Winch Design Ltd -v- Carl Le Souef & another [2025] EWHC 120 (Comm)
This was a dispute arising out of unpaid invoices for design services in relation to the manufacture of a luxury yacht.
The judgment provides a helpful commentary on how an English court will approach the issues of:
- determining the identity of the contracting parties;
- determining the proper meaning and construction of other contractual terms (in this case, the payment terms); and
- assessing conflicting witness evidence (in this case, in respect of an estoppel defence).
The background
Somio Superyachts Pty Limited (Somnio) is a special purpose vehicle (SPV) incorporated for the development and construction of Project Somnio. Project Sommio is planned to be one of the largest yachts in the world at 222m in length, comprised of multiple private residences. The budget for the build, design and outfitting is reported to be in the region of EUR 500m and the build contract is with the Norwegian shipyard VARD, (a Fincantieri company). The co-founders of Somnio are Mr Le Souef and Capt. Erik Bredhe.
In a claim subject to English law and recently decided in the English High Court, Mr Le Soeuf in his personal capacity and Somnio were defendants to a claim brought by Winch Design Limited (Winch), an English company providing design services for superyachts, for unpaid invoices in the sum of £733,750. The invoices related to an agreement (the Contract and Addendum) pursuant to which Winch was engaged to provide certain design services in relation to the construction of the yacht.
Winch succeeded in its claim that Mr Le Souef was personally liable to pay the invoices plus interest.
Headline commentary
- Mr Le Soeuf would not have been found personally liable to pay the invoices if he had not entered into the Contract and Addendum in his personal name. For a written and signed contract, the process of identifying the parties and their capacity begins with the signatures and any accompanying statement describing the capacity in which the person who signs did so.
- The meaning of contested contractual terms are assessed by an English court with reference to the objective meaning of the language the parties have chosen, and with reference to what a reasonable person with all the background knowledge reasonably available to the parties would have understood the parties to mean.
- In commercial cases, trial judges may place relatively little reliance on witness statement recollection of what was said in meetings/conversations or on the strength of the witness’ self-conviction in the accuracy of his/her memory. Instead, a trial judge will use the process of cross-examination of a witness to gauge the witness’ personality and motivations. The judge will also draw inferences from documentary evidence and known or probable facts in order to make findings of fact.
The identity of the contracting parties
Winch contended that Mr Le Souef was the counterparty to the Contract, whereas Mr Le Souef and Somnio contended that Somnio was the contracting party. The legal question was: what would the Contract convey to a reasonable person, having all the background knowledge which was reasonably available to the parties in the situation which they were in at the time of the Contract?
On behalf of Mr Le Souef, it was argued that Winch’s true counterparty was Somnio for a number of reasons:
- the recent incorporation of Somnio as the relevant SPV for the Project and that it owned the relevant IP;
- Winch had not previously contracted with Mr Le Souef and earlier contracts had not referred to him;
- the earlier invoices had been raised to Somnio; and
- Winch had been introduced by an email dated 20 June 2019 to Somnio’s CFO on the basis that he would manage the financial elements of the Project.
Mr Le Soeuf’s defence was further that because Somnio had been incorporated specifically as an SPV to enter into these types of contract, it would flout business common sense for the parties then to have deprived Mr Le Souef of the benefit of separate legal personality otherwise implied by the use of a corporate vehicle.
Mr Le Souef’s defence failed.
The Contract stated that the Client was “Carl Le Souef” and defined the “Parties” as “Winch and the Client”. Capt Bredhe was described as “the Client Representative” and signed “on behalf of Carl Le Souef”. The Court held that any objective bystander would conclude that Mr Le Souef was the intended contracting party and the express terms of the Contract could not be contradicted.
The defendants further argued that the express terms of the Contract should be rectified but this argument also failed because there was no evidence that the parties shared a common intention that Somnio should be a contractual counterparty and had outwardly expressed an accord in that respect.
The meaning and construction of the payment terms
Winch claimed that the disputed invoices were accrued debts. The defendants argued that as an overarching principle it could not be right that Winch should be entitled to payment for work which it had not performed.
The Contract, however, expressly provided for payment by specific dates and the Court was persuaded that the commercial rationale for those payment terms was that Winch had to put together and resource a team of designers to undertake the ongoing design work under the Contract, such that it needed a commitment so as not to incur lots of overheads for a period of time without being paid.
Under the terms of the Contract, Winch was to use all reasonable endeavours to meet the performance dates specified in the contractual timetable (the Timetable) but that time was not of the essence for that provision. The Timetable provision stated that:
- The above timetable is given as a business estimate only and does not give rise to any contractual obligation as to the performance of Winch”.
The Payment Schedule stated:
- The Payment Schedule is geared to progression of the Project in accordance with the timetable above”.
On a proper construction of the express contractual terms, the Court agreed with the claimant that the disputed invoices were accrued debts and that the defendants could not, counter to the express contractual terms, argue that the obligation to pay arose only after performance or substantial performance of the services in respect of the relevant stage of work.
The forbearance/estoppel issue
Mr Le Soeuf alleged that over an informal dinner in London, a non-executive Director of Winch had promised that Winch would not demand payment of its invoices or institute legal proceedings to recover any sums owed under the contract before Somnio obtained funds from the third-party investors in Project Somnio.
There was a conflict of evidence between the two witnesses in respect of their memory of the discussion over dinner.
The Court explained the importance of checking what each of these witnesses said against the contemporaneous documents and events and against the inherent probabilities or otherwise of their respective accounts.
The Court rejected Mr Le Souef’s witness account of the dinner and preferred the account of Mr Beharrell of Winch, making a number of observations and findings about the two witnesses’ accounts and the extent to which they were supported or not by contemporaneous evidence including that if Mr Le Souef had negotiated an important concession from Winch, he would have been careful to record it in writing. Unlike Mr Le Souef, Mr Beharrell reported back on the outcome of the dinner to his CEO, Ms Grapin, and other colleagues at Winch in an email dated 24 October 2021.
The Court accepted Mr Beharrell’s evidence that, as non-executive Chairman, he would not have entered into an agreement to forbear from seeking payment of Winch’s invoices without the agreement of his CEO and so, at the very least, it would have been important and necessary for him accurately to report back the outcome of his meeting with Mr Le Souef. The Court also accepted that Mr Beharrell’s email dated 24 October 2021 was an accurate account of what was discussed at the meeting.
Another criticism made of Mr Le Souef’s witness statement was that it had all the hallmarks of having been crafted by him with his lawyers. The Court thought that it was highly improbable that this type of language had been used and accepted Mr Beharrell’s evidence that it had not.
Remaining issues
The defendant’s counterclaim in respect of Winch’s breach of contract also failed. The Court found that Winch had substantially performed the Contract by providing services including recruiting and assigning a team to work on the Project, supplying drawings and making presentations and that Mr Le Souef has acknowledged the work done in the emails. In addition, under the terms of the Contract, Winch was entitled to suspend the provision of services in light of the non-payment of invoices.
Under cross-examination Capt. Bredhe finally accepted that the reasons the invoices had not been paid was because of delay by the shipyard and nothing to do with Winch not performing.