TCC decision on matters of procedure and contractual interpretation regarding design responsibility

His Honour Judge Stephen Davies provides helpful guidance in Workman Properties Ltd v ADI Building & Refurbishment Ltd in relation to suitability for the CPR Part 8 procedure, contractual interpretation regarding design responsibility and when a case will be considered ‘adjudication business’ and dealt with in abbreviated timeframes.

Workman Properties Ltd v Adi Building & Refurbishment Ltd [2024] EWHC 2627 (TCC)

Background

The claimant, Workman Properties Ltd, appointed the defendant, Adi Building & Refurbishment Ltd, as its contractor for the expansion of existing facilities at Cottesworld Dairy, Tewkesbury under a JCT Design and Build Contract 2016 with bespoke amendments.

The dispute between the parties was the subject of two adjudications before coming before the court.  

• In the first adjudication, the defendant obtained declarations that the claimant had failed to develop the design to RIBA stage 4 and/or the equivalent BSIRA stage 4(i) (collectively referred to herein as ‘Stage 4/4(i)’) and had breached what it asserted was a warranty in paragraph 1.4 of the Employer’s Requirements that said:
  
  ‘… Significant design has been developed to date which has been taken to end of RIBA Stage 4 with some parts of contractor specialist design elements together with Services design to Stage 4 (i)…’.  
• The first adjudication was commenced with a view to establishing the foundation for the second adjudication, with the defendant making financial claims and/or claims for extensions of time. 

The defendant succeeded in the adjudications.  

• In the first, the adjudicator concluded that the claimant had in fact warranted that it had progressed the design to Stage 4/4(i) and was in breach by failing to complete the design to that extent.  
• In the second, the adjudicator found that the defendant was entitled to be paid substantial sums and to extensions of time flowing from the failure to complete the design to Stage 4/4(i). 

Following the first adjudication decision and prior to the second, the claimant brought a Part 8 claim seeking declarations which went to the issue of whether it had warranted that the design was complete to Stage 4/4(i) or whether the defendant was contractually obliged to complete the design.  

Part 8 of the Civil Procedure Rules 1998 provides an alternative and more simple procedure than bringing a claim in the usual way (in accordance with Part 7).  The proviso is that the Part 8 procedure is only suitable for claims which are ‘unlikely to involve a substantial dispute of fact’.

Decision

Part 8 suitability

Before deciding the substantive issues, His Honour considered whether the dispute was suitable to be pursued and determined in accordance with Part 8.

The defendant contended that the case was unsuitable for the Part 8 procedure because there were disputed factual issues and it would be inappropriate to decide the case without a full Part 7 process where all factual and legal issues could be considered.  The claimant’s response to those contentions was that the alleged disputed facts were based on precontractual negotiations which were inadmissible, not relevant to the question of contractual interpretation or otherwise not actually in dispute.

His Honour, agreeing with the claimant, determined the matter was suitable for the Part 8 procedure on the basis that the defendant had failed to identify disputed facts going directly to the issue of contractual interpretation, stating that:

‘It is not for the claimant, still less for the court, to scrabble around in the undergrowth of the defendant’s evidence to identify any such particular facts. It is for the defendant in such a case to identify them in clear terms from the outset. If it does so, and if it is plain that they are relevant and disputed, then the defendant will be able to apply to the court for a summary determination of unsuitability and the parties will be saved much time and cost and the court’s time will not be unnecessarily wasted. If it chooses not to do so, then it cannot complain if the court is not persuaded that the Part 8 proceedings should not proceed.’

Contractual interpretation

His Honour proceeded to determine whether paragraph 1.4 of the Employer’s Requirements, upon its proper construction and in the context of the contract as a whole, amounted to a contractual warranty that the existing design had been completed up to Stage 4/4(i) or whether the defendant had an obligation to progress the design works.

• The defendant emphasised the statements arising from paragraph 1.4 that ‘significant design has been developed to date’, ‘which has been taken to the end of RIBA stage 4’ and ‘together with services design to stage 4(i)’ and said that this was consistent with its tender.  
• The claimant emphasised the statement in an earlier part of paragraph 1.4 which said that the defendant is to be ‘fully responsible for the complete design… of the works’ and referred to a number of other bespoke provisions in the contract which placed design responsibility on the defendant as a design and build contractor.

His Honour held that the relevant contract provisions pointed firmly towards the claimant’s case, save for the part of paragraph 1.4 extracted above, which led a question of whether the statement was so clear as to amount to a contractual warranty that the existing design had been completed to Stage 4/4(i) so that there was no need for the defendant to satisfy itself that was the case.  

In His Honour’s judgment the words in paragraph 1.4 relied on by the defendant were:

‘nowhere near sufficient to require the other unequivocal contract provisions to be read as so heavily qualified’

This was particularly as the clauses were bespoke amended provisions which extended the standard design responsibility under a JCT Design and Build Contract 2016.

His Honour made a number of the declarations (albeit not as wide as those sought by the claimant) to the effect that the claimant had not warranted that the design had been developed to Stage 4/4(i) (and was therefore not in breach) and the defendant was contractually obliged to complete the design works.

Further comments on procedural matters

The decision contained some comments in obiter relating to procedure which should be considered when commencing an application which has an adjudication background.

His Honour reiterated the position in Merit Holdings Limited v Michael J Lonsdale Limited¹ that, pursuant to paragraph 9.4.3 of the TCC Guide, not all applications that have an adjudication background will be dealt with as ‘adjudication business’ and heard within abbreviated timeframes.  Where an application does not relate to the enforcement of an adjudication decision or declaratory relief arising out of the commencement of an adjudication:

• directions will not be made for a ‘speedy resolution’ of the dispute in accordance with paragraph 9.4.2 of the TCC Guide; and
• the exception for compliance with Practice Direction 57AC - Trial Witness Statements in the Business and Property Courts (at paragraph 1.3(9)) will not apply and parties are expected to prepare their evidence accordingly.

The decision concludes with a final observation in respect of venue, making the point that parties should properly consider the most appropriate location to commence a proceeding.  As required by paragraph 2.3(2) of Practice Direction 57AA, any claims which have significant links to a particular circuit outside London should be issued in the Registry located in the circuit in question, which may have resulted in achieving a final determination far quicker than otherwise might be the case in the London TCC and lightening the London TCC’s caseload.  

Takeaways

Key takeaways arising from the decision include:

• Courts will carefully consider whether a dispute is suitable to be heard by way of the Part 8 procedure to protect parties from prejudice suffered by not going through a full Part 7 procedure and to avoid courts being asked to make an ill-informed decision. With that said, the court will not order that a claim proceed in accordance with Part 7 merely because one party alleges that there is a substantial dispute of fact. Naturally, each case’s suitability for the Part 8 procedure will fall on its facts and the way in which the claimant frames the dispute and the defendant contests it suitability.
• Parties should take steps to agree a statement of agreed and disputed (and why they are disputed) facts prior to the commencement of Part 8 proceedings.  Where the parties are at a fundamental disagreement as to whether it is appropriate for a dispute to proceed in accordance with the Part 8 procedure, it may be sensible to apply to the court for directions as to whether the case should proceed in that way either in a full or modified form or alternatively be directed to continue as a Part 7 claim. Doing so may reduce costs on both sides.
• Contracts should be considered in their entirety and parties should be mindful of focussing on a specific provision in isolation to avoid the risk of forming a view which is inconsistent with the commercial intent of the parties or some other contradictory result.
• All relevant factual matters should be set out clearly in evidence for the court’s consideration and legal arguments should be referrable to the evidence to assist the court in reaching a decision. 

You can read the full decision here.

¹ [2017] EWHC 2450 (TCC)