymore contend that their standard terms and conditions governed the relationship with Sergeant. Clause 6 of these provides that goods are deemed to be accepted when the customer examines goods or, if not previously examined, then in various circumstances including the elapse of 10 days of receipt of the goods, followed by submission within 14 days of receipt of a "completed claim". The clause provides that the customer shall be entitled to reject the goods only if upon examination they prove to be defective in any material respect.
113. There are a number of difficulties with Claymore's case on acceptance. The first concerns acceptance by Sergeant of these terms and conditions. These are printed on the back of Claymore's invoices. There is no reference on the face of the invoice to the terms and conditions. There is no evidence that Mr Sergeant saw the invoices. It is trite law, following the judgment of Lord Denning MR in White v Blackmore [1972] 2 QB 651, that there must be reference on the face of the document to conditions overleaf. In any event, as Mr Pugh points out, invoices are a post-contractual document.
114. The terms and conditions were drawn to Mr Sergeant's attention in early 2002. He wrote to Mr Duckett by letter dated 23 January 2002, referring to standard terms and conditions which Claymore's office manager had sent to Sergeant. He pointed out that some of the detail in the terms and conditions "cannot apply to us". Amongst other matters, he said "as we export a substantial quantity, we could not accept within 14 days as we do not see the product concerned". He wrote again on 31 January 2002, saying that he accepted the terms and conditions but that his previous letter (ie the letter of 23 January) must form part of the terms on which the companies did business. It is clear from this that the parties were never ad idem with respect to the acceptance clause on which Claymore relies. It follows that Claymore cannot demonstrate that the provisions of this clause governed the relationship between the parties.
115. In any event, the wording of clause 6 is such that the purported time limit relates to rejection of goods, not to the bringing of a claim for damages, which is what Sergeant do in this case. Accordingly, even if incorporated, the clause would not bite on this claim.
116. Even if that were not so, I should have concluded that it would be unreasonable for Claymore to have relied on this clause. As Mr Pugh submits, it would take about a week for the oil to travel from Redditch to the dock and would then be at sea for about two weeks. It would not be reasonable to expect Sergeant to be able to inspect the product and make any complaint within the time scales envisaged by the terms and conditions. Further, it would be an unreasonable condition in relation to a product which cannot be inspected before a container is opened, and which is a long-life product. The thrust of the provisions on which Claymore relies is to seek to exclude liability. It follows that the burden is on Claymore to plead reliance on such a provision and to prove reasonableness. It has failed to do so.
117. In fact, Sergeant did report to Claymore in a timely fashion the complaints which Valourdos made.

Conclusion

118. Mr Sergeant had trusted Claymore, and maintained that trust for some time, even though Claymore did little to assist him. Yet Claymore let him down badly. Mr Pugh puts Mr Sergeant's position eloquently, when he says that Mr Sergeant's letters and reports portray the dawning of a painful realisation that the Nutexa oil of which he was so proud as being a quality product was sadly as bad as Valourdos had complained it was.
119. In my judgment, Claymore was in breach of its obligations in that, since April 2000, the oils it supplied to Sergeant were not virgin oils, were not of satisfactory quality and were not reasonably fit for their purpose. Claymore misrepresented to Sergeant, in January 1999, that all oils to be supplied would be virgin oils. Claymore is liable to Sergeant in damages for these breaches.
120. Issues as to quantum must now be considered. I invite the parties to submit proposals for procedural steps to be taken to complete these proceedings. Agreement should be reached if at all possible.

Frances Kirkham

12 December 2006