Case Law Updates – March 2023

The Metropolitan Borough Council of Stockport v Unknown Owners [2023] UKUT 53 (LC)

Background:

Stockport Metropolitan Borough Council (the “Acquiring Authority”) sought a Compulsory Purchase Order (CPO) to acquire land to facilitate the construction of a new relief road linking the A6 to Manchester Airport.

The Acquiring Authority could not identify the owners of five small parcels of land which lied across the planned relief road. Nonetheless, the Acquiring Authority entered the land in March 2015 and completed the construction in 2018. The Acquiring Authority had obtained a determination from the Tribunal under Schedule 2 of the Compulsory Purchase Act 1965 of the amount of compensation payable for each of the five parcels of land.

To execute a deed poll, the acquiring authority must pay compensation to the court. However, the Courts Funds Office declined the payment, as the deposit request form required the date on which the notice to treat was given. As the owners were unknown, the Acquiring Authority had not provided a notice to treat. Before proceeding, the Court Funds Office required the Council to seek further direction from the Tribunal.

Legal Issues:

• Were the statutory requirements complied with?
• Must a notice to treat be given to unknown owners for compensation to be accepted?

Held:

• The relevant statutory provisions do not require an authority to serve notice to treat where it is unable to identify the owner of land subject to compulsory purchase.
• The tribunal provided an order allowing the Acquiring Authority to pay the compensation to court with no notice to treat.

Judgement:

The court referred to two relevant areas of statutory legislation:

The Acquisition of Land Act 1981:

• Before submitting a Compulsory Purchase Order, the Acquiring Authority is required to publicise it to those who have an interest in the land to be acquired and to explain what it involves and how it may be objected to.
• s.11 requires publication in local newspapers and given to every “qualifying person” in relation to the land (s.12(1)).
• After a Compulsory Purchase Order is confirmed, the Acquiring Authority must serve a confirmation notice (s.15). additionally, the notice must be affixed to a conspicuous object or objects on or near the land comprised in the order and published in local newspapers.

The Council complied with these steps

The Compulsory Purchase Act 1965:

• Section 5: “Notice to treat, and untraced owners,” states that a notice to treat must be given to those known to the acquiring authority after making diligent inquiry.
• Therefore, notice is only required to be given to known identities (paragraph 17 of the judgement).

For further information, please see: The Metropolitan Borough Council of Stockport v Unknown Owners [2023] UKUT 53 (LC) (01 March 2023) (bailii.org)

Kajima Construction Europe (UK) Ltd v Children’s Ark Partnership Ltd [2023] EWCA Civ 292

Background:

The respondent entered into a construction contract with the appellant to carry out the redevelopment works to a hospital. The second appellant provided the respondent with a guarantee of contractual performance.

The contract includes a provision limiting the appellant’s liability to 12 years from the date of completion of works. The contract also includes a contractual dispute resolution procedure (DRP), which requires all disputes to be submitted to a liaison committee. Only if the issue is not resolved through DRP, then the parties may proceed to court.

The appellants informed the respondent that the works were completed. The Respondent considered that there were defects in the works and submitted court proceedings as the limitation period was about to expire. The respondent applied for a stay of proceedings so they could comply with the DRP clause. The appellant applied for an order to strike out the claim on the ground that the respondent had failed to comply with the dispute resolution procedure (“DRP”).

The judge concluded that the DRP was unenforceable due to uncertainty. If it was enforceable, the judge would not exercise her discretion to do anything other than stay the proceedings.

Arguments:

• Appellants: The judge had been wrong to find that the DRP was not enforceable and that a stay of proceedings was the default remedy, and that she had erred in the exercise of her discretion when declining to strike out the claim.
• Respondent: Even if the claim against the first appellant fell to be struck out, the claim against the second appellant could not be struck out because the guarantee did not contain the DRP.

Judgement:

Appeal dismissed

Enforceability of DRP:

• The court had to endeavour to enforce the agreement but should not overstrain to do so, so that it produces an artificial result

Exercise of discretion:

• Even if the court gave greatest weight to the argument that the first appellant had been deprived of a limitation defence, this would not strike out the claim

Claim against the second appellant:

• Even if the appeal succeeded, it would not prevent seeking remedy from the second appellant

For further information, please see: Kajima Construction Europe (UK) Ltd v Children’s Ark Partnership Ltd Westlaw UK

Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Ltd & Ors [2023] EWHC 644 (TCC)

This case concerns an application for summary judgement from the Defendant in respect of a Part 20 Claim, to strike out the Particulars of Additional Claim as they disclose no reasonable grounds for bringing those parts of the claim and have no real prospect of success.

Background:

• On 20 December 2004, a series of agreements were entered into between the claimant, Sheffield Teaching Hospital Foundation Trust (“the Trust”) and the defendants.
• Hadfield agreed with the Trust (executed as a deed) to design, build, commission and operate the Hadfield Wing (“the Project Agreement”).
• Kajima agreed with Hadfield (executed as a deed) to carry out the design, construction and commissioning of the Hadfield Wing (“the Construction Contract”).
• Dalkia Utilities Services plc (“Veolia”), agreed with Hadfield to provide facilities management services from the completion of the construction works at the Hadfield Wing.
• In 2017 and 2018, the Trust identified potential defects in the fire compartmentation and other fire protection works in the Hadfield Wing
• On January 2018 all parties entered a standstill agreement, which at clause 2.1 stated:
  • “(a) for all purposes of any defence or argument based on limitation, time bar, laches, delay or related issue in connection with the Dispute (a Limitation Defence), time will be suspended during the Standstill Period.
  • (b) no party shall raise any Limitation Defence that relies on time running during the Standstill Period…”
• A second standstill agreement on the same terms was entered into on 25 March 2019.
• On 9 December 2020 the Trust commenced proceedings against Hadfield, seeking damages of £13 million in compensation for design and construction defects throughout the Hadfield Wing, as a result of which the Trust was forced to vacate the Hadfield Wing and relocate during remedial works.
• Hadfield then commenced Part 20 proceedings against Kajima, claiming that Kajima should indemnify them for all damages due to their failure to design and construct the facilities in compliance with the Construction Contract
• On 13 January 2023 Kajima issued an application for summary judgement against Hadfield.

Relevant Law

• CPR 24.2 – “The court may give summary judgment against a claimant … on the whole of a claim or on a particular issue if –

1.  it considers that –
   1. that claimant has no real prospect of succeeding on the claim or issue; … and
2.  there is no other compelling reason why the case or issue should be disposed of at a trial.”

• The claimant must have a “realistic” as opposed to a “fanciful” prospect of success – Swain v Hillman [2001] 1 All ER 91
• The claim must be “realistic”, meaning it carries a degree of conviction and must be more than merely arguable – ED & F Man Liquid Products v Patel [2003] EWCA Civ 472
• Where reasonable grounds exist to believe that further investigation may alter the evidence available and the ultimate outcome of the case, the court should be hesitant to make a final decision without a trial – Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63.
• Where the court is satisfied it has all necessary evidence for proper determination and the parties have had opportunity to address the question in argument, it should decide on that point of law. It is not enough to argue that a case go to trial in the event something may appear which would have a bearing on the question of construction – ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 at [11]-[14]; Easyair Ltd (t/a Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15].

Issues

1. Whether the scope of the standstill agreement applies to this dispute.
2. Whether a common law duty of care existed between the parties

Held

The application for summary judgement or strike out was dismissed.

Reasoning

• It was found to be more than fanciful that the definition of the terms ‘defects’ and ‘dispute’ in the standstill agreement applied to this dispute and in the absence of full documentation and cross-examination the court was not able to reach a conclusion. Overall, it could not be said that Hadfield’s claim was bound to fail.
• Whether a common law duty of care is applicable was not an issue suitable for determination on a summary basis in this case. The reasoning in RSK Environment v Hexagon [2020] EWHC at [43] was cited; “In a commercial context, the nature and extent of a common law duty of care will be framed by the contractual nexus or lack of contractual nexus between the parties, together with the wider factual and contractual arrangements, including any stated limitations or exclusions from liability. The cases all serve to emphasise the importance of the factual matrix when considering whether any common law duty of care arises, including the nature and scope of any such duty.” Justice O’Farrell was not convinced that he had enough evidence for a proper determination of this issue and is a matter that should be decided at trial.

For Further information, please see: Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Ltd & Ors [2023] EWHC 644 (TCC) (22 March 2023) (bailii.org)

The Fraserburgh Harbour Commissioners v McLaughlin & Harvey Limited” [2021] CSIH 58

This case concerned a dispute as to whether under clause W2.4 of the NEC 3 Engineering and Construction Contract (the “Contract” agreed between the parties barred the pursuer from entering litigation or arbitration before the dispute was first referred to adjudication.

Background

The pursuer was the statutory harbour authority responsible for Fraserburgh Harbour and wished to carry out works to deepen part of the harbour to accommodate larger vessels and increase efficiency.

In November 2012 the pursuer accepted the defender’s tender to carry out the works. After completion of the works, the pursuer identified defects which they claim arose a failure to conduct the works in accordance with the contract and the specified methodology. The pursuer brought proceedings for damages of £7 million pounds.

The defender claimed that there was a contractual bar to the claim, in that as per W2 of the contract it was a mandatory step for the matter to be taken to adjudication before referral to court or arbitration. The position was therefore that the pursuer’s claim should be dismissed.

The relevant part of Clause W2 of the Contract is as follows:

• W2.4 (1) “A Party does not refer any dispute under or in connection with this contract to the tribunal unless it has first been decided by the Adjudicator in accordance with this contract.”

Issue

Whether Clause W2 created a contractual bar to the dispute being heard in court before being referred to adjudication.

Held

There did exist a contractual bar and the dispute would have to be referred to adjudication before it could be referred to the court.

Reasoning

It is clear from the language used that the provision was intended to be definitive as to the means for determining any disputes between the parties and the sequence by which a claim is brought.

For Further information, please see: https://www.bailii.org/scot/cases/ScotCS/2021/2021_CSOH_8.html