Cleveland Bridge UK Ltd and Another v Multiplex Constructions (UK) Ltd (Respondent/appellant)
| Jurisdiction | England & Wales |
| Judgment Date | 19 February 2010 |
| Neutral Citation | [2010] EWCA Civ 139 |
| Docket Number | Case No. A1/2008/2631 and A1/2008/2639 |
| Court | Court of Appeal (Civil Division) |
| Date | 19 February 2010 |
[2010] EWCA Civ 139
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: The President of the Queen's Bench Division
Lord Justice Dyson
Lord Justice Stanley Burnton
Case No. A1/2008/2631 and A1/2008/2639
MR R STEWART QC, MR P BUCKINGHAM and MS A SIMS (instructed by Clifford Chance) appeared on behalf of the Claimant.
MR A WILLIAMSON QC and MS L GARRETT (instructed by McGrigors LLP) appeared on behalf of the Defendant.
: This is at least the fourth occasion on which this court has had to address matters of contention arising from the steelwork subcontract entered into between Multiplex Construction (UK) Limited and Cleveland Bridge UK Limited for the design, supply, fabrication and erection of structural steelwork for Wembley Stadium.
On 5 June 2006 Mr Justice Jackson, as he then was, sitting in the Technology and Construction Court, gave judgment on ten preliminary issues of liability: [2006] EWHC 1341 TCC.
On 20 December 2006 this court dealt with applications for permission to appeal against parts of that decision: [2006] EWCA Civ 1874.
On 27 April 2007 this court decided some of the permitted grounds of appeal: [2007] EWCA Civ 443. Some other grounds of appeal were not pursued.
On 21 December 2007 this court determined a further liability appeal on an 11th issue— [2007] EWCA Civ 1372—on appeal from a further decision of Mr Justice Jackson on that issue: [2007] EWHC 145 TCC.
We are now concerned with thankfully quite confined appeal issues arising from Mr Justice Jackson's quantum judgment: [2008] EWHC 2220 TCC of 29 September 2008.
I would like to pay tribute to the outstanding skill and economy of those who have presented these appeals, and this extends to those whose preparation has enabled those who have spoken to do so to such effect.
At the same time, I would like to endorse, without expanding on, what the judge said in chapter 37, paragraphs 1668 to 1673 of his monumental judgment under appeal as to the apparent commercial disproportion of this litigation. To a neutral outsider, the time, effort and expense that has been incurred, and which continues, makes no sense, and doubtless dwarfs the total sum of £6,154,246 which the judge ordered Cleveland Bridge to pay to Multiplex. That said, the present appeal proceedings taken alone do not appear unduly disproportionate.
General factual introductions may be found at: first, paragraphs 1 to 101 of Mr Justice Jackson's judgment of 5 June 2006; second, paragraphs 1 to 16 of this court's permission judgment of 20 December 2006; thirdly, the introductory paragraphs of this court's judgment of 27 April 2007.
The terms of the supplemental agreement of 16 June 2004 are set out in full in paragraph 74 of Mr Justice Jackson's judgment of 5 June 2006. The main parts of clause 21 of the subcontract conditions are set out in paragraphs 11 to 16 of this court's judgment of 20 December 2006. I shall not repeat any of that material in extenso. As on previous occasions, considering as I do that no point of more than passing general interest arises on this appeal, I shall not attempt to fashion a potentially reportable judgment.
The relevant general background to these appeals in very short summary is as follows. On 26 September 2002 the parties entered into a subcontract whereby Cleveland Bridge were to design, fabricate, paint and erect structural steelwork for the new Wembley Stadium. Multiplex were the main contractors for that project.
For a number of now immaterial reasons, the progress of the structural steelwork fell into delay during the course of 2003. Various claims were intimated in that regard.
To resolve those matters, the parties entered into heads of agreement in mid-February 2004. The heads of agreement were subsequently superseded by a supplemental agreement made on 16 June 2004. The principal features of the supplemental agreement were that:
One, Cleveland Bridge's works were to be valued in accordance with the subcontract up to 15 February 2004, and various other payments were to be made to Cleveland Bridge.
Second, for a revised lump sum price of £12 million, Cleveland Bridge were to design, draft, fabricate and paint some, but not all, of the remaining structural steel.
Third, Cleveland Bridge were to continue with the on-site erection on a cost plus basis, but with a provision whereby Multiplex could, on 28 days’ notice, remove the erection works so as to give it to another contractor.
Between February and August 2004 the parties proceeded in accordance with the contractual regime set out in the supplemental agreement.
On 30 June 2004 Multiplex gave 28 days’ notice to Cleveland Bridge to cease erection, and Multiplex engaged a company called Hollandia, a Dutch company, to proceed with the erection work.
Shortly after expiry of this 28-day period, on 2 August 2004, Cleveland Bridge, as Mr Justice Jackson found, repudiated its remaining duties under the subcontract and Multiplex accepted that repudiation. At that stage, so far as is material to this appeal, the following facts are relevant.
First, Cleveland Bridge had been paid significant sums by way of interim payments. Multiplex asserted then and subsequently that Cleveland Bridge had been overpaid.
Secondly, Cleveland Bridge had supplied substantial quantities of fully fabricated and painted steel. As at the date of repudiation, Cleveland Bridge had steel in their possession which was raw, part fabricated or fully fabricated, and they continued to deliver this to Multiplex after 2 August 2004.
Third, Hollandia began to erect steelwork on site from about the beginning of August 2004 and from then onwards.
Both parties almost immediately instituted High Court proceedings, each asserting that the other had repudiated the subcontract.
In May 2006 Mr Justice Jackson tried the preliminary issues 1 to 10. The principal issue, which the judge resolved in Multiplex's favour, concerned which party had repudiated the subcontract. The judge also dealt with certain other matters in his judgment, including the extent to which disputed variations had been compromised.
Cleveland Bridge sought permission to appeal against this judgment. Permission to appeal was given on certain issues, but in the event the appeal was unsuccessful.
As I have said, the Court of Appeal delivered its first judgment in this matter on 27 April 2007. Cleveland Bridge did not obtain permission to appeal against the finding as to repudiation. Certain of the matters canvassed on this first appeal are of some relevance to the present appeal.
Meanwhile, in January 2007, Mr Justice Jackson heard the further 11th preliminary issue. This concerned matters of contractual interpretation relevant to temporary works. The judge held that Cleveland Bridge were not obliged to fabricate or design temporary works after 15 February 2004. This decision also was appealed by Multiplex to the Court of Appeal. The Court of Appeal upheld the judge as to the fabrication, but not as to the design of the temporary works on 21 December 2007.
The case thus proceeded in relation to quantum issues. Multiplex essentially advanced three claims against Cleveland Bridge.
First, schedule 1, that Cleveland Bridge's work before repudiation has been defective in certain respects. This was a claim for some £2.5 million. In the event Multiplex was awarded damages of £150,305 plus interest in respect of this schedule 1 claim.
Secondly, schedule 2, that Multiplex had overpaid Cleveland Bridge on an interim basis in the order of £14 million. Cleveland Bridge, to the contrary, asserted that they had been underpaid by approximately £10 million and sought a decision to this effect as part of the schedule 2 issues. In the event, Multiplex was awarded the sum of £4,020,061, plus interest of about £1.8 million, for the schedule 2 claim.
Thirdly, schedule 4, that Multiplex had suffered substantial delay and other damages by consequence of the repudiation. This was put at about £25 million, although it was subject to a contractual cap of £6 million. In the event, Multiplex was awarded nominal damages of £4 in respect of this schedule 4 claim. There is no appeal against this element of the claim.
The quantum hearing on schedules 1, 2 and 4 took place in the summer of 2008. The judgment was handed down on 29 September 2008. The judge awarded Multiplex sums amounting in all to £6,154,246.
Each of the parties’ appeals relates to the schedule 2 claims, and Cleveland Bridge's ground 4 also would affect the schedule 1 claim.
As the appeals arise out of the valuation dispute, the background to the schedule 2 issue needs to be somewhat expanded. There were two separate valuation exercises to undertake. The first was the valuation of Cleveland Bridge's works to 15 February 2004. The second was the valuation of the work carried out between 15 February and 27 July 2004 or 2 August 2004, as appropriate. This double exercise was necessary as a result of the supplemental agreement which, in summary, set up two different contractual schemes for each valuation of the works.
Schedule 1(a) of the supplemental agreement required a valuation up to 15 February 2004 in accordance with the original terms of the subcontract. The remainder of schedule 1 to the supplemental...
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