On 8 May 2024, the TCC handed down judgment which considered (1) the defendant's application to strike out the claimant's particulars of claim; and (2) the claimant's application to amend and serve the fourth version of their particulars of claim and the fourth version of their draft response to a request for information.
The case is a succinct summary of the court's approach to strike-out applications and centred around defects in a development at a mental health hospital. Construction defects cases such as these tend to be complicated and detail-orientated. As cases progress, new information can come to light which requires arguments to be amended so that they remain coherent and relevant to the facts as they develop through the litigation.
Background
In 2007, a Project Agreement was entered into by Tees Esk and Wear Valleys NHS Foundation Trust ("the Trust") and Three Valleys Healthcare Limited ("TVH") for the development of a site at Roseberry Park Hospital ("the Hospital") in Middlesborough. TVH subsequently entered into a building contract with Laing O'Rourke Delivery Limited (the Claimant in these proceedings, "LOR") in respect of the Hospital, under which LOR was the design and build contractor. The Trust, TVH, LOR and funders engaged Nisbet as the "Independent Tester" for the project ("the Appointment"). Nisbet warranted to LOR the performance of its obligations under the Appointment via a Collateral Warranty. Nisbet was subsequently acquired by Sweett (UK) Limited (the Defendant in these proceedings, "Sweett"), thereby taking the liabilities in respect of the Appointment and the Collateral Warranty.
Following handover, the Trust identified serious fire safety concerns with the Hospital. It carried out extensive investigations and issued a letter of claim in 2020 against TVH relating to those and other defects. TVH passed the claim on to LOR, who agreed to pay TVH over £18m in a formal settlement. In July 2022, LOR issued a claim for £20.4m against Sweett for breach of its obligations under the Appointment and negligence in relation to various defects at the Hospital.
LOR issued their application to amend the Particulars of Claim ("POC") and response to a Request For Information ("RFI"). Sweett made an application to strike out various parts of LOR's POC ("Strike Out Application").
Strike Out
Under CPR 3.4(2) the court may strike out a statement of case if it appears to the court –
- that the statement of case discloses no reasonable grounds for bringing or defending the claim;
- that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or
- that there has been a failure to comply with a rule, practice direction or court order.
Sweett applied to strike out various parts of LOR's POC, submitting that there was no recognisable cause of action i.e. there were no reasonable grounds for bringing the claim. If Sweett were successful, the application would allow the court to hand down summary judgment in Sweett's favour. This was not Sweett's intent however, and they submitted that "LOR should be given a further opportunity to put forward a coherent case which pleads properly the alleged causes of action". Sweett may have taken this approach as a strike-out may have led to new applications and submissions which could delay the matter and incur further fees.
The rules for a summary judgment are also relevant and are found under CPR 24.2, namely, the court may give summary judgment on the whole of a claim or on a particular issue if –
- it considers that –
- that claimant has no real prospect of succeeding on the claim or issue; or
- that defendant has no real prospect of successfully defending the claim or issue; and
- there is no other compelling reason why the case or issue should be disposed of at a trial.
Judgment
Each of the above rules in relation strike-out and summary judgment were explored in detail by Mr Justice Freedman in paragraphs 30 to 43 of his judgment.
Mr Justice Freedman decided to allow the amendments to the POC because they have "real prospects of success."
Mr Justice Freedman referred to the judgment in EasyAir Ltd v Opal Telecom Ltd, saying that its approach to summary judgment applications also applied to strike out applications. In summary, the correct approach would be for the court to:
- Consider whether the claimant has a "realistic" as opposed to "fanciful" prospect of success;
- Understand that a "realistic" claim carries some degree of conviction;
- Not conduct a "mini-trial";
- Avoid taking arguments at face value, for instance where factual assertions are contradicted by evidence;
- Consider the evidence that can reasonably be expected to be available at trial, not just the evidence before it;
- Hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case; and
- Make a decision on a short point of law or construction, if the court is satisfied it has all the evidence necessary for the proper determination of the point, as an argument which is bad in law has no real prospect of succeeding. However the court should avoid issuing a summary judgment if it can expect that new material will exist at trial and there would be a real prospect of success.
Mr Justice Freedman then turned to each of the defects and reviewed them in light of the above. In his analysis, he confirmed that the arguments in the POC (as they now stood) did have a realistic prospect of success and did not require further improvement. One could argue that there is always room for improvement so the judgment was keen to express that "pleadings are not marked out of ten with a basic pass-mark". The points either have a realistic prospect or are struck out.
Conclusion
If amendments need to be made to POC to reflect new evidence, or provide clarity, this will generally be permitted provided care is taken to not waste the court's time with fanciful arguments. The court will review these points at a depth which is more than face value but less than at a trial. In this matter a schedule was provided which recorded numerous objections to the amendments, but the court decided to review the objections thematically, focussing on the bigger picture to save on time and costs.
Laing O'Rourke Delivery Ltd v Sweett (UK) Ltd highlights that in construction litigation new evidence tends to come to light as a matter progresses. For instance, expert evidence is often a key part of any construction dispute, but it can take time to produce so may not form part of the arguments raised in the original POC. This case provides helpful clarity on the test that will be applied by the court when considering a strike out application and confirms that the parameters set out in EasyAir Ltd v Opal Telecom Ltd still apply.
