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

Summary

Mathias Cheung successfully represented the Claimant (“Workman”) in the TCC in its Part 8 claim for declarations regarding the scope of the design responsibility of the Defendant (“ADI”) under an amended JCT Design and Build Contract 2016 (“Contract”), in relation to the expansion of the existing facilities at Cotteswold Dairy in Gloucestershire (“Works”).

The parties have already engaged in two adjudications prior to the Part 8 hearing. In the first adjudication, the adjudicator has decided that the statement at paragraph 1.4 of the Employer’s Requirements that “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)…” gave rise to a contractual warranty by Workman, and the fact that some of the design was not actually up to RIBA Stage 4 / BSRIA Stage 4(i) gave rise to a breach and/or a “Change” under the Contract.

Workman therefore sought declarations from the Court to the effect that ADI was responsible for completing all necessary works to develop the design up to RIBA Stage 4 / BSRIA Stage 4(i), and that Workman did not warrant that the design had been developed up to RIBA Stage 4 / BSRIA Stage 4(i).

ADI has opposed the use of the Part 8 procedure throughout, on the basis that there is a substantial dispute of fact (including as to the parties’ respective knowledge of the design status, ADI’s tendering strategy, and alleged statements regarding the design status during the tender process) which goes to the factual matrix relevant to the interpretation of the Contract.

Workman, on the other hand, has maintained that the facts purportedly relied on by ADI were irrelevant and inadmissible and did not prevent the Court from making a Part 8 determination, as those facts related to pre-contractual negotiations and/or the parties’ subjective understandings and intentions.

Decision on Suitability

HHJ Stephen Davies rejected ADI’s contention that the alleged factual disputes rendered the matter unsuitable for the Part 8 procedure. He observed at [19] that “general reference to what might have happened or been said at meetings was obviously insufficient to identify a genuine factual issue relevant to contract interpretation”, and that “nothing identified added anything material to what was in the contract documents or was in dispute”.

HHJ Davies emphasised at [27] that “[i]t 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”, noting that ADI could have applied to the Court for a summary determination of unsuitability but chose not to do so.

Although ADI relied on the parties’ follow-on adjudication on extensions of time, variations and loss and expense to argue that the Court should not decide points of interpretation without looking at the substantive claims, HHJ Davies pointed out at [52] that “it would be to the advantage of both parties to know now what their contractual rights and liabilities are as regards this discrete design responsibility point, at a time when there is plainly still significant scope for dispute going forwards in relation to this contract”.

Decision on Merits

HHJ Davies carefully considered the contractual provisions relied on by the parties, which he summarised at [54]-[84], before finding in favour of Workman.

He concluded at [95]-[96] that “all of the relevant contract terms point firmly towards the claimant’s case, save for the second part of paragraph 1.4 of the Employer’s Requirements”, and that to elevate paragraph 1.4 to a contractual warranty “involves treating the obligation to complete the existing design and to be fully responsible for the whole design as excluding all design work up to and including the end of stages 4/4(i)” – this would mean that ADI “had no obligation to… satisfy itself that it could safely, as design and build contractor, proceed straight to construction stage without checking that the existing design was sufficient and adequate for that purpose”.

Further, HHJ Davies noted at [97]-[98] that paragraph 1.4  of the Employer’s Requirements was “nowhere near sufficient to require the other unequivocal contract provisions to be read as so heavily qualified”, and if ADI decided to rely wholly on the consultants’ design, “then that was at their own risk and, in any event, was something which they were able to protect against by enforcing the novated contracts against those consultants”.

Comment

This case demonstrates the dangers of a party seeking to rely on pre-contractual negotiations and evidence of subjective intentions on a question of contractual interpretation. The Court will take a robust approach when faced with such arguments, and will not lightly refuse to deal with a contractual issue on a Part 8 claim just because one party alleges that there is some substantial dispute of fact which is ultimately irrelevant to the exercise of interpretation.

The Court’s focus when interpreting a contract is very much based on the contractual documents and the language used, and parties should be careful not to rely on one or two isolated statements in the contract documents to override the preponderance of the express terms which clearly impose very wide design responsibilities on the contractor.

The Court has also provided some helpful guidance on the procedure to be adopted where the suitability of the Part 8 procedure is contested, and suggested that the parties should apply to the Court for directions as to whether the case should continue as a Part 8 claim (see [14]). Encouragement has also been given for future Part 8 claims to be issued in the Business and Property Court District Registries to enable a hearing to be listed and disposed of more speedily (see [121]).

Mathias Cheung was instructed by Trowers & Hamlins LLP (Birmingham).

You can read the full judgment here.