Sheffield Teaching Hospital Foundation Trust v Hadfield Healthcare Partnerships Ltd
| Jurisdiction | England & Wales |
| Judge | Mrs Justice O'Farrell DBE,Mrs Justice O'Farrell |
| Judgment Date | 22 March 2023 |
| Neutral Citation | [2023] EWHC 644 (TCC) |
| Docket Number | Case No: HT-2020-000454 |
| Court | King's Bench Division (Technology and Construction Court) |
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[2023] EWHC 644 (TCC)
Mrs Justice O'Farrell DBE
Case No: HT-2020-000454
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (KBD)
Royal Courts of Justice
Rolls Building
London, EC4A 1NL
Fiona Sinclair KC and Simon Hale (instructed by Clyde & Co LLP) for the Defendant / Part 20 Claimant
Samar Abbas Kazmi (instructed by Addleshaw Goddard LLP) for the First Part 20 Defendant
Crispin Winser KC (instructed by Pinsent Masons LLP) for the Second Part 20 Claimant
Hearing dates: 7 th & 8 th March 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on Wednesday 22 nd March 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
There are two matters before the Court:
i) an application by the First Part 20 Defendant (“Kajima”) for summary judgment in respect of parts of the Part 20 Claim, and/or to strike out those parts, on the basis that the Particulars of Additional Claim disclose no reasonable grounds for bringing those parts of the claim and they have no real prospect of success;
ii) an application by the Second Part 20 Defendant (“Veolia”) against the Defendant (“Hadfield”), seeking security for costs.
Background facts
The Claimant (“the Trust”) is an NHS hospital foundation trust, comprising five teaching hospitals, including the Northern General Hospital in Sheffield. Hadfield is a special purpose limited company, incorporated in 2004 for the purpose of developing and operating a new ward block at the Northern General Hospital (“the Hadfield Wing”) as a PFI project. Kajima is the design and construct contractor and Veolia provides facilities management services in respect of the project.
By an agreement dated 20 December 2004, made as a deed between the Trust and Hadfield, Hadfield agreed (as Project Co) to design, build, commission and operate the Hadfield Wing (“the Project Agreement”). The Hadfield Wing is a three-storey building, comprising three separate blocks built around a central atrium, connected to a pre-existing hospital building by an enclosed bridge at the second storey level. It contains acute medical wards, intended primarily for the care of elderly patients.
By a further agreement on 20 December 2004, Hadfield entered into a contract, executed as a deed, with Kajima, under which Kajima agreed to carry out the design, construction and commissioning of the Hadfield Wing (“the Construction Contract”).
Clause 9.7 of the Construction Contract contains a limitation clause as follows:
“Notwithstanding any other provision of this Agreement which for the avoidance of doubt shall include any indemnity or any of the other Ancillary Documents, no claim, action or proceedings shall be commenced against the Contractor after the expiry of twelve (12) years from the Actual Completion Date.”
On the same date, Barclay's Bank plc, the Trust, Hadfield and Kajima entered into an agreement (“the Contractor's Collateral Agreement”), whereby Kajima warranted that it had and would continue to comply with its obligations under the Construction Contract.
Clause 13.4 of the Contractor's Collateral Agreement also contains a limitation clause as follows:
“The Contractor shall not be liable to the Trust for any breach or breaches of this Agreement more than 12 (twelve) years after the Completion Date (or termination of the Construction Contract if earlier) provided that this clause shall not apply to any proceedings commenced against the Contractor prior to expiry of such 12 (twelve) years.”
By an agreement dated 20 December 2004 between Hadfield and Dalkia Utilities Services plc (now Veolia), Veolia agreed to provide facilities management services from the completion of the construction works at the Hadfield Wing (“the Hard Services Agreement”). Barclays Bank plc, The Trust, Hadfield and Veolia entered into a collateral agreement, whereby Veolia warranted that it had and would continue to comply with its obligations under the Hard Services Agreement (“the Hard Service Provider's Collateral Agreement”).
Further, on 20 December 2004 Hadfield, Kajima and Veolia entered into an agreement governing the interface between Kajima's design and construction work and Veolia's service management work (“the Interface Agreement”).
By a certificate dated 28 March 2007, practical completion of the Hadfield Wing was certified as achieved on 26 March 2007.
In 2017 and 2018, the Trust identified potential defects in the fire compartmentation and other fire protection works in the Hadfield Wing.
On 30 January 2018 the Trust, Hadfield, Veolia and Kajima entered into a standstill agreement (“the First Standstill Agreement”), under which the parties agreed at clause 2.1 that:
“(a) for all purposes of any defence or argument based on limitation, time bar, laches, delay or related issue in connection with the Dispute (a Limitation Defence), time will be suspended during the Standstill Period.
(b) no party shall raise any Limitation Defence that relies on time running during the Standstill Period…”
On 14 November 2018 South Yorkshire Fire & Rescue Service issued a prohibition notice under Article 31 of the Regulatory Reform (Fire Safety) Order 2005, informing the Trust that, in its opinion, the Hadfield Wing constituted an excessive risk to persons in case of fire.
By letter dated 29 November 2018, the Trust notified Hadfield that in accordance with paragraph 2.2(a) of the First Standstill Agreement, the Standstill Period would terminate seven days after the service of the letter.
On 3 December 2018 the Trust vacated the Hadfield Wing (save for the administrative offices).
On 25 March 2019 the Trust, Hadfield and Kajima entered into a further standstill agreement (“the Second Standstill Agreement”).
Between 2019 and 2021 various remedial works were carried out by Kajima and by Hadfield.
Proceedings
On 9 December 2020 the Trust commenced proceedings against Hadfield, seeking damages of £13 million approximately. The Trust's case is that there are design and construction defects throughout the Hadfield Wing, including fire compartmentation and fire protection issues, as a result of which the Trust was forced to vacate the Hadfield Wing and relocate its services to temporary modular accommodation during remedial works.
Initially, the Trust also commenced proceedings against Kajima but on 22 July 2022 it discontinued that claim.
On 16 August 2021 Hadfield commenced Part 20 proceedings against Kajima. The basis of claim is summarised in paragraph 3:
If and to the extent that Project Co is found liable to the Trust as alleged in the Trust's Particulars of Claim, then as set out below that liability was caused by Kajima's failure to design and/or construct the Facilities in compliance with the Construction Contract. In the event that it is found liable to the Trust Project Co will be entitled to and claims from Kajima indemnity or damages in respect of all sums which Project Co may be held liable to pay to the Trust (whether as damages, interest or costs), as well as damages in respect of Project Co's own losses caused by Kajima's breach of the Construction Contract.
In its Part 20 Defence, Kajima denied liability and asserted that certain of the losses alleged by the Trust against Hadfield, and in turn by Hadfield against Kajima, arose in whole or in part from maintenance failures which amounted to breaches of the Project Agreement by Hadfield and/or breaches of the Hard Services Agreement by Veolia.
On 13 May 2022 Hadfield commenced Part 20 proceedings against Veolia, stating that its primary case was a denial of any liability to the Trust and its secondary case was that Kajima was responsible for the defects alleged by the Trust but if, and to the extent that, Kajima established that the defects and/or remedial works were Veolia's responsibility under the Hard Services Agreement, Hadfield claimed an indemnity or damages against Veolia.
The trial has been listed to start on 9 October 2023 with an estimate of six weeks.
The summary judgment / strike out application
On 13 January 2023, Kajima issued an application, seeking summary judgment pursuant to CPR 24.2 on parts of the Additional Claim on the grounds that Hadfield has no real prospect of succeeding on:
i) paragraph 50.1 of the Particulars of Additional Claim (Issue 1);
ii) paragraph 29 of the Particulars of Additional Claim and paragraph 36.1 of the Re-Amended Reply and Defence to Counterclaim (Issue 2);
iii) paragraph 44 of the Particulars of Additional Claim (Issue 3); and
iv) parts of paragraphs 28, 29 and 43 of the Particulars of Additional Claim (Issue 4);
further or alternatively, that those parts of the claim be struck out pursuant to CPR 3.4(2)(a) because they disclose no reasonable grounds for bringing the claim.
The application is supported by:
i) the third witness statement of Jonathan Tattersall, solicitor of Addleshaw Goddard LLP, dated 13 January 2023;
ii) Mr Tattersall's fourth witness statement dated 27 February 2023;
iii) Mr Tattersall's fifth witness statement dated 6 March 2023.
The application is opposed by Hadfield as set out in:
i) the witness statement of Lucy Frith, solicitor of Clyde & Co LLP, dated 20 February 2023;
The applicable test
CPR 24.2 provides that:
“The court may give summary judgment against a claimant … on the whole of a claim or on a particular issue if –
(a) it considers that –
(i) that...
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