MW High Tech Projects UK Ltd v Outotec (USA) Inc.
| Jurisdiction | England & Wales |
| Judge | Stephen Davies |
| Judgment Date | 17 November 2023 |
| Neutral Citation | [2023] EWHC 2885 (TCC) |
| Court | King's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2012-000386 |
[2023] EWHC 2885 (TCC)
His Honour Judge Stephen Davies sitting as a High Court Judge
Case No: HT-2012-000386
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KB)
Rolls Building,
London, EC4A 1NL
Robert-Jan Temmink KC & Matthew Finn (instructed by HFW, London EC2) for the Claimant
Adrian Williamson KC, Paul Bury & John Steel (instructed by Walker Morris, Leeds) for the Defendants
Hearing dates: 24 & 25 October 2023
Judgment circulated in draft: 9 November 2023
APPROVED JUDGMENT
Remote hand-down:
This judgment was handed down remotely at 10:30am on 17 November 2023 by circulation to the parties or their representatives by email and by release to The National Archives.
I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
His Honour Judge Stephen Davies
| Paragraphs | |
| Introduction and summary of decision | 1 – 3 |
| Background | 4 – 37 |
| The re-assignment issue – MW's breach of contract claim against Outotec | 38 – 54 |
| MW's claim against Metso for defects and/or delay related damages – consequences of the ineffective re-assignment | 55 – 69 |
| MW's misrepresentation claim against Metso under the parent company guarantee | 70 – 88 |
| Abuse of process – legal principles | 89 – 101 |
| Abuse of process as regards both Outotec and Metso – discussion and decision | 102 – 136 |
| Other matters | 137 – 146 |
Introduction and summary of decision
This judgment follows the hearing over 2 days of the Defendants' application for strike out or summary judgment of this substantial claim, which has been vigorously contested and extremely well prepared and argued, both in writing and orally, on both sides. The following issues require determination:
i) Whether the entire claim brought by the Claimant (MW) against the First Defendant (Outotec) is an abuse of process and, thus, should be struck out in its entirety. If not
ii) Whether the claim for misrepresentation brought by MW against Outotec is an abuse of process and should be struck out and/or whether the breach of contract claims (or certain such claims) also brought against Outotec should be struck out as abusive; and
iii) Whether the breach of contract claims brought by MW against Outotec should be summarily dismissed on the basis that the re-assignment relied upon by MW to establish such claims is, on its true construction, ineffective to re-transfer rights under the subcontract made between them in the absence of prior consent from Outotec to such re-assignment; and
iv) Whether the misrepresentation claim and/or the breach of contract claims against the Second Defendant (“Metso”), brought under the parent company guarantees given by Metso to MW, should be allowed to proceed even if, or to the extent that, the same claims against Outotec are struck out or summarily dismissed.
In short, my decision on each of the issues identified above is as follows, in the order in which I have dealt with them below:
i) The breach of contract claims against Outotec should be summarily dismissed because the re-assignment, being made without consent, was ineffective as between MW and Outotec.
ii) The breach of contract claims cannot be separately pursued as against Metso under the parent company guarantee.
iii) The misrepresentation claim is within the scope of the parent company guarantee and MW can pursue such claim against Metso even if the misrepresentation claim against Outotec is to be struck out as an abuse, unless there is a separate basis for striking out the misrepresentation claim against Metso as an abuse.
iv) The misrepresentation claim against Metso should not be struck out as an abuse.
v) The misrepresentation claim against Outotec should not be struck out as an abuse.
vi) Had the breach of contract claims not been summarily dismissed, it would not have been an abuse to pursue them.
My reasons appear below. Because the case is listed for a case management conference on 8 December 2023 it will assist the parties for me to produce this judgment as speedily as practicable. Hence, I have attempted to keep this judgment reasonably brief. I have not specifically identified and separately dealt with each and every point raised by the parties, only those which are of importance to my decision.
Background
For the same reasons as identified above I will keep this section reasonably brief, adopting with gratitude the non-controversial sections of counsels' respective opening written submissions 1.
The parties relevant to this case are as follows:
i) MW is a company registered in England and Wales which engaged in the engineering, procurement, and construction of energy from waste (“EfW”) plants.
ii) Outotec is a company registered in Idaho, USA, which engages in the supply of combustion and gasification technologies for converting waste materials into energy.
iii) Metso is registered in Finland, and engages in the design, development, construction, and maintenance of processing plants and equipment. Metso is the parent company of Outotec.
In 2015: (a) a company named Energy Works Hull Limited (“EWH”) entered into a main contract with MW for the construction of a new waste to energy power plant in Hull (“the Hull project”) for a price of around £154 million; (b) MW entered into the sub-contract with Outotec to supply plant for use as part of the main contract works (“the subcontract”). The subcontract was an amended version of the IChemE Yellow Book standard form.
Metso, being Outotec's parent company, offered three parent company guarantees (in 2017, 2021 and 2022, all in the same or substantially the same terms) in respect of Outotec's liabilities arising from the project. MW also engaged Outotec in two similar projects within the UK; one in Levenseat, Scotland and the other in Surrey. In each case, Outotec's plant was, effectively, the same.
The Hull project was beset with difficulties and, ultimately, EWH terminated the main contract on 4 March 2019. Under the terms of the main contract EWH was entitled to call for MW to assign the subcontract with Outotec to itself and, having called on MW to do so, MW duly complied.
EWH then commenced proceedings against MW in July 2019, pleading a claim for damages for breach of the main contract on the basis that:
i) MW was guilty of culpable delay from 10 April 2018 until 7 January 2019 and liable for liquidated damages in the sum of £23 million (this being the delay damages cap under the main contract) or general damages in a similar sum;
ii) EWH was entitled to terminate the main contract for default and/or at common law, and was entitled to claim damages arising from termination. These damages were ultimately claimed at around £130 million;
iii) MW's pre-termination work was defective in the respects set out at Appendix 4 to the Particulars of Claim. Following amendment, there were 33 defects in total claimed at around £11.5 million.
MW commenced Part 20 Proceedings against Outotec on 27 September 2019, pleading the following claims “primarily” on the basis that it retained the benefit to accrued pre-assignment rights under the subcontract and, alternatively, under the Civil Liability (Contribution) Act 1978 (the “1978 Act”). The basis for these claims was that the commissioning of Outotec's plant was significantly delayed and that such delay was caused by defects and other performance shortfalls in Outotec's plant.
i) Liability for liquidated damages for delay under the subcontract in the sum of $5.3m.
ii) Certain defects alleged by EWH to arise out of breaches of contract by Outotec. Following amendments, these ultimately amounted to 15 alleged issues (the “EWH defects claims”).
iii) The defects also exposed MW to liability for liquidated damages and termination for default. This claim, if correct, would have exposed Outotec to potentially very large losses.
Outotec pleaded a defence to the additional claim and a counterclaim under which it claimed certain outstanding milestone payments from MW along with various unpaid variations. In its original Reply and Defence to Counterclaim MW defended Outotec's counterclaim on the basis of:
a. Certain alleged defects which had been raised by MW during the course of the works. By paragraph 51(i) MW pleaded that it “continues to rely upon the “Recharges” which currently total $12,179,379.18. Those recharges upon which MW relies will be introduced in due course by way of amendment to the Particulars of Additional Claim”.
b. (By paragraph 51(ii)) MW pleaded that it “remains entitled to set-off any counterclaims or set-offs that may exist against Outotec's money claim”. Asked to clarify this, MW responded that the counterclaims it relied upon were those in the Additional Claim and: “It is these claims which MW avers it is entitled to set-off against any sums otherwise due to Outotec, irrespective of the position on the assignment”.
Outotec also contended that post assignment MW had lost the right to make any claims against it for damages for pre-assignment breaches of the subcontract. The effect of this assignment was an issue in the previous proceedings and was determined by O'Farrell J in her judgment on the preliminary issues (“the preliminary issues judgment”) of 24 September 2020. At paragraph 41 she explained the issue as follows:
“It is common ground that there was a valid assignment of the Sub-Contract by MW to EWHL. The dispute concerns the effect of such assignment, namely, whether it transferred all benefits, including accrued benefits, or merely...
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Outotec (USA) Inc. v MW High Tech Projects UK Ltd
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