Aldi Stores Ltd v WSP Group Plc and Others

JurisdictionEngland & Wales
JudgeLord Justice Thomas,Lord Justice Wall,Lord Justice Longmore
Judgment Date28 November 2007
Neutral Citation[2007] EWCA Civ 1260
Docket NumberCase No: A1/2007/0228
CourtCourt of Appeal (Civil Division)
Date28 November 2007
Between
Aldi Stores Limited
Appellant
and
Wsp Group Plc, Wsp London Limited and Aspinwall & Company Limited
Respondents

[2007] EWCA Civ 1260

[2007] EWHC 55 (TCC)

Before

Lord Justice Longmore

Lord Justice Thomas and

Lord Justice Wall

Case No: A1/2007/0228

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

MR JUSTICE JACKSON

Royal Courts of Justice

Strand, London, WC2A 2LL

David Thomas QC (instructed by Cobbetts) for the Appellant

Michael Soole QC (instructed by Reynolds Porter Chamberlain) for the First and Second Respondents

Michael Douglas QC (instructed by Simmons & Simmons) for the Third Respondents

Hearing date: 3 October 2007

Judgement

Lord Justice Thomas
1

This appeal concerns the application of the principles set out in Johnson v Gore Wood [2000] UKHL 65 [2002] AC 1 to an attempt to strike out a claim for abuse of process on the basis that the claim could and should have been brought in previous litigation. It arises in the context of complex commercial litigation relating to the damage sustained to a retail store site near Luton.

2

The undisputed facts are very fully set out at paragraphs 2–45 of the judgment of Jackson J [2007] EWHC 55 (TCC). It is therefore only necessary to summarise them:

i) In 1993 and 1994, Laporte Industries Ltd (Laporte) entered into agreements for a lease with the appellants (Aldi) and B&Q plc (B&Q) under which it agreed to construct stores at a site at Dallow Road, Luton; the site had previously been used by Laporte to deposit chemical waste from its nearby plant.

ii) In 1994, Laporte entered into a building contract with Holmes plc (Holmes) for the design and construction of the buildings and into agreements with the First and Second Respondents (to whom I shall refer together as WSP) and the Third Respondents (Aspinwall) for specialist consultancy services for engineering and environmental services respectively. Holmes employed Norwest Holst Soil Engineering Ltd (Norwest Holst) as the ground improvement contractor. Under the terms of complex contractual arrangements, Aldi and B&Q became entitled to warranties from Holmes, WSP and Aspinwall to the effect that they had properly performed their obligations; in the case of WSP and Aspinwall this related to their respective professional duties of skill and care; the warranties were supported by professional indemnity insurance for £5m. These warranties were executed under seal by these companies in 1994 and 1995.

iii) The buildings were completed in 1995. Laporte entered into a 25 year lease with Aldi and a lease for a similar term with B&Q. The freehold reversions were subsequently transferred to Grantchester Properties (Luton) Ltd and to Grantchester Retail Parks plc (Grantchester).

iv) Aldi and B&Q commenced trading from their stores in 1995. In 1997 and 1998, differential settlement to the buildings leased by Aldi and B&Q began to occur and caused damage to the buildings. Aldi were advised that the settlement had been caused by the vibro-compaction of the site; they were also advised that vibro-compaction was an unsuitable method of ground improvement and had not achieved its objective. There appears now to be little dispute that the differential settlement was caused by the unsuitability of the site and the method of compaction.

v) On 22 June 2001 Aldi commenced an action in the Technology and Construction Court (TCC) against Holmes claiming damages for breach of warranty and negligence; its claim was for £3.01m. Holmes joined the Second Respondents (one of the WSP companies) and Norwest Holst as Part 20 defendants in August 2001. In the Part 20 claim Holmes alleged that there had been breaches of the various warranties given to Aldi and B&Q.

vi) B&Q commenced an action against Holmes in May 2002 in the TCC; its store was considerably bigger and its claim was for £26m. Holmes issued Part 20 claims in that action against one of the WSP companies and Norwest Holst in July 2002. Grantchester commenced actions against WSP and Norwest Holst in September 2002.

vii) It was only in November 2002 that Aspinwall were joined by WSP into the action commenced by Aldi and B&Q. Between then and early 2003, Aspinwall and WSP were made parties by B&Q and Grantchester to their actions and to some of the Part 20 proceedings in the B&Q and Grantchester actions. Aspinwall were made, along with the First Respondents (the other WSP company), Part 20 defendants to the Aldi action by Holmes in January 2003. Subsequently another company, Keller Limited, who had acted as ground improvement specialists, became party to the actions.

viii) Holmes had gone into administration on 5 February 2002. Nonetheless it had the required professional indemnity insurance under a cost inclusive primary layer for £2m and for a second layer of £3m excess of £2m. The primary layer agreed to indemnify Holmes and instructed solicitors to act on behalf of Holmes; the Aldi claim attached to one year and the B&Q claim to a different year. However, the position of the excess layer underwriters was different; by July 2002, they had reserved their position and Aldi were informed of this.

ix) Aldi pursued its claim vigorously against Holmes who continued to be represented by solicitors instructed by the primary layer underwriters until 11 April 2003; it claimed only against Holmes and never made WSP or Aspinwall defendants to its claim. It is clear that Aldi's quantum claim against Holmes was, from an early stage, treated separately from the remainder of the Aldi action and the other actions. Thus:

a) On 16 March 2002, Aldi obtained judgment against Holmes on certain liability issues.

b) On 26 July 2002, Aldi obtained judgment on further liability issues. Directions were given at a pre-trial review before Judge Bowsher QC for a preliminary issue on quantum to be tried on 1 October 2002 with the remaining issues for trial in March 2003; the Part 20 defendants to that action were to be bound by the result and were given permission to attend the trial. A case management conference (CMC) was heard on the same date in the B&Q action and a trial of the quantum issues between B&Q and Holmes was fixed for March 2003.

c) On 1 October 2002, Aldi obtained judgment by consent on the preliminary issue on quantum; in essence Holmes accepted Aldi's contention that it was bound under the terms of the lease to keep the store in substantial repair.

d) On 29 November 2002, there was a further CMC before Judge Bowsher QC in all the actions; the trial of the quantum of Aldi's claim was adjourned to 3 June 2003. It was ordered that Holmes' Part 20 claim in the Aldi action, the B&Q action and the Grantchester actions were to be tried together on a date to be fixed; the CMC was adjourned to 17 January 2003.

e) At the adjourned CMC in all the actions on 17 January 2003 Judge Bowsher QC made directions for the trial of the remaining issues of quantum in Aldi's claim against Holmes. The order provided that the other parties were not to be bound by or required to attend the quantum hearing. This was because WSP and Aspinwall contended that the measure of damages was different and therefore different issues would arise. The date for the trial of the Part 20 proceedings in the Aldi action and the other actions was fixed for 12 January 2004, with an estimated length of just over 6 weeks; mediation was recommended for early June 2003.

f) On 24 January 2003, Holmes were ordered by consent to make a further interim payment to Aldi in the sum of £1.3m; this was agreed on the basis that it was likely to be the sum that would exhaust the primary layer of Holmes' cover; in fact the sum was too low and a further payment of £0.131m was made to Aldi in August 2004.

g) Aldi served its case on quantum on 3 February 2003 putting forward a claim that totalled £3.5m.

h) On 11 April 2003, the solicitors instructed by the primary layer underwriters on behalf of Holmes who no longer had an effective interest in the action after the agreement made on 24 January 2003, came off the record for Holmes; solicitors instructed by the administrator then came on the record for Holmes.

i) On 1 May 2003, there was a summary assessment of Aldi's quantum claim by Judge Bowsher QC; Aldi obtained a further judgment for £2.054m and that was made enforceable as to £0.526m after giving credit for the sums already paid. Certain issues were left over.

j) On 22 May 2003, there was a final hearing of the quantum claim before Judge Bowsher QC when the remaining issues were resolved by consent. Judgment was entered for Aldi for £3.331m; after giving credit for the payments made, the judgment was made enforceable for a further £1.266m, making a total of about £1.792m.

x) As Aldi had obtained judgment against Holmes for the whole of its claim, it set about trying to recover the sum of £1.792m from the excess layer underwriters. On 12 May 2003, Aldi's solicitors wrote to the solicitors for the excess layer underwriters making it clear that the Third Party (Rights Against Insurers) Act 1930 would be used if necessary.

“In particular, our client has an understandable reason to wish to pursue to a conclusion the issue of enforcement under the 1930 Act which is that our client currently retains the benefit of various other potential causes of action against other parties. Claims against those other parties are subject to concerns in relation to limitation law. Further, those other parties are Defendants to various other claims (Part 20 claims) before the [TCC] which are due to come to trial in January of next year. It is our client's view that the court would expect our client to...

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