Viva must repay the balance for 650 ventilators, with interest and 55% of the claimant’s costs.
The High Court has ordered Viva Enterprises Limited to pay US$38.48 million to Servicios de Salud del Instituto Mexicano del Seguro Social para el Bienestar, following a dispute over the supply of medical ventilators during the COVID-19 pandemic. Mr Justice Richard Smith also refused the defendants permission to appeal.
The proceedings arose from a 12 April 2020 agreement under which Viva was to supply 1,000 ventilators to the claimant’s predecessor, INSABI. The claimant had paid about US$42 million upfront. A June 2020 agreement varied the original contract and provided for alternative performance.
The court found that Viva had delivered 50 ventilators from supplier HBK by 3 July 2020. It rejected Viva’s case that a further 465 ventilators supplied by Mexican company Encore had been delivered on Viva’s behalf. The judge found that those units had instead been supplied by Encore under its own arrangement with INSABI. The court also rejected Viva’s suggested entitlement to tender another 185 ventilators.
As a result, INSABI became entitled under the June agreement to a refund corresponding to the remaining 650 ventilators. The judge held that this entitlement could properly be recognised even though the claimant had not originally pleaded the refund as a liquidated contractual claim in those terms. The court concluded that the relevant issues and evidence had already been fully explored at trial and that granting the relief would not prejudice the defendants.
The court subsequently entered judgment for US$38.48 million and permitted the claimant to amend its Particulars of Claim to make the contractual basis of the refund explicit.
Pre-judgment interest was awarded under section 35A of the Senior Courts Act 1981. Rather than applying US Prime, the judge concluded that interest should run from 1 January 2022 at the Effective Federal Funds Rate plus 1%.
On costs, the court considered the claimant to have been the successful party overall, despite its failure on its misrepresentation claim and the separate claim against Robert Dangoor. Viva was ordered to pay 55% of the claimant’s costs, subject to detailed assessment if not agreed. The costs order is on the standard basis and excludes the costs of the injunction application, which will be considered separately.
The court also ordered a payment on account of 60% of the costs claimed, excluding injunction costs, within 14 days of judgment. Pre-judgment interest on those costs was awarded at the Bank of England base rate plus 1%.
The defendants advanced four grounds for permission to appeal, challenging the court’s construction of the June agreement, the treatment of unpleaded relief and the findings concerning the alleged “covert scheme”. The judge concluded that none had a real prospect of success and that there was no compelling reason for an appeal, so permission was refused.
The court did, however, grant a stay of the payment order pending any application to the Court of Appeal for permission, citing the amount involved and the potential effect of enforcement on Viva, including possible insolvency proceedings.