City and General Ltd v Structure Tone Ltd & Others
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE CHRISTOPHER CLARKE |
| Judgment Date | 18 August 2009 |
| Neutral Citation | [2009] EWHC 2139 (TCC) |
| Docket Number | Claim No: HT-09-26 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 18 August 2009 |
[2009] EWHC 2139 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Christopher Clarke
Claim No: HT-09-26
Claim Number HT-09-27
Mr Manus McMullan (instructed by Clyde & Co) for the Claimant
Mr Terry (instructed by DWF LLP) for the Defendant
Hearing dates: 23rd July 2009
MR JUSTICE CHRISTOPHER CLARKE :
This is an application by the defendants in both actions to set aside an order made by Ramsey, J on 1 st June 2009 by which he extended the claimant's time for serving the claim form in the actions.
City & General (Holborn) Limited (“City”), the claimant, is the owner and developer of 25 Southampton Buildings/11 Staples Inn (“the Premises”), which was formerly the patent office. From 2001 onward works (“the Works”) were being carried out at the Premises by Kier Regional Ltd (“Kier”), which traded as “Wallis”, pursuant to a contract (“the building contract”) with City. The building contract was in the JCT 1998 Standard form. The contract sum was £ 11,650,000. By clause 20 City was responsible for all risks insurance and insurance of existing structures.
Clause 25 of the building contract stated that on the occasion of one of the specified Relevant Events, Kier was entitled to an extension of time in certain circumstances. Such an extension would extend the contract completion date and prevent City from deducting LADs (liquidated and ascertained damages) for the extended period. Clause 26 of the building contract stated that if progress of the works were disrupted or delayed by reason of one of the specified matters, Kier was entitled in certain circumstances to claim in respect of loss and expense caused by the period of disruption and/or delay.
On 18 th January 2003 a crane on a site adjacent to the Premises carried out an operation which is said by City to have caused a water main in the highway to fracture. The crane sub-contractor was Ainscough Crane Hire Limited (“Ainsclough”), the defendant in claim HT-09–26 (“Action 26”). In Action 26 City claims against Ainscough in negligence and nuisance for the loss and damage it claims to have suffered as a result of the consequent disruption of the Works.
In the claim HT-09–27 (“Action 27”), City claims against the defendant insurers under a Contractor's All Risks and a Buildings Insurance policy on the grounds that they are liable to indemnify City against these losses. In addition City claims in that action an indemnity arising out of two different events:
(a) flooding to the basement of the Premises in May 2002;
(b) Pseudomonas infection of the water supply which is said to have been first detected on 17 th May 2004.
It is not clear whether this infection resulted from the events of May 2002 or January 2003 or because of some other unrelated and unidentified cause.
Kier began an arbitration against City in which it claimed that the incident with the crane and a large number of other alleged “Relevant Events” had caused it delay, loss and expense and additional cost to compete the development. It claimed an extension of time and that it was excused from paying liquidated damages, and entitled to variations and damages itself. City does not accept these claims. In particular it does not accept that something such as the fracture, occurring on the highway and not on the Premises, is capable of constituting a Relevant Event. Nor does it accept that the Relevant Events relied on were causes of delay.
Prior to March 200there had been discussions between City and Royal & Sun Alliance (“RSA”) about insurance claims in respect of the three incidents. On 27 th March 200RSA wrote to City responding to the claims. They offered the following:
(i) £ 24,022.06 in response to a claim for £ 552,291.63 in respect of the burst water main in January 2003; on the basis that the relevant policy covered the reasonable direct cost of remedial work + preliminaries and overheads in respect thereof; but not additional costs of construction and the like;
(ii) £ 25,000 in respect of water damage to the basement in response to a claim now presented as £ 1,197,638.89. This was the limit of cover for Loss Minimisation and Prevention under the property policy. The contention was that there was no “Damage” as required by both policies;
(iii) Nothing in respect of the pseudomonas claim on the basis that it had not been reported promptly and that various adjudications had taken place without insurers' knowledge
On 16 th January 2009 City issued claim forms in each action. Before then City had written no letter before action; nor had it complied with the Pre–Action Protocol for Construction and Engineering Disputes. The time for serving the claim form would expire on 17 th May.
The applications
On 8 th May City issued two ex parte applications for extensions of time for service of the claim forms until January 2010. The applications were made on the basis that the pending arbitration with Kier included claims arising out of and relevant to the claims in Actions 26 and 27 including the extent to which City was unable to deduct liquidated and ascertained damages from sums owed to Kier and of the loss and expense owed to Kier as a result of the flood and pseudomonas infestation at the Premises. It was said that it would not be possible for City:
“to establish with any certainty the proper extent of the loss and damage arising under or pursuant to the claim”
until the arbitrator's award and that it would therefore be premature to serve the claim on the Defendants at this time.
The telephone conversation of 15th May
Ms Starey, an associate with Clyde & Co, says in her witness statement that on Friday 15 th May, with time about to expire, she telephoned the court and spoke to a member of the case administration unit of the TCC. He told her that City's application for an order to extend time for service of the claim form
“would be treated as being in time as the mid-term break would delay Mr Justice Ramsey's deliberations upon it. Mr Justice Ramsey J would return from his break on Monday 18th May and … would grant [City] a short extension in any event to cover the period of his deliberations whether or not City received the extension requested so as not to unfairly prejudice City for the delay due to Ramsey J's absence.”
In consequence she decided, after consultation with the supervising partner, not to serve the claim form.
On 19 th May the case administrator wrote:
“Mr Justice Ramsey has seen the applications in these claims for the time for service of the Claim Form to be extended until 1 January 2010.
He is concerned that the defendants to the claim may not have been given notice of the claim and that the relevant pre–action protocols may have been completed: see para 6 to the Pre–Action Protocol for Construction and Engineering disputes. He would ask for clarification as to the position.
In addition, he considers that on the facts of the case the most appropriate procedure and would be that the claim form to be served (with any necessary short extension) and for proceedings to be stayed after the defendants have acknowledged service, while the proceedings are preserved, subject to any application by the Defendants.”
On 20 th May Ramsey J's clerk e-mailed Clyde & Co on his behalf informing them that in the light of three Court of Appeal cases that the judge had been reviewing on another matter 1 he was now of the opinion that it would not be appropriate to grant the extension, and inviting them to consider the three cases.
On 22 nd May Clyde & Co wrote to the TCC, for the attention of Ramsey J, a long letter in which they confirmed that the defendants had not been given notice of the claim nor had the pre–action been protocol followed. They also responded to the 20 th May e-mail with a discussion of the authorities. They invited the Court, if it was not minded to grant the long extension sought, to grant the extension contemplated by the letter of 19 th May.
On 1 st June Ramsey J extended time for the service of the claim form in both actions until 16 th June. The draft and actual orders did not contain, as they should have done a statement of the right of the defendants to apply to set it aside: CPR 23.9 (3). The claim forms together with Particulars of Claim were served on 15 th June 2008.
The Particulars of Claim
Action No 26
The Particulars of Claim in Action No 26 pleaded clauses 25 and 26 of the building contract. City said that Kier had claimed that the fractured water main was a Relevant Event and a matter that delayed the progress of the works, and had claimed an extension of time and loss and expense under the contract and damages and various sums as variations. I refer to these types of claim as “the Kier averments”. It was said that City did not accept these claims which were live issues in the ongoing arbitration.
Pararaphs 18 – 22 read as follows:
“18 The First Defendant's and/or Second Defendant's negligence and/or
nuisance has caused the Claimant to suffer loss and damage, including
but not limited to:
(1) any additional sums due for variations and/or as part of Kier's
Final Account and interest;
(2) loss and expense or damages payable to Kier pursuant to the
Building Contract and interest;
(3) loss of ability to deduct Liquidated and Ascertained Damages
(“LADs”) from the sums owed to Kier under the Building
Contract
19 Pending the outcome of the...
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