The Technology & Construction Court has recently published its judgment in Workman Properties Ltd v Adi Building & Refurbishment Ltd [2024] EWHC 2627. A notable aspect of the judgment in Workman is what the court had to say about how the parties had failed to deal appropriately with the question of whether or not the dispute was suitable for proceeding under Civil Procedure Rules (CPR) Part 8.
The background to the case, briefly, was this: in January 2022 Workman Properties Ltd (WPL) had contracted with Adi Building & Refurbishment Ltd for Adi to carry out design and construction works at Cotteswold Dairy in Gloucestershire. More than a year later Adi complained to WPL that the tender design in the Employer’s Requirements had not been developed to RIBA Stage 4, giving rise to a claim for damages and/or additional time/costs. In a first adjudication the adjudicator decided that the design was not to Stage 4, that WPL had warranted that it would be and hence Adi was entitled to damages. In a second adjudication Adi was awarded more than £3m.
In subsequent litigation in the Technology & Construction Court (TCC) WPL sought declarations regarding the proper construction of the building contract, being declarations as to matters already dealt with in the adjudications. Adi argued that WPL’s claim for these declarations was unsuitable for being dealt with under Part 8 (“the suitability issue”).
The presiding judge, HHJ Stephen Davies, lamented that “in certain respects” the parties’ solicitors had failed to comply fully with “guidance previously given by the courts as to how such cases should be conducted: (i.e. cases where the parties are far apart on the suitability issue). As this case illustrates, that approach [i.e. the lawyers’] has not ultimately assisted their clients nor has it assisted the court in dealing with this case in an effective or proportionate manner.”
Adi’s statement of costs lodged for the hearing totalled more than £220,000. That considerable sum was indicative of just how awry the lawyers’ approach to the suitability issue had gone.
In particular, the court in Workman identified the fact that the guidance given on the suitability issue by the court in Cathay Pacific Airlines Ltd v Lufthansa Technik AG [2019] EWHC 484 Ch ( – see paragraph 42 onwards – ) had not been followed. In Cathay the court had said this:
“Whenever a party is contemplating proceedings under CPR Part 8 in respect of a claim which could be started under CPR Part 7, the following steps ought generally to be taken:
(a) The proposed defendant ought to be notified that the use of CPR Part 8 is being contemplated.
(b) A brief explanation ought to be provided as to why CPR Part 8 is considered to [sic] more appropriate than under CPR Part 7 in the particular circumstances of the case.
(c) A draft of the precise issue or question which the claimant is proposing to ask the court to decide ought to be supplied to the defendant for comment.
(d) Any agreed facts relevant to the issue or question ought to be identified.”
In Workman the TCC went through the various stages, from WPL’s letter before action through to the hearing, picking over what the lawyers had got wrong at each point on the suitability issue.
For example, in their letter before action, WPL contended that Part 8 was appropriate because any disputed factual issues would not fall within the Part 8 claim. However they did not provide a draft agreed statement of facts or suggest a procedure for agreeing one. In their letter of response, Adi raised a plethora of objections to Part 8, including that it would be necessary to analyse the facts at the time the parties entered into the contract, but it did not identify what the relevant facts were, which would be in dispute and why. Without any further engagement, WPL had then launched Part 8 proceedings.
The various failings in approach to the suitability issue by the lawyers meant that the fundamental disagreement between the parties over whether Part 8 was suitable for the claim did not – but should have – cause them to apply to the court for directions as to how the case should proceed. The court said that this led it to them having no option but to list the hearing for one day on the first available date, as per the request of the claimant (WPL).
The court also pointed out that WPL’s witness statements wrongly stated that CPR Practice Direction 57AC (witness statements in the Business and Property Courts) did not apply here, because the proceedings fell within an exception for TCC proceedings relating to adjudication awards. However, the court explained that that was not the case, that exception did not apply here. Therefore PD 57AC should have been followed.
This case serves as a reminder that the courts will not allow the Part 8 procedure to be abused and exploited as a back door to expedited judgment, that there is clear guidance on how parties should approach the suitability issue, that PD57AC compliance is not a chore easily avoided and that lawyers are easily embarrassed in court judgements.
About the author: Tim Seal is head of construction at Ridgemont, a boutique law firm specialising in real estate and construction
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