Aldi Stores Ltd v Holmes Buildings Plc
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE AULD,Lord Justice Dyson,LORD JUSTICE DYSON,Lord Justice Auld,LADY JUSTICE HALE |
| Judgment Date | 01 December 2003 |
| Neutral Citation | [2003] EWCA Civ 1882 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | A1/2003/1758 |
| Date | 01 December 2003 |
[2003] EWCA Civ 1882
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
TECHNOLOGY AND CONSTRUCTION COURT
(HIS HONOUR JUDGE BOWSHER)
QUEEN'S BENCH DIVISION
Lord Justice Auld
Lady Justice Hale
Lord Justice Dyson
A1/2003/1758
MR H TOMLINSON QC and MR T GRANT (instructed by Messrs Walker Morris Solicitors, Leeds LS1 2HL) appeared on behalf of the Appellant
MR M SOOLE QC and MS S GILMORE (instructed by Messrs Reynolds Porter Chamberlain, London EC3A 1AT) appeared on behalf of the Respondent
Lord Justice Dyson will give the first judgment.
This appeal raises a point as to the circumstances in which party A should be permitted to amend its claim against party B to introduce a claim which has already been made by A against B in other pending proceedings, where, because of the relation-back principle, it is said that the amendment will or may deprive B of a limitation defence available to it in the pending proceedings.
I shall refer to the appellant as "Holmes" and the respondent as "WSP". Holmes is a design and build contractor and WSP a structural engineer. In 1994, Laporte Industries Ltd ("Laporte") owned a site at Dallow Road, Luton on which it proposed to build two retail stores. Laporte has since assigned its interest in the site to Grantchester Properties (Luton) Ltd ("Grantchester"). Holmes was interested in submitting a tender for the design and construction of the development, and in April 1994 it retained WSP to act as its engineer to advise it in relation to the proposed tender.
In reliance on the advice of WSP, Holmes entered into a design and build contract ("the building contract") with Laporte on 25th August 1994 for the construction of the two stores. Laporte had already entered into agreements for leases in respect of the two stores with B&Q Plc ("B&Q") and Aldi Stores Plc ("Aldi"). Under these agreements, Laporte agreed to construct and then let the stores on 25-year leases.
By clause 2.8.1 of the building contract, Holmes agreed to execute a deed of warranty in favour of such third parties as Laporte might specify, warranting proper performance by Holmes of its obligations under the building contract. Entirely predictably Laporte specified that Holmes should execute such deeds in favour of Aldi and B&Q, and this Holmes duly did. By these warranties, Holmes warranted that it would perform all its obligations under the building contract in accordance with its terms; that it would satisfy the performance specification included in the building contract; and that it would exercise all reasonable skill and care as would be expected of a competent professional engineer.
Holmes completed the works in 1995 and Aldi and B&Q executed 25-year leases with Laporte. Cracking occurred in both buildings. It is common ground that this was caused by differential settlement, resulting from the fact that the stores had been constructed on four infilled lagoons which contained chemical sludge separated by bunds. It was the presence of the bunds which made differential settlement inevitable.
On 22nd June 2001, Aldi issued proceedings against Holmes ("the Aldi action") alleging that it was in breach of the building contract, and therefore in breach of its warranty. On 28th September 2001, Holmes issued a Part 20 claim against WSP alleging negligence and breach of contract and claiming damages equal to an indemnity against its liability to Aldi. It is not necessary to set out the details of the allegations made against WSP. Suffice it to say that Holmes alleged that WSP had given negligent advice in relation to the ground improvement work that was required, and that Holmes had relied on that advice in designing the scheme which was incorporated into the building contract. By its original defence WSP denied liability, but did not plead a limitation defence.
On 7th May 2002, B&Q issued proceedings against Holmes ("the B&Q action"). The allegations of breach of contract are substantially the same as those made by Aldi. In turn, Holmes issued a Part 20 claim against WSP on 10th July 2002. The allegations made were substantially the same as those that it had made in its Part 20 claim in the Aldi action. Holmes claimed damages equal to an indemnity against its liability to B&Q.
In its defence to the Part 20 claim in the B&Q action, WSP pleaded a limitation defence. It also obtained permission to amend its defence in the Aldi action. At paragraph 23B of its amended defence in the Aldi action, WSP pleaded as follows:
"Holmes' claims against WSP in contract and tort are statute-barred in that:
(i) the alleged breaches of contract occurred more than 6 years before the issue of these Part 20 proceedings against WSP on 28th September 2001
(ii) the alleged cause of action in tort accrued on 25th August 1994 when Holmes entered the Building Contract alternatively 20th September 1994 when Holmes executed the Deed of Warranty with Aldi, in either case more than 6 years before the issue of proceedings.
23C In respect of the claim against WSP, paragraph 30F is denied. On 22nd September 1998 Holmes received and considered the results of a level survey of the Aldi site and concluded that the survey showed settlement of up to 90 mm across the length of the floor slab. Given (i) their contractual obligations to Laporte/Aldi in respect of maximum settlement (ii) their possession and interpretation of WSP's letter to them dated 7th June 1994 as relied on (in particular) in paragraph 15 of the Re-Amended Particulars of Claim, Holmes' date of knowledge was no later than 22nd September 1998 and therefore more than 3 years before the said issue of proceedings."
The plea at paragraph 23C was in response to paragraph 33 of Holmes' reply, which was in these terms:
"Further, if, as WSP allege in paragraph 23B(ii), which is denied, the right to sue WSP in respect of the losses claimed by Aldi arose upon Holmes entering into the Building Contract with Laporte on 25th August 1994 and/or executing the Deed of Warranty with Aldi on 20th September 1994, Holmes's knowledge within the meaning of section 14A(5) did not arise until (a) 22nd June 2001 (service of the Particulars of Claim), alternatively (b) Holmes had had a reasonable opportunity to consider and respond to Aldi's solicitors' letter of 30th November 1998."
The corresponding pleas in the B&Q action are at paragraphs 22 and 23 of the WSP defence and paragraphs 23–25 of the WSP reply in the Part 20 proceedings.
Accordingly, in relation to the date of knowledge for the purposes of identifying the start of the three-year limitation period specified in section 14A of the 1980 Act, Holmes' case is that the date was 22nd June 2001 or a reasonable time after 30th November 1998, and WSP's case is that the date was 22nd September 1998. It will be seen therefore that if Holmes is right, the claim was not statute-barred when it issued its Part 20 proceedings in either action. If WSP is right, then the Part 20 proceedings were issued only six days out of time in the Aldi action, but about nine and a half months out of time in the B&Q action. This difference of approximately nine and a half months might prove to be critical. That is why the application for permission to amend might prove to be determinative of the issues between Holmes and WSP in relation to the B&Q claim.
On 3rd February 2003, Grantchester issued its claim against Holmes. It claimed damages for breach of a collateral warranty given by Holmes to Allied Dunbar Assurance Plc that it had performed all its obligations under the building contract. Grantchester sued as assignee of the benefit of that warranty. It claimed the loss allegedly suffered by it as a result of the differential settlement and the damage caused to the two buildings. No Part 20 proceedings have yet been issued in the Grantchester action.
On 15th March 2002, judgment for liability was entered by Aldi against Holmes. On 12th July 2002, judgment in respect of liability was entered by B&Q against Holmes. On 2nd June 2003, judgment was entered by Aldi in the sum of £3,311,922. Damages will be assessed in the B&Q action at a trial due to start in January 2004. The sum claimed, we are told, is in the region of £34 million. The following issues, amongst others, will be determined at that hearing: Holmes' Part 20 claim against WSP in the Aldi action; the assessment of damages suffered by B&Q and all issues in Holmes' Part 20 claim against WSP in the B&Q action; and all issues in the Grantchester action.
By a letter dated 23rd June 2003, Holmes' solicitors wrote to WSP's solicitors. Their letter covered a number of points including the question of limitation. At paragraph 4 of their letter they said:
"The Aldi Part 20 action was commenced on 28 September 2001. Holmes' case on the limitation issue is as follows:
4.1 It is accepted that all Holmes' breach of contract claims against WSPL are statute-barred.
4.2 It is now accepted that, as at the date of issue of the Aldi Part 20 proceedings, the primary limitation period in respect of Holmes' negligence claims against WSPL had expired. We appreciate that this is contrary to the presently pleaded case. The Reply will be amended in due course.
4.3 The Aldi Part 20 Proceedings were issued within the 'secondary limitation period' laid down by section 14A of the Limitation Act 1980 as Holmes did not, prior to 28 September 1998, have the 'knowledge' required for bringing an action under...
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