England and Wales High Court (Technology and Construction Court) Decisions

 Case No: 1999 HT 37

Date of Judgment: 1st July 1999

Paul Infield (instructed by Fairweather Stephenson for the Applicant)

Michael Stimpson (instructed by Howard Kennedy for the Respondent)

CPR 31.16

1. This is an application for pre-action discovery of the documents set out in the Schedule annexed to the Application Notice. It is made under CPR 31.16, which so far as material provides:

"(1) This rule applies where an application is made to the court under any

Act for disclosure before proceedings have started.

......

(3) The court may make an order under this rule only where -

(a) the respondent is likely to be a party to subsequent proceedings;

(b) the applicant is also likely to be a party to those proceedings;

(c) if proceedings had started, the respondent's duty by way of standard

disclosure, set out in rule 31.6, would extend to the documents or

classes of documents of which the applicant seeks disclosure; and

(d) disclosure before proceedings have started is desirable in order to-

(i.) dispose fairly of the anticipated proceedings;

(ii.) assist the dispute to be resolved without proceedings; or

(iii.) save costs."

2. Before 26 April 1999 the right to make an order for pre-action disclosure was restricted to actions in which claims were made in respect of personal injury or death. However, on that date sections 33 and 34 of the Supreme Court Act 1981 were purportedly amended by article 5 of The Civil Procedure (Modification of Enactments) Order 1998, SI 1998/2940 ("the Order") so as to remove the restriction. On behalf of Galliard Homes Ltd ("Galliard"), Mr Stimpson submits that article 5 of the Order is ultra vires, and that I should declare it to be null and void. I shall deal with this point first.

3. The relevant primary legislation which needs to be considered is to be found in the Civil Procedure Act 1997, which, so far as material, provides as follows:

1. "1. Civil Procedure Rules

2. (1) There are to be rules of court (to be called "Civil Procedure Rules") governing

3. the practice and procedure to be followed in-

4. (a) the civil division of the Court of Appeal,

5. (b) the High Court, and

6. (c) county courts.

7. (2) Schedule 1 (which makes further provision about the extent of the power to make

8. Civil Procedure Rules) is to have effect.

9. 4. Power to make consequential amendments

10. (1) The Lord Chancellor may by order amend, repeal or revoke any enactment to the

11. extent he considers necessary or desirable in consequence of--

(a) section 1 or 2, or

12. (b) Civil Procedure Rules.

13. (2) The Lord Chancellor may by order amend, repeal or revoke any enactment passed

14. or made before the commencement of this section to the extent he considers necessary

15. or desirable in order to facilitate the making of Civil Procedure Rules.

16. (3) Any power to make an order under this section is exercisable by statutory instrument.

17. (4) A statutory instrument containing an order under subsection (1) shall be subject to

18. annulment in pursuance of a resolution of either House of Parliament.

19. (5) No order may be made under subsection (2) unless a draft of it has been laid before

20. and approved by resolution of each House of Parliament.

......

21. 8. Disclosure etc of documents before action begun

22. (1) The Lord Chancellor may by order amend the provisions of section 33(2) of the

23. Supreme Court Act 1981, or section 52(2) of the County Courts Act 1984 (power of

24. court to order disclosure etc of documents where claim may be made in respect of

25. personal injury or death), so as to extend the provisions -

26. (a) to circumstances where other claims may be made, or

(b) generally.

27. (2) The power to make an order under this section is exercisable by statutory instrument

28. which shall be subject to annulment in pursuance of a resolution of either House of

Parliament."

4. So far as material, the Order provides as follows:

29. "The Lord Chancellor, in exercise of the powers conferred on him by section 4(2) of the

30. Civil Procedure Act 1997, hereby makes the following Order of which a draft has, in

31. accordance with section 4(5) of that Act, been laid before and approved by resolution of

32. each House of Parliament -

1. This Order may be cited as the Civil Procedure (Modification of Enactments) Order

33. 1998 and shall come into force at the same time as the first Civil Procedure Rules made

under section 2 of the Civil Procedure Act 1997.

2. The amendments set out in this Order shall have effect.

.....

5. The Supreme Court Act 1981 is amended as follows --

34. (a) in section 33 (powers of High Court exercisable before commencement of action),

35. in subsection (2), omit " in which a claim in respect of personal injuries to a person,

36. or in respect of a person's death, is likely to be made,"; and

37. (b) in section 34 (power of High Court to order disclosure of documents, inspection

38. of property etc.) -

39. (i) omit subsection (1); and

40. (ii) in each of subsections (2) and (3), omit "to which this subsection applies".

5. Mr Stimpson's argument is simplicity itself. He submits that article 5 of the Order should have been made under sections 8(1) and (2) of the 1997 Act, and not under section 4(2). Section 4 does not cover the same ground as section 8. The express reference in section 8 to the power to amend earlier legislation concerning pre-action disclosure shows that it was not intended that such a power be conferred by section 4. Moreover, article 5 of the Order could not reasonably be said to be "necessary or desirable in order to facilitate the making of Civil Procedure Rules" as required by section 4(2) of the 1997 Act.

6. In my judgment, this argument must be rejected for the two following reasons:

7. Thus, in Finbow v Air Ministry [1963] 1 WLR 697 at 709, a Minister mistakenly exercised a formal power of approval of a licence to occupy land under a repealed section of a statute, instead of its re-enacted successor. It was argued that this was not an effective approval, and was therefore a nullity. McNair J held that to hold that the misdescription of his powers rendered the document a nullity would defeat the plain intention of the Minister. He continued in an explosion of Latin:

41. "It is, in my judgment, a plain case for the application of the maxim falsa demonstratio non nocet and of the principle embodied in the maxim magis

42. valeat quam valeat. There is a total inconsistency and repugnancy between

43. the minister's manifest intention and the literal effect of the document,

44. and, in my judgment, the former should prevail."

8. In R v Dover Magistrates Court ex parte Webb (unreported 18 March 1998), a similar issue fell to be determined in the Divisional Court (Lord Bingham LCJ and myself). HM Customs & Excise made an application to forfeit cash under the Criminal Justice (International Co-operation) Act 1990, at a time when that Act had been repealed. The justices made forfeiture orders purportedy under sections 26(1) and 27 of that Act. The relevant provisions of the 1990 Act were broadly re-enacted in the Criminal Justice Act 1993. It was held that, on the footing that the reference to the provisions of the repealed Act was wrong, the maxim falsa demonstratio would apply, and the error would not invalidate the justices' decision. If I may be forgiven for quoting from my judgment, I said the following:

45. "The fact that failure to refer to section 26 in the application form would not

46. invalidate the form or the proceedings fortifies me in my view that the erroneous

47. reference to section 26 in the application in this case was immaterial to the validity

48. of the application. Nor can I see any difference in principle between a mistaken

49. reference to the wrong section of an Act which is still in force. In each case, it can

50. be said that the statutory provision referred to in the application does not authorise

51. the making of the application . I do not believe that the law requires that a formalistic

52. and technical approach be taken in either case. The relevant question is whether,

53. viewed as a matter of substance, the application is one which is empowered by

54. the relevant statute.

55. In the present case, an application for forfeiture in the substantive terms in which the

56. application of 13 April 1995 was made was authorised by section 43 of the 1994 Act.

In my view, Finbow v Air Ministry [1963] 1 WLR, 697 is a valuable illustration of

57. the maxim falsa demonstratio non nocet, or to translate, the wrong label does not

58. invalidate. If it is right, as was held in that case, to save the exercise by a Minister of

59. a formal power, mistakenly made under a repealed section of a statute instead of its

60. re-enacted successor, I can see no reason for refusing to save an application for

61. forfeiture mistakenly made under the repealed section 26, instead of its re-enacted

successor."

9. Mutatis mutandis, these observations apply with equal force to the present case. Here, article 5 of the Order would not have been invalidated by a failure to mention in the recital the statutory power pursuant to which it was made. This shows that the (assumed) erroneous reference to section 4(2) was immaterial to the validity of article 5.

10. The proposed proceedings relate to an estate known as Burrells Wharf, West Ferry Road, Isle of Dogs, East London. It comprises 406 flats divided into 11 blocks. The flats are held on long leases. The development of the estate was started by Kentish Homes Ltd in 1987. The Halifax Building Society appointed receivers in July 1989 when the estate was only part completed. Halifax carried on with the work, and sold on to Packamist Ltd in October 1993. Packamist is a subsidiary of Galliard, and it seems not to be in dispute that at all times Packamist was acting as agent or trustee for Galliard. By an agreement dated 18 December 1997, Packamist sold the freehold reversion to Burrells Wharf Freeholds Ltd ("Burrells"). Burrells is a company owned by about 250 of the lessees of the flats. Clause 12.2 of the conditions of contract provided that following completion, Packamist would:

62. "comply with outstanding building regulation requirements relating to development

63. of the Property by the sellers to the satisfaction of the local building control authority".

11. Burrells discovered what they considered to be serious defects in the buildings comprising the estate. In particular, their surveyor, Mr Easton of Messrs Easton Bevins, has expressed the opinion that the estate suffers from serious breaches of the Building Regulations in relation to resistance to the spread of fire. Regulations B2 and B3 have been identified as being of particular relevance. They provide inter alia:

"Internal fire spread (surfaces)

64. B2. In order to inhibit the spread of fire within the building, surfaces of materials

65. used on walls and ceilings -

66. (a) shall offer adequate resistance to the spread of flame over their surfaces; and

67. (b) shall have, if ignited, a rate of heat release which is reasonable in the circumstances.

Internal fire spread (structure)

B3. - (1) The building shall be so constructed that, in the event of fire, its stability

68. will be maintained for a reasonable period.

69. (2) The building, or the building as extended, shall be sub-divided into compartments

70. where this is necessary to inhibit the spread of fire within the building.

71. (3) Concealed spaces in the structure or fabric of the building, or the building as

72. extended, shall be sealed and sub-divided where this is necessary to inhibit the

73. unseen spread of fire and smoke.

74. (4) A wall common to two or more buildings shall offer adequate resistance to

75. the spread of fire and smoke."

12. On 24 May 1999, Mr Easton swore an affidavit in which he stated that there were wide ranging and serious breaches of the Building Regulations. He gave a provisional figure of £500,000 for the cost of remedial work, but said that the final figure might be very much more. In carrying out his investigations, he said that he needed to establish what the developers intended to build, what the relevant building control authority allowed the developers to build, what other technical requirements may have applied, and what was actually built. To assist him in this exercise, he needed to see various documents. As it was explained to me in argument by Mr Infield, of particular importance are documents which show what was required or allowed by the building control authorities. This is because the interpretation of Regulations B2 and B3 involves a considerable element of judgment and subjectivity on the part of the building control officers. Note, for example, the reference to "adequate" (B2(a)) and "reasonable" (B2(b)), and "for a reasonable period" (B3(1)), "where this is necessary" (B3(2) and (3)), and "adequate" (B3(4)). Thus, says Mr Easton, in determining whether there was a breach of the Building Regulations, it is necessary to know how these fire related requirements were interpreted by the building control officers.

13. Mr Easton has made considerable efforts to examine the relevant documents which are in the possession of the local authority, Tower Hamlets. It is on the basis of his examination of those documents that he has compiled the schedule of documents in respect of which this application for pre-action disclosure is made. But he has not been permitted by Tower Hamlets to take copies of the documents that he has seen, and the local authority is currently denying him access to the documents altogether. Mr Easton has deposed that, without the relevant documents, the exercise of attempting to compile an accurate schedule of defects will be more costly than if he has the documents. He says that, if the documents are available, his firm's costs will be between £75,000 and £100,000 plus VAT, but that the figure could well rise to £150,000 plus VAT if he has to reconstruct the intended layout and design without the benefit of the documents. Moreover, without the documents, the schedule will almost certainly be less accurate than it would be if Mr Easton has the documents. This is because without the documents, he will have to make his own assessment of what the building control officers are likely to have required or authorised for the purposes of satisfying Regulations B2 and B3.

14. On behalf of Burrells, Mr Infield submits that all the criteria stated in CPR 31.16(3) are satisfied. Thus both Burrells and Galliard are likely to be party to subsequent proceedings.If proceedings had started, Galliard's duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which Burrells now seek disclosure. Finally, disclosure is desirable before proceedings have started in order to dispose fairly of the anticipated proceedings, assist the dispute to be resolved without proceedings, and/or to save costs.

15. Mr Stimpson resists the application on the following grounds. First, he submits that it is not likely that there will be proceedings at all. Galliard has always made it clear that, once a fully particularised schedule of defects has been served, it will give it careful consideration, and meet its legal liabilities without the need for litigation. Secondly, none of the purposes stated in CPR 31.16(3)(d) is likely to be achieved by ordering disclosure now. The documents are not required to enable Burrells to produce an accurate and complete schedule of defects. Its technical advisers are currently engaged on a thorough examination of every flat in the development, and they know which regulations were applicable at the time of construction. The only possible area of difficulty for them may be local authority relaxations, but that is an insufficient reason for ordering pre-action disclosure. It follows, submits Mr Stimpson, that to order disclosure of the documents now would not be likely to assist the dispute to be resolved without proceedings, or save costs. In a nutshell, he argues that Burrells should serve a schedule of defects as soon as possible; if proceedings ensue, Burrells can amend the schedule following disclosure of documents by Galliard in the usual way.

16. I do not share Mr Stimpson's optimism that proceedings are unlikely. The hostility that this application has generated bodes ill for the future resolution of this dispute. I am told that Galliard has incurred legal costs in excess of £20,000 in meeting this application alone. This is hardly a good example of the brave new world of cooperation and more affordable litigation that was supposed to have been ushered in by the Woolf reforms. The correspondence between the solicitors makes depressing reading. I am satisfied that, as matters currently stand, litigation between these two parties is likely. Quite apart from other issues, it seems that there is an issue as to whether, upon the true construction of the conditions of contract, Galliard is liable for defects in work that had been carried out before the date of the contract. That issue alone would make proceedings likely. But more generally, my strong impression from a brief perusal of the many documents that have been placed before me is that, unless there is a change of attitude between these parties and their legal advisers, litigation is highly likely, if not inevitable.

17. Before I deal with the question whether all or any of the criteria stated in CPR 31.16(3)(d) are satisfied, I ought to make a few preliminary observations. Although in his skeleton argument Mr Stimpson does not concede that the documents of which disclosure is now sought would be the subject of standard disclosure as defined by CPR 31.6, he did not address any argument to me on the point. As I understand it, his case is not that the documents (if they are or have been in the control of Galliard) are not disclosable. It is simply that they should not be ordered to be disclosed before proceedings. Nor is it contended that it would be oppressive, difficult or disproportionate to give disclosure now. When I asked Mr Stimpson why objection was taken to the disclosure that is sought, he said that his client was opposing the application on grounds of principle.

18. In the light of my conclusion that the requirements of CPR 31.16(3)(a)(b) and (c) are satisfied, the only issue is whether disclosure is desirable in order to achieve one or more of the objectives stated in subparagraph (d). Mr Stimpson says that this is a "run of the mill" construction dispute, and that if pre-action disclosure were to be ordered in this case, it would be ordered in most construction cases, and it is plainly intended that such an order should be made only in exceptional cases. I do not find his reference to "exceptional cases" helpful. The rule clearly spells out the circumstances in which pre-action disclosure may be ordered. The court has a discretion whether or not to make such an order, and it may only be exercised if it is desirable in order to achieve one or more of the purposes stated in CPR 31.16(3)(d). Whether it is desirable to order disclosure in order to achieve one or more of those purposes will depend on an assessment of the facts of the case. That assessment will sometimes have to be made on the basis of a limited appreciation of the likely issues in the case, but where that occurs (as in the present case) the court must do its best on the available material.

19. I have been persuaded that this is a case in which I should order the disclosure that has been sought, and order it now. I do not regard this as a "run of the mill" case. It is unusual in that the allegations are predominantly, if not exclusively, made on the basis of breaches of building regulations. This is not a typical construction defects case, where the allegations are of breaches of the terms of a specification or of implied terms of a construction contract to carry out work in a proper manner using materials of good quality which are fit for their purpose. A central feature of this case will be to ascertain what the building control officers required and/or authorised for the purposes of meeting the standards specified in the building regulations. Burrells do not have control of documents which would show what the building control officers did require and/or authorise, particularly in relation to the building regulations that apply to fire.

20. Disclosure of these documents before proceedings would enable Burrells to prepare a more accurate schedule of defects than is now possible. It is impossible at this stage to say how much more accuracy will be achievable with the documents than without them. Having regard to the nature of the allegations that Burrells seeks to make, however, I am satisfied that the documents are likely to enable Burrells to produce a schedule that is significantly more accurate than would otherwise be possible. That is certainly the view of Mr Easton, and I see no reason not to accept it. On behalf of Galliard it is said that Mr Easton should produce the best schedule that he can at the present time, and, if necessary, amend it after disclosure has been given later in the proceedings. In my view, it would be far better to give Burrells the material they need to prepare an accurate schedule now, so as to avoid, as far as possible, future amendments. Amendments cause delay and generate costs.

21. I would allow this application on the grounds that it is desirable to do so in order to achieve each of the purposes identified in CPR 31.16(3)(d). If the schedule of defects is based on an accurate statement of what the building control officers required or authorised, it is more likely to lead to the fair disposal of the proceedings than if the schedule is founded on a mistaken understanding of how the authority interpreted the relevant building regulations at the time when the work was carried out. For the same reason, an accurate schedule is more likely to assist the parties to resolve the dispute without proceedings. In answer to a question from me, Mr Infield said that, once Burrells have sent the completed schedule to Galliard, they would be willing to consider some form of alternative dispute resolution. Finally, an order for disclosure at this stage is likely to save costs. I have already referred to the costs implications as regards Mr Easton's fees of denying disclosure before proceedings. But, additionally, it seems to me that to order disclosure now is likely to achieve a saving of costs more generally. A more accurate schedule will enhance the possibility of avoiding litigation altogether, or achieving an earlier settlement than would otherwise be possible. It would also reduce the likelihood of the need to amend the schedule.

22. In the result, this application succeeds. I wish to emphasise that this judgment should not be construed as indicating a relaxed approach to applications for pre-action disclosure. An application will fail unless the requirements of CPR 31.16 are satisfied. For the reasons that I have given, on the facts of this case, they are.

23. Since I have heard no argument directed to any of the individual documents of which disclosure is sought, I shall order disclosure of all the documents listed in the schedule attached to the Application Notice.

24. As a postscript, I would add that in my view this application did not raise issues of great complexity. They certainly did not justify the voluminous affidavits and prolix correspondence that have been generated by the parties. CPR 1.3 provides that the parties are required to help the court to further the overriding objective. The overriding objective of enabling the court to deal with a case justly includes, so far as practicable, saving expense, and dealing with the case in ways which are proportionate inter alia to the complexity of the issues: CPR 1.1(2)(b) and (c)(iii). These important principles have clearly been overlooked in the present case.