Yuanda (UK) Company Ltd v Multiplex Construction Europe Ltd (formerly known as Brookfield Multiplex Construction Europe Ltd)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Fraser |
| Judgment Date | 28 February 2020 |
| Neutral Citation | [2020] EWHC 468 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-202-0000025 |
| Date | 28 February 2020 |
[2020] EWHC 468 (TCC)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
TECHNOLOGY AND CONSTRUCTION COURT (QB)
Rolls Building
Fetter Lane
London, EC4A 1NL
THE HONOURABLE Mr Justice Fraser
Case No: HT-202-0000025
Alexander Hickey QC and James Hatt (instructed by Devonshires Solicitors LLP) for the Applicant/Claimant
Sean Wilken QC (instructed by CMS Cameron McKenna Nabarro Olswang LLP) for the First Respondent/Defendant
Laura John (instructed by DLA Piper UK LLP) for the Second Respondent/Defendant
Approved Judgment
Hearing dates: 20, 27 January 2020, and 19 February 2020
Introduction
These proceedings concern an injunction which was obtained by Yuanda (UK) Company Ltd (“Yuanda”) against both Multiplex Construction Europe Ltd (“Multiplex”) and the Australia and New Zealand Banking Group Ltd (“the Bank”) preventing the Bank from paying out, on demand, to Multiplex the sum of £4,411,490.70 (“the Sum”) said by Multiplex to have fallen due to it under a financial instrument issued by the Bank. That instrument is Guarantee No. GO207831002 dated 26 May 2015 (“the Guarantee”), and the Sum is the maximum sum under the terms of the Guarantee. The Guarantee has an expiry date, which I deal with further at [18] below. The demand, or call, was made by Multiplex dated 17 January 2020. Yuanda obtained the injunction shortly after that, and seeks continuation of it, as will become clear.
The Guarantee was provided in respect of a contract between Multiplex and Yuanda for works at a major construction project at One Blackfriars Road in London (“the Project”). Further details, in so far as they are relevant to these proceedings at this stage, are provided below at [8] and following.
The demand was made on 17 January 2020, which was a Friday. On the following Monday morning, 20 January 2020, Yuanda's legal representatives notified the court that it wished to obtain a very urgent ex parte hearing in order to obtain interim injunctive relief restraining a call and/or payment out on a bond. The court provided Yuanda with a hearing at 2.00pm on the same day. A skeleton argument and draft witness statement from Mr Richard Anderson for Yuanda was provided to the court, but there was no application notice, no draft proceedings, nor was there a draft Order provided. The reason for identifying this is these features are relevant in terms of the relief sought in the (subsequent) draft proceedings brought by Yuanda, as will become clear. Mr Anderson is one of Yuanda's solicitors.
A draft Order, in something of a bare if not completely novel form, was provided to the court at 1.58pm, which evidently is only two minutes before the hearing. Notice of the application had been given by Yuanda to each of Multiplex and the Bank, and so Multiplex (although not the Bank) was represented at the hearing at 2.00pm, although Mr Wilken QC had not had very much time involved in the case. He certainly had not been given much time to study the draft Order. The application therefore proceeded ex parte on notice. At that point Yuanda, in its evidence, was alleging fraud and bad faith against Multiplex; Mr Anderson's witness statement, which was signed in court at the application, had a number of paragraphs under the heading “Multiplex's bad faith”.
Yuanda satisfied me that an injunction was justified at that stage, clearing the necessary hurdles for the making of an interim injunction with a return date for no longer than 7 days later. However, the order could not be made in the terms of the draft that was submitted, as there was no reference within that order either to the necessary undertakings which are routinely required for ex parte orders, nor was there any reference to fortification of the undertaking in damages. Despite Yuanda's best endeavours to persuade the court that no fortification of the undertaking in damages was required in this particular case, fortification was something that I considered was in this case plainly required. This was particularly as Multiplex made various observations about Yuanda's potential financial situation, but not solely because of that. I would have required fortification of the undertaking in any event, regardless of those observations. I would also observe that in this case, there was undoubtedly sufficient time to have lodged a draft order considerably earlier than 1.58pm on 20 January 2020, as well as to have lodged proceedings themselves, at least in draft. Paragraph 4.3(1) of Practice Direction 25A requires a draft order to “be filed with the court two hours before the hearing wherever possible”, rather than the two minutes before the hearing adopted in this case. A draft order is not only very useful to the court, as it enables the judge in advance to work out what he or she is being asked to grant by way of injunctive relief; it also assists the applicant by concentrating the mind on what undertakings are usually required before such urgent orders will be granted. Yuanda was given time to draft an order in more suitable terms, the court having indicated that an injunction would be granted.
I therefore made an order later that afternoon that, in operative part, prevented Multiplex from pursuing the demand of 17 January 2020 made on the Guarantee, together with an earlier demand dated 11 December 2019 which seemed to have been abandoned. The order also prevented the Bank from making any payment in respect of the Guarantee until the return date or further order. The first return date was fixed for 27 January 2020, one week later than the grant of the urgent order. At that second hearing Mr Wilken again attended for Multiplex. Proceedings had been issued by Yuanda by that stage, and served against both Respondents/Defendants, although these were not (as the court had been told on 20 January 2020 would be the case) Part 8 proceedings, but were rather proceedings under Part 7. By that date, no Particulars of Claim were available.
I wish to make it clear that no criticism is intended of the Bank, in any respect, for not appearing, and not being represented, at either of the hearings on 20 or 27 January 2020. It is not at all unusual for a Bank not to be able to attend such hearings, and/or not to wish to attend in any event. Banks are very often neutral in arguments about the effect of terms within such financial instruments. The position of the Bank in these proceedings generally is very well summarised by Ms John in her skeleton argument for the second return date in the following terms:
“ANZ is an established and reputable bank, which honours its payment obligations. Its primary concern in these proceedings, both substantively and reputationally, is therefore for all relevant matters to be resolved as quickly and efficiently as possible.” The Bank does not, however, adopt a neutral position on all the legal issues before the court, as will become clear when the proper construction of Clause 4 of the Guarantee is considered below.
One Blackfriars Road, or as its marketing name has it, simply “One Blackfriars”, is a major building recently constructed in London immediately next to Blackfriars Bridge on the South Bank of the Thames. It is 170m tall and 50 storeys high, and due to its distinctive shape, has also become known as The Vase or The Boomerang. It consists of a tower, a hotel and a retail/leisure facility called the Podium. It is the tower that is 50 storeys high. The Employer is St George PLC and St George South London Ltd jointly, both of which are members of the Berkeley Group of companies. Multiplex is the main contractor under a JCT Design and Build (2011) contract (the “Main Contract”) to carry out the main shell and core works. Multiplex appointed Yuanda to carry out, as sub-contractor to Multiplex, the façade works for the Development under a JCT Design and Build (2011) Sub-Contract dated 14 July 2014 (“the sub-contract”). Yuanda obtained the Guarantee from the Bank as security for its performance of the sub-contract, that security being provided to Multiplex on the terms set out in the Guarantee.
The Main Contract works were delayed, and the sub-contract works were delayed. The parties are in dispute about the cause of delay. Multiplex maintain that Yuanda are to blame, and Yuanda contend that they are entitled to an extension of time for the sub-contract works together with substantial further payment by way of loss and expense suffered as a result of delay.
Multiplex entered into a compromise agreement with the Employer in respect of certain matters arising under the Main Contract on 17 October 2019 (the “Settlement Agreement”). The evidence served by Multiplex makes it clear that there was a cap in the Main Contract upon liquidated and ascertained damages payable to the Employer (“LADs”) in the sum of £7.5 million. Absent this cap, it is said that Multiplex's potential liability for delay could have been as high as £55 million. However, regardless of that, in the Settlement Agreement Multiplex and the Employer agreed that Multiplex would pay LADs under the Main Contract in the sum of £7.5 million, the full amount of the cap. Mr Grinstead's evidence for Yuanda in his second witness statement states that the Employer issued an invoice to Multiplex for this sum of £7.5m and also gave Multiplex a notice under clause 2.29.1 of the Main Contract asserting a right to be paid or deduct LADs from Multiplex. It is correct to state that Mr Grinstead queries the validity of this notice because he says that “the Main Contract was superseded at that time” but the basis for that assertion is that Multiplex and the Employer...
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