Kajima Construction Europe (UK) Limted v Children's Ark Partnership Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lord Justice Popplewell,Lord Justice Holroyde |
| Judgment Date | 17 March 2023 |
| Neutral Citation | [2023] EWCA Civ 292 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-001646 |
[2023] EWCA Civ 292
Lord Justice Holroyde
Lord Justice Coulson
and
Lord Justice Popplewell
Case No: CA-2022-001646
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Mrs Justice Joanna Smith DBE
[2022] EWHC 1595 (TCC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Hargreaves KC and Samar Abbas Kazmi (instructed by Addleshaw Goddard LLP) for the Appellants
William Webb (instructed by Bevan Brittan LLP) for the Respondent
Hearing date: 25 January 2023
APPROVED JUDGMENT
This judgment was handed down remotely at 10.30am on 17 March 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives
Introduction
This appeal concerns the enforceability and effect of a contractual dispute resolution procedure. In particular, it is concerned with what the court should do in circumstances where one party has not activated that procedure, and has commenced court proceedings instead. Ordinarily, as the authorities show, the court is likely to stay the proceedings until the dispute resolution procedure has been completed. But, for two reasons, the present case is more complicated than that.
First, as we shall see, the dispute resolution process was described by the judge as a condition precedent to court proceedings: in other words, as a matter of contract, it was a process that should have been completed before court proceedings could be commenced. Accordingly, the appellants sought to strike out the claim, not merely to stay it. That would ordinarily seem like overkill: in all the relevant authorities, save one, a stay of the proceedings was regarded as sufficient. But that leads to the second complication: if these court proceedings are struck out because of the failure to comply with the condition precedent, then it is appears likely that any fresh claim against the first appellant (“Kajima Construction”) would be statute-barred.
The Contractual Framework
On 10 June 2004, Brighton and Sussex University Hospital NHS Trust (“the Trust”) engaged the respondent (“CAP”) to design, build and finance the redevelopment of the Royal Alexandra Hospital for Sick Children in Brighton (“the Project Agreement”). On the same day, CAP engaged Kajima Construction to design, construct and commission the Hospital (“the Construction Contract”). On 17 October 2013, CAP entered into a deed of guarantee (“the Guarantee”) with the second appellant (“Kajima Europe”) pursuant to which Kajima Europe agreed to guarantee the due and punctual performance by Kajima Construction of each and all of its duties or obligations to CAP under the Construction Contract. In the body of this judgment I refer to Kajima Construction as “Kajima” for convenience, unless it is important to differentiate between the two companies.
The Project Agreement
This was a PFI Project. The Project Term expires on 9 June 2034. The overall scheme, common to many such PFI Projects, was that the Trust would make monthly payments to CAP relating both to the cost of the project and the ongoing maintenance. From those payments, deductions could be made if, for example, there were defects in the work which required remedial work.
Clause 12 of the Project Agreement was headed ‘Liaison’. It provided:
“ Liaison Committee
12.1 The Trust and Project Co shall establish and maintain throughout the Project Term a joint liaison committee (the “Liaison Committee”), consisting of three (3) representatives of the Trust (one of whom shall be appointed Chairman) and three (3) representatives of Project Co which shall have the functions described below.
12.2 The functions of the Liaison Committee shall be:
(a) to provide a means for the joint review of issues relating to all day to day aspects of the performance of this Agreement;
(b) to provide a forum for joint strategic discussion, considering actual and anticipated changes in the market and business of the Trust, and possible variations of this Agreement to reflect those changes or for the more efficient performance of this Agreement; and
(c) in certain circumstances, pursuant to Schedule 26 (Dispute Resolution Procedure), to provide a means of resolving disputes or disagreements between the parties amicably.
12.3 The role of the Liaison Committee is to make recommendations to the parties, which they may accept or reject at their complete discretion. Neither the Liaison Committee itself, nor its members acting in that capacity, shall have any authority to vary any of the provisions of this Agreement or to make any decision which is binding on the parties (save as expressly provided in Schedule 26 (Dispute Resolution Procedure)). Neither party shall rely on any act or omission of the Liaison Committee, or any member of the Liaison Committee acting in that capacity, so as to give rise to any waiver or personal bar in respect of any right, benefit or obligation of either party.
12.4 The parties shall appoint and remove their representatives on the Liaison Committee by written notice delivered to the other at any time…
Procedures and practices
12.5 Subject to the provisions of this Agreement, the members of the Liaison Committee may adopt such procedures and practices for the conduct of the activities of the Liaison Committee as they consider appropriate from time to time and:
(a) may invite to any meeting of the Liaison Committee such other persons as its members may agree (in accordance with Clause 12.6); and
(b) receive and review a report from any person agreed by its members.
12.6 Recommendations and other decisions of the Liaison Committee must have the affirmative vote of all those voting on the matter, which must include not less than one (1) representative of the Trust and not less than one (1) representative of Project Co.
12.7 Each member of the Liaison Committee shall have one (1) vote. The Chairman shall not have a right to a casting vote.
12.8 The Liaison Committee shall meet at least once each quarter (unless otherwise agreed by its members) and from time to time as necessary…
12.10 Meetings of the Liaison Committee shall be convened on not less than ten (10) Business Days' notice (identifying the agenda items to be discussed at the meeting) provided that in emergencies a meeting may be called at any time on such notice as may be reasonable in the circumstances…
12.12 Minutes of all recommendations (including those made by telephone or other form of telecommunication) and meetings of the Liaison Committee shall be kept by Project Co and copies circulated promptly to the parties, normally within five (5) Business Days of the making of the recommendation or the holding of the meeting. A full set of minutes shall be open to inspection by either party at any time, upon request”.
Other relevant clauses of the Project Agreement include:
(a) Clause 56, which provided that:
“Except where expressly provided otherwise in this Contract, any dispute arising out of or in connection with this Contract shall be resolved in accordance with the procedure set out in Schedule 26 (Dispute Resolution Procedure)”.
(b) Clause 68, which provided that:
“Subject to the provisions of the Dispute Resolution Procedure, both parties agree that the courts of England and Wales shall have exclusive jurisdiction to hear and settle any action, suit, proceeding or dispute in connection with this contract and irrevocably submit to the jurisdiction of those courts”.
Schedule 26 to the Project Agreement set out the Dispute Resolution Procedure (“DRP”). Its scope was set out in paragraphs 1 and 2 as follows:
“1. The procedure set out in this Schedule (the Dispute Resolution Procedure) shall apply to any dispute, claim or difference arising out of or relating to this Contract ( Dispute) except where it has been excluded from this procedure by an express term of this Contract.
2. This Dispute Resolution Procedure shall not impose any precondition on any party or otherwise prevent or delay any party from commencing proceedings in any court of competent jurisdiction to obtain either:
2.1 an order (whether interlocutory, interim or final) restraining the other party from doing any act or compelling the other party to do any act; or
2.2 summary judgment pursuant to the Civil Procedure Rules 1998, Part 24 for a liquidated sum.”
Schedule 26 provided for the referral of disputes under the Project Agreement to a Liaison Committee in the following terms:
“3.1 Subject to paragraph 2 and 6 of this Schedule, all Disputes shall first be referred to the Liaison Committee for resolution. Any decision of the Liaison Committee shall be final and binding unless the parties otherwise agree.
3.2 Where a Dispute is a Construction Dispute the Liaison Committee will convene and seek to resolve the Dispute within ten (10) Business Days of the referral of the Dispute”.
‘Construction Dispute’ was defined in the Project Agreement by reference to the Housing Grants (Construction and Regeneration) Act 1996 (“the 1996 Act”).
As to other forms of dispute resolution, paragraphs 4, 5, and 6 of Schedule 26 provided that the parties “may” refer a dispute to mediation or adjudication. Court proceedings were dealt with at paragraph 7.1 as follows:
“7.1 All Disputes, to the extent not finally resolved pursuant to the procedures set out in the foregoing provisions of this Schedule, shall be referred to the High Court of Justice in England by either party for resolution. The parties agree that where the nature of the Dispute so allows, the Dispute shall be tried by a Judge of the Technology and Construction Court. To avoid doubt, this paragraph shall...
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