Mi-Space (UK) Ltd v Lend Lease Construction (EMEA) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 16 July 2013 |
| Neutral Citation | [2013] EWHC 2001 (TCC) |
| Date | 16 July 2013 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-13260 |
[2013] EWHC 2001 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Akenhead
Case No: HT-13260
Nerys Jefford QC (instructed by TLT LLP) for the Applicant
Steven Walker QC (instructed by Pinsent Masons LLP) for the Respondent
Hearing date: 4 July 2013
Introduction
The Applicant, Mi-Space (UK) Ltd ("Mi-Space") seeks pre-action disclosure of what would be a substantial amount of documentation from Lend Lease Construction (EMEA) Ltd ("Lend Lease"). An issue arises as to whether or not there is an arbitration clause in the underlying agreement between the parties, it being common ground that if there is an arbitration agreement the Court does not have the power to order pre-arbitration disclosure. Other issues arise about the scope of the documentation which has been sought.
By a written agreement ("the Prime Contract") dated 29 September 2010, Lend Lease was engaged by the Secretary of State for Defence ("the Authority") to redevelop residential units for service personnel and families known as the Canadian Estate at Bulford. The Prime Contract was a form of "target cost" contract. In addition to "Target Cost" the Prime Contract also provided for a Maximum Price. The Target Cost and Maximum Price could be adjusted in respect of what were known as "Prime Changes". Without making any findings as to what the Prime Contract provisions meant Clause 10 provided for "Minimum" and "Target" Cost figures, a "Target Profit" which was 5.24% of Target Cost, a "Target Price", a "Maximum Cost" (expressed as Target Costs +14.98%) and a Maximum Price (expressed as Target Cost +15.72%); the Maximum Price was identified as £49,523,043. It was necessary to determine what the "Actual Costs reasonably and properly incurred" by Lend Lease were because the "Final Price Payable" was based upon such Actual Costs. There was what is sometimes called a "pain/gain" arrangement whereby if the actual cost was less or more than the Target Cost there were agreed arrangements whereby the pain or the gain was shared by the parties, although, if the cost exceeded the Maximum Cost Lend Lease was to be liable for all costs incurred over that amount. Provision was however made for adjusting the Target Cost and Price and the Maximum Cost and Price in certain circumstances, for instance if there were "Changes" as envisaged in Clause 13. An "open book" accounting arrangement was agreed upon in effect enabling the Authority to consider and review the costs being claimed for.
Lend Lease employed Mi-Space as the primary sub-contractor to carry out most of the work. The Sub-Contract, dated 13 May 2011, between Mi-Space and Lend Lease is a cost plus arrangement with comparable "pain/gain" provisions which were intended to incentivise Mi-Space to minimise costs incurred delivering the works. The Sub-Contract contains detailed terms relating to the final sum payable to Mi-Space but in general terms the incentive arrangements in the Sub-Contract are based on the financial outcome under the Prime Contract whereby Mi-Space agreed that it would receive an agreed share of any cost saving under the Prime Contract and it would pay an agreed share of any cost overrun. A comparable "open book" arrangement applied. Clause 1A.1 provided that the two parties should:
"…establish and maintain effective communications and management procedures and commit themselves to transparent and co-operative exchanges of information."
In terms of what Mi-Space was entitled to financially, this was based on the "Actual Costs…reasonably and properly incurred by" Mi-Space, albeit subject to verification. Clause 10.13 provided for the pain/gain arrangements, it being made apparently clear in Clause 10.16 that the "Final Price Payable" (which allowed for Actual Costs and profit as well as the pain/gain adjustments) excluded costs incurred by Lend Lease, Mi-Space, its subcontractors and consultants and indeed other subcontractors engaged by Lend Lease by reason of their breaches or other defaults. It was understood that "Prime Changes" which were defined as Changes as defined in Clause 13 of the Prime Contract would or could feature in the adjustment of various figures in the pain/gain computations.
The Works were substantially completed in December 2012. Lend Lease has been for some months and currently still is in the process of seeking to reach settlement with the Authority in respect of (i) the Prime Actual Costs incurred in providing the Works and (ii) adjustments to Target/Maximum Costs.
There clearly has been some delay in the completion of the various works and issues have arisen between Mi-Space and Lend Lease as to various financial entitlements. Mi-Space is concerned that Lend Lease is not doing all that it should do to secure agreement about Prime Changes and, in particular the Prime Changes which are also Changes under the Sub-Contract, and to secure adjustments to the various pain/gain Target/Maximum figures to minimise the pain and to maximise any gain. It is worried that, as the main sub-contractor responsible for over £30 million's worth of work, it could end up suffering more than it should do. This concern had emerged by March 2012 when it received from Lend Lease its latest cost forecast. Part of the growing concern related to whether Lend Lease was actually even passing on to the Authority Mi-Space's claims for Changes, in whole, in part or at all.
Solicitors for both parties became involved towards the end of 2012, TLT for Mi-Space and Pinsent Masons LLP for Lend Lease. On 22 November 2012 TLT sent a letter pursuant to the Pre-Action Protocol relating to proposed proceedings for declaratory relief. That claim has been the subject of numerous exchanges between the parties with the gist being that Mi-Space has incurred substantial costs that fall outside the pain/gain provisions of the Sub-Contract. However, at least so far as I can ascertain from the voluminous documents put before the Court, the current application does not relate to that claim. It relates to possible claims which have not yet been the subject matter of a Pre-Action Protocol engagement.
The question of pre-action disclosure in relation to the current application seems to have been raised initially in December 2012 and January 2013. Initially TLT sought a number of classes of documents in its letter of 14 December 2012 to Pinsent Masons whose reaction on 30 January 2013 was, broadly, that Lend Lease was "happy in principle to provide such documents and information as your client reasonably requires in order to assist its understanding of our client's cost assessments" but the categories requested "are extremely wide and to provide copies of everything requested would be a costly and time-consuming exercise". It is clear that a number of documents were made available and indeed copied for Mi-Space. In essence, thereafter Lend Lease took a firm line suggesting that what Mi-Space and TLT were seeking was "unfettered access to all costs information held by Lend Lease".
There is some dispute between the parties as to what documentation was actually provided for inspection or copying to Mi-Space by Lend Lease and that is something which I can not determine on this application. There is little doubt however that a substantial amount of documentation was provided on any account.
These Proceedings
On 23 May 2013, Mi-Space issued its application for pre-action disclosure. An estimate of 2 1/2 hours was given and it was supported by the first of three witness statements from Mr Wrzesien of TLT. This statement runs through 22 pages of prose and three lever arch files of documentation. Although the statement is cross referred to the lengthy exhibits, no page numbers were given and it proved a very lengthy process for this judge to try to follow what he says in that statement. This was responded to by a first witness statement from Mr Kippax of Pinsent Masons which led to a responsive statement from Mr Wrzesien, a second statement from Mr Kippax in reply and a yet further statement from Mr Wrzesien containing further rebuttal material.
The exercise has been confounded and delayed by the failure on the part of the applicant and its solicitors to follow the basic practice set out in the TCC Guide and common sense which would have involved preparing and lodging in good time before the hearing an application bundle. The Court was never provided with such a bundle and indeed until about 4.30 pm on the afternoon before the hearing, the Court did not even have that first statement of Mr Wrzesien, the actual application itself or the exhibits to the first witness statement of Mr Kippax for the Respondent. The Court was only provided with a list of what was intended to go into the bundle just before 3 pm on the day before but the Court did not have the documents on that list at that time. It was only due to the good offices of Ms Jefford QC and her Chambers that I received these documents belatedly. There was probably some 10 hours pre-reading for the Court. It is incumbent on solicitors making applications such as this, which are complex and heavy, to assist the court by providing some estimate of the reading time required well before the hearing so that appropriate time can be set aside by the Judge to read the relevant documents. It was only when I began reading the extremely limited amount of documentation available to the Court the day before the hearing which comprised several of the responsive witness statements from both sides that I realised that the Court was missing the earlier documentation and that it was likely that a substantial amount of reading remained to be done. Although...
To continue reading
Request your trial
-
Lambsmead v. Pharmawest Pharmacy, 2014 BCSC 218
...Justice, Queen's Bench Division, Technology and Construction Court, Mi-Space (UK) Limited v. Lend Lease Construction (EMEA) Limited , [2013] EWHC 2001 (TCC), in which the court dealt with an arbitration clause which provided that the governing law of the arbitration was to be the law of Eng......
-
Dispute resolution
...vocation of dispute boards” [2017] International Business Law Journal 253. 42 Mi-Space (UK) Ltd v Lend Lease Construction (EMEA) Ltd [2013] EWHC 2001 (TCC) at [16], per Akenhead J. 43 See Vernstein, “Ex tempore contracting”, 55 William and Mary Law Review 1869 (2014). 44 S&E Contractors, In......
-
Arbitration
...v Balfour Beatty Construction Ltd [1993] AC 334 at 352–353, per Lord Mustill; Mi-Space (UK) Ltd v Lend Lease Construction (EMEA) Ltd [2013] EWHC 2001 (TCC) at [35], per Akenhead J; Anzen Ltd v Hermes One Ltd [2016] UKPC 1 at [33]. 122 Robert W Blackwell & Co Ltd v Mayor et al of Derby (1909......
-
Litigation
...193; PHD Modular Access Services Ltd v Seele GmbH [2011] EWHC 2210 (TCC); Mi-Space (UK) Ltd v Lend Lease Construction (EMEA) Ltd [2013] EWHC 2001 (TCC) at [37]–[43], per Akenhead J; Bull-ring Limited Partnership v Laing O’Rourke Midlands Ltd [2016] EWHC 3092 (TCC) at [19]–[21], per Coulson ......
-
Table of cases
...Engineering Ltd [2015] EWHC 3360 (TCC) I.2.41, I.2.64, II.9.110, II.11.35 Mi-Space (UK) Ltd v Lend Lease Construction (EMEA) Ltd [2013] EWHC 2001 (TCC) III.23.12, III.23.14, III.25.39, III.26.89 “Miss Jay Jay”, he [1987] 1 Lloyd’s Rep 32 II.13.69 Mistry v hakor [2005] EWCA Civ 953 II.10.148......