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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House
		5th February 2009

MR. JUSTICE RAMSEY:

Introduction

1. This is an application for pre-action disclosure pursuant to CPR Rule 31.16. The contemplated proceedings relate to alleged defects in the cooling system in a building known as Building 12, Harbourside, Bristol ("the Building"). In proceedings in 2006 I determined an issue and decided that the required internal design temperature for the cooling system serving the office areas of the Building was 24 degrees Centigrade dry resultant temperature. It is alleged that the cooling system, as designed and installed, does not achieve that standard.
2. On this application, the applicant ("Resthaven") seeks input data and project model data files in respect of a thermal model which was produced by Integrated Environmental Solutions Ltd. ("IES") under an agreement with the respondent ("Kier").

Background

3. Resthaven were forward funders for the development of the Building, which was being developed by Crest Nicholson (South West) Limited ("Crest") to provide offices for Clerical Medical Insurance Group Limited, who were the prospective tenants. Crest engaged Gleeds as the employer's agent and entered into a 1998 JCT standard form of building contract with contractor's design with Kier ("the Contract"). Hoare Lea & Partners ("HLP") were the mechanical and electrical consultants for the project. The original completion date was 30 April 2006 but the Building was not completed by that date and on 10 May 2006 Gleeds issued a certificate of non-completion. Subsequently, on 8 December 2006, Kier reported to Gleeds that there was defective design in the Building in that tests indicated that the building was unable to achieve the specified cooling requirements unless certain changes were made. Kier then carried out remedial works in 2007, and practical completion was certified on 25 October 2007. Resthaven received a notice from Kier in February 2007 and thereafter were obliged to "step-in" and take the place of Crest under the building contract.
4. In about June 2007, Resthaven instructed Kier to provide a thermal model of the building. One had originally been provided by HLP, but it appears that it no longer exists and is said to have been lost. The arrangements made by Kier in June 2007 arose from a discussion between Kier and Mr. Pope on behalf of Resthaven, and led to instructions being given to Kier which included an outline specification for cooling load model dated June 2007 produced by AYH plc. Kier then instructed IES to carry out the dynamic thermal modelling. There are two relevant documents which set out the scope of the relevant obligations undertaken by IES: (1) a letter dated 21 June 2007 where IES provided a quotation to Kier for a dynamic thermal modelling assessment; (2) a purchase order dated 12 July 2007 in which Kier instructed IES to carry out the dynamic thermal modelling assessment as set out in the quotation dated 21 June 2007. Kier provided IES with information so that IES could carry out the modelling exercise. That information provided the "input data" for the model. This information was provided to IES by a number of documents during 2007.

The application

5. On this application, Resthaven seeks disclosure and inspection, as follows, in the terms of a draft order submitted to the court on 4 February 2009:

"The Respondent do by 4.00 p.m. on 11 February 2009 disclose all of the input data it has provided to IES and/or in connection with the IES thermal dynamic model of the building known as Building 12, Harbourside, Bristol ('the IES model') except for (1) the input data provided by the Respondent under cover of its solicitors' letter to Addleshaw Goddard dated 16^th June 2008; (2) the input data provided by the Respondent's expert to the applicant's expert by email timed at 11.38 on 18 December 2008; and (3) the input data provided in tabs 5, 6, 8, 9, 10, 12 to 20 of the exhibit MDR 1 to Mr. Michael Regan's witness statement dated 21^st January 2009. The Respondent do make disclosure of the input data by providing copies of the input data to the Respondent's solicitors."

6. IES used the raw input data provided to them by Kier during 2007 so as to produce the necessary so-called "inputted data" which they then input into the virtual environment software version 5.8.1, a modular software package with certain particular modules being during the modelling process. As Mayer Brown International LLP ("Mayer Brown"), Kier's solicitors, say in their second letter dated 3 February 2009, there is a possibility that the IES software requires additional parameters that Kier or Kier's experts, Navigant, have not provided to IES and which IES has assessed itself, such as by making appropriate assumptions or deriving information from documents or other data. This "inputted data", it is asserted, is not in the possession and/or control of Kier or their expert Navigant.
7. The second part of Resthaven's application was originally expressed to be provision of a full copy of the IES model on a CD. This was modified in description to the project model data files, and essentially what is sought is the inputted data as described in Mayer Brown's letter of 3 February 2009.
8. In summary, therefore, what Resthaven seeks under Rule 31.16 is: (1) disclosure of input data which Kier supplied to IES for the purpose of the modelling exercise by providing copies to the extent that they have not already been provided; (2) disclosure of the "inputted data" by production of a full copy of the project model data files on a CD. It should be noted that what is not sought is any part of the software package or any output as a result of the modelling assessment.

The requirements of Rule 31.16.

9. This is an application made under CPR Rule 31.16 which provides for disclosure before proceedings have started and where an application is permitted to be made under any Act. Rule 31.16(3) provides as follows:

"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."

10. The relevant provisions of the Act in this case are those in section 33 of the Supreme Court Act 1981 which provides for powers of the High Court exercisable before commencement of actions, and in particular section 33(2) which provides that on an application:

"... the High Court shall, in such circumstances as may be specified in the rules, have power to order a person who appears to the court to be likely to be a party to the proceedings and to be likely to have or to have had in his possession, custody or power any documents which are relevant to an issue arising or likely to arise out of that claim –

(a) to disclose whether those documents are in his possession, custody or power; and

(b) to produce such of those documents as are in his possession, custody or power to the applicant or, on such condition as may be specified in the order -

(i) to the applicant's legal advisers...."

11. In the present case, I am satisfied that the provisions of Rule 31.16 are satisfied in the following respects. As to (a), Kier is likely to be a party to subsequent proceedings, given that there is a pre-action protocol procedure currently taking place involving both Resthaven and Kier. As to (b), Resthaven is similarly likely to be a party to those proceedings, following the pre-action protocol. I shall deal with the requirements of 31.16(e)(c) and (d) in the context of the two types of document for which disclosure is sought. If I find that the requirements are satisfied, then I still have to decide whether to make an order as a matter of discretion: see Black v. Sumitomo Corporation [2002] 1 WLR 1562, per Rix L.J. in particular at para.88 and following. Also, of course, there is the question of what might be the appropriate form of order. I now turn to consider the two types of documents which are sought in this application.

Input data

12. The central issue between the parties in relation to input data is whether, as Kier contends, the documentation has already been provided. It is evident that the input data for the model supplied by Kier to IES would form part of standard disclosure and that by providing disclosure now the experts can properly consider, on a common footing, the extent to which the cooling system complies with the requirements of the contract. I am satisfied that such disclosure will allow the proceedings to be disposed of fairly, assist the dispute to be resolved without proceedings and save costs.
13. The dispute is therefore, as I have indicated, whether the input data which Kier has already provided is complete. The disclosure has been provided in three tranches, as identified in the draft order to which I have referred. That is, first, on 16 June 2008 to Resthaven's former solicitors; secondly, by Kier's expert, Mr. Rollason of Navigant, to Resthaven's expert, Mr. Smith of Atkins, on 18 December 2008 and, finally, as part of an exhibit to Mr. Regan's witness statement, dated 21 January 2009, submitted on behalf of Kier on this application.
14. In paragraphs 66 and 70.2 of Mr. Regan's witness statement, he says that Kier has provided to Resthaven the information relating to the model in its possession and/or control. Resthaven rely on the evidence of Mr. Smith, who deals with this at paragraph 5 of his witness statement. He attaches a list of all the input data he would expect to be required in order to construct a model using IES software. He says that when comparing this list with what he has received, some has been provided but a large proportion of the input data is still outstanding. Although Mr Smith did not descend to detail, Mr. John Marrin QC, who appeared with Ms. Rachel Ansell on behalf of Resthaven, referred me to two categories of information, which Mr. Smith would expect to be provided, relating to "the shading effect of the building from other buildings or obstructions", and "plant types, max and min output heating or cooling works". It is evident from the standard data requirements document issued by IES when they sent out their quotation, that this information formed part of those data requirements.
15. In response to that IES list of data requirements, Kier said, in an email dated 31 July 2007, which attached various documents: (1) in respect of shading from surrounding building "drawings as attached – dwg format", and (2) in respect of plant types "as per specification issued, plant details to be advised". Mr. Marrin submits that this raises grounds of concern because the attached drawings do not show the shading effect and the plant details do not appear to have been advised. Mr. Marrin also points to the fact that on 17 December 2008 Mayer Brown suggested that the information could be obtained from Mr. Rollason. Mr. Smith refers to the information which has been provided in this way but Mr. Marrin submits that when further enquiries were made, Mr. Regan provided extensive further information by way of his witness statement. Further, Mr. Marrin submits that although Mr. Regan said in paragraphs 66 and 70.2 of his witness statement that Kier had provided the information in its possession and/or control relating to the model, further information was provided by letter dated 28 January 2009.
16. Ms. Camille Slow, who appears for Kier, submit that Kier's position is that it has provided Resthaven with all the input data which it gave to IES. She says that Kier has never refused to cooperate and has provided further documentation with Mr. Regan's witness statement because it had previously been thought that those documents were readily available to Resthaven.
17. Whilst it can be seen that Kier have provided documents which contain the input data on a number of occasions, there is, in my judgment, a justifiable concern that the informal process by which Kier provided information to IES over the course of 2007 may have led to information not being identified by Kier and provided to their solicitors. It would unfortunate if, at a later stage, further input data were disclosed when the experts have spent much time and cost proceeding on the basis that they had all the input data. The means by which disclosure has taken place by Kier, both through experts and solicitors, means there may be documents which have not been properly identified of the type which Mr. Marrin has referred to.
18. In the circumstances, I consider that Resthaven are entitled to an order in the form which they seek, so that the issue of completeness of disclosure of input data can be resolved at this stage. In my judgment, this is an appropriate case for me to exercise my discretion so that this aspect of the dispute can be fully and openly considered during the course of the pre-action protocol process.

Project Model Data Files

19. I now turn to consider the project model data files. Ms. Slow submits that the person who currently and ordinarily has possession of the files, IES, has not consented to provide them. She says that whilst Kier has no objection in principle to providing these documents, Kier considers that it does not have a proprietary interest in the files but, rather, that it has only procured the result of IES's modelling. She submits that the contractual documentation supports this construction. She referred me to the decision of the Court of Appeal in Lonrho v. Shell [1980] QB 358, and submits that for Kier to have the "inputted data" or project model data files in their power, it must be shown that Kier has an enforceable right to inspect the documents or obtain possession or control of those documents from IES.
20. So far as the question of approach is concerned, she referred me to the position of Rimer J. (as he then was) in Langbar International Ltd. v. Rybak & Ors. [2007] EWHC 3255 (Ch) and submitted that even if I considered that Kier did have the relevant documents in its power, if there was a possibility that they might not be, it would not be appropriate to make an order positively requiring disclosure since it was conceivable that Kier might not be able to perform such an order. Ms. Slow also submits that, as a matter of discretion, I should in any event refuse disclosure and that disclosure would be disproportionate.
21. Mr. Marrin submits that under the agreement between Kier and IES, as a matter of construction or necessary implication, Kier does have an enforceable right to inspect or obtain possession or control of the "inputted data" or the project model data files. He submits that the court should decide this issue on the balance of probabilities and not adopt a different or higher test. He submits that the evidence shows that IES has not refused to provide the relevant documents and that there is no reason why, as a matter of discretion or proportionality, the documents should not be provided.
22. I accept that I need to be satisfied that Kier has an enforceable right to inspect or obtain possession or control of the relevant documents. So far as the question of the approach to interpreting the agreement between Kier and IES is concerned, it seems to me that I must be satisfied on the balance of probabilities that there is that enforceable right. That decision has to be made on the basis of the evidence and the submissions made by the two parties before me. I must also take into account as part of that information any information I have as to the approach of IES to this matter. If I find that Kier does have the right to obtain possession or control, then I must decide whether to make an order, as a matter of discretion or that it would not be disproportionate In addition, in making any order, then, as Rimer J. said in Langbar, the possibility that Kier may not be able to perform the order must be taken into account.
23. Approaching the matter in that way, I turn to the two documents which form the agreement between IES and Kier in this case: the letter of 21 June 2007, and the Kier order of 12 July 2007. Whilst the letter from IES referred to a dynamic thermal modelling assessment, the work which IES had to do to carry out the analysis was to build a model so that they could carry out the following tasks, amongst others: (1) a Suncast analysis of the building to input into the thermal simulation; (2) ApacheSim thermal simulations; (3) the provision of a tabulated Excel work sheet with results on temperature and comfort; (4) heat gain and heat loss calculations using CIBSE loads. The breakdown of the work involved included data gathering, model building, and checking. In the notes to that section, it is indicated that what would be provided to Kier was referred to as "model reportage and basic results output".
24. As the evidence shows, there were a number of simulations carried out in which certain parameters were changed at Kier's request, so as to provide results for different conditions. It is also evident that there would be meetings between IES and Kier at which the results would be reviewed. In my judgment, in those meetings, or as part of the model reportage, Kier would be entitled under the agreement to be provided with information concerning the "inputted data", that is the additional parameters not provided to IES by Kier but which IES had assessed itself, such as making appropriate assumptions or deriving information from drawings or other data. Without knowledge of this "inputted data", the model could not be properly assessed by Kier. In my judgment, Kier would, if necessary, have an enforceable right to inspect or obtain possession or control of that "inputted data" as part of the obligations of IES under the agreement with Kier.
25. The evidence which I have as to the position of IES would confirm this. Mr. Regan, in paragraphs 68 to 69 of his witness statement, reports on conversations between Mr. Ouvry of Navigant and Ms. Graham of IES. Whilst IES expressed concerns arising, it seems, from the complexity of the model and the need for expertise, and whilst evidently IES retain the project model data files, there is no assertion by IES that Kier are not entitled to the documents. In an email dated 2 February 2009, Ms. Graham said this:

"We have had an internal discussion and we think the best way forward would be to sit down with Resthaven and Atkins to go through the model inputs etc. and answer any questions they might have. We do not consider making the model available in the first instance to be the most efficient way to proceed. If after discussion there is still a desire to have the model, this can be negotiated further."

26. Again, this does not indicate that she is asserting that Kier do not have an enforceable right, but, rather, she is concerned about practicalities concerning the most efficient way to proceed.
27. On this basis, I consider that the "inputted data" would form part of Kier's standard disclosure and, for the same reasons as the input data, the requirements of rule 31.16(3)(d) would be satisfied. This is a case where Mr. Regan says, at paragraph 67 of his witness statement, that Kier have no objection whatsoever to Resthaven being provided with a copy of the model, which he refers to as being the project model data files. These are, in my judgment, as essential as the input data to ensuring that the objectives of the pre-action protocol process are achieved. In principle, therefore, I consider that Kier should give disclosure of the relevant inputted data.
28. My concern arises in relation to the appropriate form of order which must take into account the following matters: (1) Mr. Smith indicates at paragraph 7.2 of his witness statement that it should be reasonably straightforward for IES to provide the project model data files. I do not know whether that view is shared by IES but, as in all matters concerning software and software applications, unforeseen difficulties can often arise in providing what at first seems straightforward. (2) Mr. Smith in paragraph 7.3 of his witness statement states that providing the project model data files would be much more straightforward for Kier and/or IES than excising the "inputted data". Again, the same consideration applies. (3) There must always be a possibility, for whatever reason, that Kier are not able to obtain a copy of the project model data files from IES. As part of this, as I have indicated, I have not heard what IES has to say as to the terms of the contract between IES and Kier.
29. In those circumstances, while I consider that as a matter of discretion it is appropriate to make the order, I consider that the order itself will need further discussion. At present I consider that the following form of draft order would, subject to the views of the parties, be appropriate. The wording is:

"Kier shall use its best endeavours to provide by [date] a copy of the project model data files on CD from IES so as to produce the "inputted data" used by IES in carrying out the dynamic thermal modelling assessment for Building 12, Harbourside, Bristol, pursuant to an agreement made by IES's letter of 21 June 2007 and Kier's purchase order dated 12 July 2007, with liberty to apply."

JUDGMENT ON COSTS
 


MR. JUSTICE RAMSEY:

30. I have an application by Kier for their costs. Ms Slow refers me to CPR rule 48.1(2) which provides that the general rule is that the court will award the person, against whom the order is sought, his costs of the application and of complying with any order made on the application. Ms. Ansell, on behalf of Resthaven, submits that the appropriate order in this case is that each party should bear their own costs. The basis for that application is that the documents were requested in June 2008 and, although there was a period of hiatus thereafter, the application had to be issued in December, and then some documents were provided. But overall, Ms. Ansell submits that the costs in this particular case should reflect the fact that the parties generally provide documentation as part of the pre-action protocol process.
31. It seems to me that in this case there are two aspects. The first is that the input data which was requested has been largely provided in the course of the application and I have no reason to believe that what has been provided during the course of the application necessitated the application itself. It seems to me that on the first question of the input data, the justification of the order is really on the basis that there is an application before the court and there is some justifiable concern as to the possible repercussions if later input data is discovered. Those are the reasons why it was appropriate to make the order and it does not seem to me that that reasoning should deprive Kier from the general rule which applies under 48.1(2).
32. Secondly, in relation to the project model data files, it seems to me that this is a case where during the course of the pre-action protocol process issues relating to documents held by a third party may arise and the only proper way of dealing with those matters is to come before the court. I consider that in relation to the project model files the application again is one where Resthaven seek the benefit of an order of the court under these express grounds for pre-action disclosure, and I see no reason why the general rule should not apply.
33. In those circumstances, the order should be that Kier are to have their costs of the application and of complying with the orders that I have made.