Swansea Stadium Management Company Ltd v City & County of Swansea
| Jurisdiction | England & Wales |
| Judge | Mr Justice Pepperall |
| Judgment Date | 17 April 2019 |
| Neutral Citation | [2019] EWHC 989 (TCC) |
| Docket Number | Case No: HT-2017-000262 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 17 April 2019 |
[2019] EWHC 989 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
Rolls Building, Fetter Lane, London, EC4A 1NL
THE HONOURABLE Mr Justice Pepperall
Case No: HT-2017-000262
Justin Mort QC and Tom Owen (instructed by Douglas-Jones Mercer) for the Claimant
Riaz Hussain QC (instructed by City & County of Swansea) for the First Defendant
Paul Darling OBE QC (instructed by Reynolds Porter Chamberlain LLP) for the Second Defendant
Hearing dates: 30, 31 October and 1, 5, 6, 8, 19 & 20 November 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para 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.
The Liberty Stadium in Swansea is owned by the City & County of Swansea [“the Council”] and is the home of Swansea City Football Club and Ospreys Rugby Club. It was opened to the public on 23 July 2005 when it hosted Swansea City's match against Fulham.
Work started on the new stadium in late September 2003. By a building contract dated 17 June 2004, executed as a deed, the Council employed Interserve Construction Limited [“Interserve”] as the main contractor to design and build the stadium. The contract was in the form of the 1998 edition of the JCT's Standard Form of Building Contract with Contractor's Design with amendments 1–4 and some further bespoke provisions. On 1 April 2005, Gardiner & Theobald, the Employer's Agent under the building contract, certified that the works had reached Practical Completion on 31 March 2005. The Defects Liability Period ran for 12 months from Practical Completion.
Meanwhile, the Council, the football club and the rugby club incorporated Swansea Stadium Management Company Limited [“SSMC”] in order to operate the stadium for the benefit of the clubs. Although initially a joint venture company, SSMC is now wholly owned by the football club. By a lease dated 22 April 2005, the Council leased the stadium to SSMC for a term of 50 years. Although not a party to the building contract, SSMC has the benefit of a collateral warranty from Interserve in respect of the building works. The warranty was given by way of an undated deed. Further, by a deed executed on 21 July 2006 between the Council, SSMC and the clubs, the Council agreed to take all reasonable steps to enforce its rights under the building contract.
As I relate more fully below, there were, among other issues, problems with both the concourse flooring and the paintwork:
4.1 A number of spectators slipped in wet conditions. Remedial work was therefore undertaken at SSMC's cost in 2009 in order to improve the slip resistance of the flooring.
4.2 There were issues with the repair of damage caused during the handling and erection of the pre-painted steelwork. The paintwork also suffered discolouration, rust and ultimately delamination of the coatings. These issues were attended to on a number of occasions by Interserve's specialist subcontractors. By this claim, SSMC alleges that the remedial works were not effective.
Notwithstanding these problems, on 26 May 2011, Gardiner & Theobald issued the Notice of Completion of Making Good Defects. Such notice formally certified in accordance with clause 16.4 of the building contract that the defects which the Council might require to be made good had been made good as of 14 April 2011. Finally, on 14 June 2012, the Council and Interserve entered into a settlement agreement in respect of the contractor's final account.
On 4 April 2017, SSMC commenced these proceedings against both the Council and Interserve. Its primary case was that the original building works were defective and in breach of the contractual specification. These construction claims were, however, struck out by O'Farrell J because they were brought 4 days after the expiry of the limitation period: Swansea Stadium Management Co. Ltd v City & Council of Swansea [2018] EWHC 2192 (TCC), [2019] B.L.R. 652. Accordingly, SSMC falls back on two secondary claims:
6.1 As against the main contractor, SSMC alleges that Interserve was in breach of its obligations under clause 16 of the building contract to identify and make good the flooring and paintwork defects during the Defects Liability Period. It therefore claims that it was likewise in breach of the collateral warranty.
6.2 As against the Council, SSMC alleges that the Council was in breach of its obligations under the 2006 agreement to take all reasonable steps to enforce its own rights under the building contract in respect of the flooring and paintwork defects.
Although the case was also opened against the Council on the basis that it was in breach of an implied repairing obligation under the 2005 lease, such claim was not pursued in closing submissions.
In the event that liability is established against the Council, it seeks a contribution or indemnity in respect of such liability from Interserve. That aside, the Council as Employer under the building contract has not issued its own claim against the main contractor. Indeed, it accepted through its agent that Interserve had complied with its obligations to make good defects arising during the Defects Liability Period by 14 April 2011 and it agreed the contractor's final account on 14 June 2012.
This judgment is arranged as follows:
THE CONTRACTUAL BASIS FOR THE CLAIM AGAINST INTERSERVE
THE ORIGINAL CONSTRUCTION CLAIMS
| The contractual basis for the claim against Interserve | Paragraphs 10–14 |
| The contractual basis for the claim against the Council | Paragraphs 15–18 |
| The Notice of Completion of Making Good Defects | Paragraphs 19–36 |
| The settlement agreement | Paragraphs 37–43 |
| The evidence | Paragraphs 44–59 |
| The flooring claim | Paragraphs 60–120 |
| The paintwork claim | Paragraphs 121–201 |
| Decision | Paragraph 202 |
In granting Interserve summary judgment upon its limitation defence, O'Farrell J held that:
10.1 an Employer's cause of action for breaches of the obligation to carry out and complete building works accrues on Practical Completion;
10.2 by letter dated 1 April 2005, Gardiner & Theobald, the Employer's Agent under the building contract, had certified that Practical Completion had been reached on 31 March 2005;
10.3 although:
a) there was no evidence that Interserve had then complied with clause 6A.5.2 (its obligation to provide a health and safety file in accordance with the Construction, Design & Management Regulations); and
b) SSMC alleged that there were both defects and outstanding works at 31 March 2005,
on a proper construction of clause 16.1 of the building contract, Practical Completion was “deemed for all purposes” to have taken place on the day named in the Employer's written notice of Practical Completion;
10.4 accordingly, time for suing upon the obligations to carry out and complete the building works ran from 31 March 2005 and, the contract being by way of deed, any claim was statute barred upon issue on 4 April 2017; and
10.5 although:
a) SSMC's claim was brought under the collateral warranty; and
b) such warranty was not executed until, at the earliest, April 2005,
the claim under the warranty was likewise statute barred since, on the proper construction of the warranty, Interserve's liability to SSMC was coterminous with its direct contractual liability to the Council under the building contract.
THE DEFECTS LIABILITY PERIOD
As already indicated, this claim is therefore pursued against Interserve on the basis that it failed to make good defects during the Defects Liability Period. Such period ran for 12 months from Practical Completion; i.e. from 31 March 2005 to 31 March 2006. Clauses 16.2–16.3 of the building contract provided:
“16.2 Any defects, shrinkages or other faults which shall appear within the Defects Liability Period and which are due to failure of the Contractor to comply with his obligations under this Contract or to frost occurring before Practical Completion of the Works, shall be specified by the Contractor in a Draft Schedule of Defects which he shall deliver to the Employer not later than 14 days after the expiration of the said Defects Liability Period, and the Employer may within 21 days of receipt of such Draft Schedule notify the Contractor of his comments and any further such defects, shrinkages or other faults which are to be included in the Schedule. 28 days after delivery of the Draft Schedule to the Employer the Contractor shall deliver to the Employer a Schedule of Defects which shall be based upon the Draft Schedule and shall take account of the comments and further items notified by the Employer (if any) and within a reasonable time after delivery of such Schedule the defects, shrinkages and other faults therein specified shall be made good by the Contractor at no cost to the Employer unless the Employer shall otherwise instruct; and if the Employer does so otherwise instruct then an appropriate deduction in respect of any such defects, shrinkages or other faults not made good shall be made from the Contract Sum.
16.3 Notwithstanding clause 16.2 the Employer may whenever he considers it necessary so to do, issue instructions requiring any defect, shrinkage or other fault which shall appear within the Defects Liability Period and which is due to failure of the Contractor to comply with his obligations under this Contract or to frost occurring before Practical Completion of the Works, to be made good and the Contractor shall within a reasonable time after receipt of such instructions comply with the same at no cost to the Employer unless the Employer shall otherwise instruct; and if the Employer...
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