Halsion Ltd v St Thomas Street Development Ltd
| Jurisdiction | England & Wales |
| Judge | Cawson |
| Judgment Date | 08 August 2023 |
| Neutral Citation | [2023] EWHC 2045 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2023-000010 |
[2023] EWHC 2045 (TCC)
HHJ Cawson KC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: HT-2023-000010
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
The Rolls Building
7 Rolls Buildings
London, EC4A 1NL
Lucy Garrett KC and Ben Sareen (instructed by Fieldfisher LLP) for the Defendant
David Streatfeild-James KC and Hugh Saunders (instructed by Mills & Reeve LLP) for the Claimant
Hearing date: 18 July 2023
Approved Judgment
Remote hand-down: This judgment was handed down remotely at 10.30 am on Tuesday 8 August 2023 by circulation to the parties or their representatives by email and by release to The National Archives.
HHJ Cawson KC:
CONTENTS
| INTRODUCTION | 1 |
| BASES FOR THE APPLICATION | 13 |
| Introduction | 13 |
| Failure to comply with rule, practice direction or court order | 17 |
| No reasonable grounds for bringing the claim/abuse of process | 30 |
| Proper construction of the Trade Contract | 31 |
| Rectification of the Trade Contract | 43 |
| Estoppel by convention | 56 |
| Declarations | 61 |
| Particulars of knowledge | 66 |
| Conclusion | 70 |
| HALSION'S CASE | 72 |
| Introduction | 72 |
| CPR 3.4(2) | 77 |
| Pleading of the proper construction issue | 83 |
| Rectification | 90 |
| Estoppel by convention | 94 |
| Declarations | 95 |
| Particulars of knowledge | 97 |
| Conclusion | 100 |
| DETERMINATION OF THE APPLICATION | 101 |
| Introduction | 101 |
| STSD's specific objections | 105 |
| Proper construction of the Trade Contract | 105 |
| Rectification case | 120 |
| Estoppel by convention | 125 |
| Declarations | 127 |
| Particulars of Knowledge | 134 |
| General objections to the Particulars of Claim | 137 |
| Discussion | 137 |
| Breach of CPR Part 16 and the TCC Guide | 143 |
| Proportionate and practical response | 148 |
| OVERALL CONCLUSION | 149 |
INTRODUCTION
Under the terms of a Trade Contract dated 30 July 2018 and made between the Defendant, St Thomas Street Development Limited (“ STSD”) (1), and the Claimant, Halsion Ltd (“ Halsion”) (2) (“ the Trade Contract”), Halsion was engaged by STSD as the M&E contractor in respect of the construction by STSD of a 27 story residential tower adjacent to the Shard known as “Shard Place”. Although initially envisaged as a design and build project with Mace as main contractor, STSD ultimately procured the project by construction management with Mace engaged as construction manager, and with Chapman BDSP (“ Chapman”) engaged as M&E engineer for the project.
It is common ground that a life safety systems generator (“ the Generator”) supplied under the Trade Contract was not adequately sized to meet the performance requirements in paragraph 1.10.1 of Volume 2B of the Specification within the Trade Contract, which provided that: “ The standby generator shall be sized to provide the power for all Life Safety Services when running at 80% full load but as a minimum to be rated at 500KVA at stand-by and designed to avoid failure during start-up for inrush currents.”
The crux of the dispute between the parties is as to whether, under the terms of the Trade Contract:
i) Halsion was responsible for procuring and installing a life safety systems generator (“ Generator”) that met requirements set out in a design and specification prepared by Chapman and was not therefore responsible for sizing the Generator (as contended by Halsion); or
ii) Alternatively, Halsion was obliged to provide a generator of sufficient capacity to meet the life safety power requirements of the building, whatever they might have been on the basis that the obligation to size the Generator rested with Halsion, with the result that Halsion was in breach of contract because the Generator was not correctly sized (as contended by STSD).
There have been two relevant adjudications relating to this dispute (“ Adjudication 4” and “ Adjudication 5”) in which, amongst other things, STSD sought damages for breach of contract of £2,617,159.49. Ultimately, the adjudicator in Adjudication 5 decided that Halsion was in breach of contract, the adjudicator rejecting arguments to the contrary advanced by Halsion based on the construction of the Trade Contract, alternatively to the effect that the Trade Contract ought to be rectified or that an estoppel by convention arose with regard to the terms of the Trade Contract. The adjudicator awarded STSD damages assessed at £1,934,732.11, which Halsion has paid.
It is trite that pursuant to s.108(1) of the Housing Grants Construction and Regeneration Act 1996 and/or paragraph 23 of Part I of the Scheme for Construction Contracts, SI 1998 No 649, the decision of an adjudicator is binding until the dispute is finally determined by legal proceedings, arbitration, or agreement. However, where it is determined by a court that an adjudicator's decision involved the payment of more than was actually due in accordance with the parties' substantive legal rights, then the adjudicator's decision ceases, retrospectively, to bind – see Aspect Contracts (Asbestos) Ltd v Higgins Construction Ltd [2015] UKSC 38, [2015] 1 WLR 2961, per Lord Mance JSC at [24]. In these circumstances an overpayment is, retrospectively, established, and repayment is required either pursuant to an implied contractual obligation or by virtue of an independent restitutionary obligation – see Aspect Contracts (supra), per Lord Mance JSC at [23].
In the present proceedings, Halsion alleges that the adjudicator in Adjudication 5 got it wrong, and that on a proper construction of the relevant provisions of the Trade Contract, alternatively pursuant to the terms of the Trade Contract as rectified, alternatively in consequence of an estoppel by convention concerning the terms of the Trade Contract, Halsion had no obligation to size the Generator, and so it was not in breach of contract. Consequently, as a matter of substantive rights, Halsion had no obligation to pay damages to STSD, and is therefore entitled to recover the £1,934,732.11 paid to STSD.
In seeking to recover this sum, Halsion further seeks declarations as to the proper construction of the Trade Contract, alternatively rectification of the Trade Contract, alternatively a declaration that STSD is estopped by convention with regard to the effect of the terms of the Trade Contract. In its original form, Halsion's Particulars of Claim further sought an order that the decisions in Adjudications 4 and 5 “be set aside”. However, recently produced Amended Particulars of Claim now seek, instead, a declaration that the decisions of Adjudications 4 and 5 are “of no effect”.
The application that I am presently concerned with is an application dated 8 February 2023 (“ the Application”) whereby STSD seeks:
“(1) Summary judgment pursuant to CPR r.24.2 on the claims for (i) declarations (ii) rectification and (iii) set aside of two adjudicators' decisions; (2) The remainder of the Claimant's Particulars of Claim dated 16 January 2023 to be struck out pursuant to CPR 3.4(2). Alternatively, the whole of the Particulars of Claim to be struck out.”
Following the issue of proceedings on 16 January 2023, STSD's Solicitors, Fieldfisher, wrote to Halsion's Solicitors, Mills & Reeve, on 26 January 2023 setting out the respects in which it was contended that the Particulars of Claim did not comply with the Civil Procedure Rules (“ CPR”), and were thus liable to be struck out. This letter invited Halsion to re-plead the Particulars of Claim. Halsion declined to do so, hence the issue of the Application, which Halsion resists.
As mentioned, draft Amended Particulars of Claim (“ the APOC”) have been produced proposing a number of comparatively minor amendments that do not, on STSD's case, resolve the difficulties that are said to exist with Halsion's pleaded case. It is common ground that the Application should be considered by reference to the APOC.
The Application is supported by the witness statements of STSD's Solicitor, Samantha Jayne Thompson of Fieldfisher, dated 8 February 2023 and 30 June 2023. In response, Halsion relies upon the witness statement of its Solicitor, Neil Davies of Mills & Reeve, dated 18 May 2023.
Lucy Garrett KC and Ben Sareen appeared on behalf of STSD, and David Streatfeild-James KC and Hugh Saunders appeared on behalf of Halsion. I am grateful to them all for their helpful written and oral submissions.
BASES FOR THE APPLICATION
Introduction
The Application is brought pursuant to CPR 3.4(2)(a), (b) and (c). It is thus STSD's case that the APOC disclose no reasonable grounds for bringing the claim, amount to an abuse of the court's process, and fail to comply with a rule, practice direction or court order.
The challenge to the APOC is advanced on two bases, namely that:
i) The APOC fails to comply with CPR 16.4(1)(a), if not also paragraph 1.3 of CPR PD16, and with various provisions of the October 2022 TCC Guide (“ the TCC Guide”), and does so to such a serious extent that the only appropriate course is for the Particulars of Claim to be struck out and for Halsion to be required to re-plead its case in so far as it is capable of being re-pleaded; and
ii) The way in which Halsion's case as to each of the proper construction of the Trade Contract, rectification and estoppel by convention has been pleaded is such as to fail to advance reasonable grounds for pursuing the claim based thereupon, if not also such as to be abusive.
The Application thus requires a consideration of the way that the APOC as a whole has been pleaded, as well as a consideration of the way in which Halsion's case as to each of the proper construction of the Trade Contract, rectification and estoppel by convention claims respectively have been...
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